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Recent surveies show that SME development is closely linked with growing. For illustration, Beck et Al. ( 2005 ) find a robust, positive relationship between the comparative size of the SME sector and economic growing, even when commanding for other growing determiners. Harmonizing to Ayyagari et Al. ( 2007 ) , in high-income states formal SMEs contribute to 50 per centum of GDP on norm.

Furthermore, in many economic systems the bulk of occupations are provided by SMEs. In OECD states, for illustration, SMEs with less than 250 employees employ two-thirds of the formal work force ( Beck et al. , 2008 ; Dietrich, 2010 ) . Using country-level informations, Ayyagari et Al. estimation that, on norm, SMEs history for near to 60 per centum of employment in the fabrication sector. Harmonizing to SME Performance Review ( EC, 2009 ) , between 2002 and 2008, the figure of occupations in SMEs increased at an mean one-year rate of 1.9 per centum while the figure of occupations in big endeavors increased by merely 0.8 per centum. In absolute Numberss, 9.4 million occupations were created in the SME sector in EU-27 between 2002 and 2008. Besides, it is frequently argued that SMEs are more advanced than larger houses. In developed states, SMEs normally follow “ niche schemes, ” utilizing high merchandise quality, flexibleness, and reactivity to client demands as a agency of viing with large-scale mass manufacturers ( Hallberg, 2000 ; Snodgrass and Biggs, 1996 ) .

In this chapter, an debut of the field research study and the chosen subject is provided. The paper continues with a background of the research subject and country, followed by the research principle, research aim ( s ) and range of the research

Background Information

All over the universe little and average endeavors are the bed stone of any economic system, but it seems that the same does non use to Nigeria where this important edifice block of every economic system is being neglected and under-utilized. China which has become the bride of every state today started her journey by developing and promoting little concerns. All companies, concerns, industries and houses with less than 250 employees in Nigeria are categorized as MSMEs. Studies done by the Federal Office of Statistics shows that 97 % of all concerns in Nigeria employ less than 100 employees. Looking at our earlier definition of SMEs, it so means that 97 % of all concerns in Nigeria are, to utilize the umbrella term, “ little concerns ” . The SME sector provides, on norm, 50 % of Nigeria ‘s employment, and 50 % of its industrial end product.

Due to the high unemployment rate in most underdeveloped states, MSME ‘s has turned out to be the dominant signifier of concern ventures. Particularly on the African continent, with high unemployment rates, people are turning toward informal and formal little concern in order to prolong their support. The per centum of Nigerian SMEs and their impact on the economic system is high and can be compared to those in developed economic systems of the universe. There are about 23 million little concerns in the US which wholly employ more than 50 % of the private work force, and bring forth more than half of the state ‘s gross domestic merchandise ( GDP ) . In the European Union, SMEs are seen as mostly indispensable for European employment. With up to one million new SMEs being set up annually in the European Union and SMEs account for 99.8 % of all companies and 65 % of concern turnover in the European Union

In the UK statistics of early 1997, there were 3.7 million concerns, with 99 % of these holding less than 50 employees, merely like in Nigeria. So what is the difference? The difference lies in the importance attached to the SME sector by the authoritiess of each state and the function they play in national economic development. In the UK, these concerns non merely organize the bedrock of the British economic system, but they are widely accepted as the chief hub of economic activity in the state. They are Godheads of wealth and non merely seen as occupation Godheads. But to exceed it all, the UK authorities steadfastly believes that little and average sized concerns are important to a successful endeavor economic system and is to the full committed to exciting the creative activity, fight and growing of new and little concerns. These are non merely mere words. The cardinal rules underlying the UK Government ‘s attack include furthering an endeavor civilization that encourages pioneers and hazard takers ; supplying and keeping a supportive economic environment ; identifying and taking barriers to growing and supplying high quality concern support for houses at all phases of their development. This is where the job resides. Whilst the UK authorities and so the authoritiess of other advanced economic systems see their SME sector as important to their continued growing and development, the Nigerian authorities, to set it mildly, does non hold any concrete thought of what concealed potency lies within its SMEs, and if it does, has no thought how to tackle it. Obviously, it would be unreasonable to compare Nigeria ‘s degree of development with that of the UK. This means that Nigeria is non expected to be able to supply the same degree of sophisticated support for its little concerns, non merely for fiscal grounds, but besides because in footings of economic development, Nigeria is non on the same par as Britain. Having said that, nevertheless there is nil incorrect in larning from them and following ( non blindly of class ) some of their policies and programmes that best suits her demands. Small Firms are the anchor of the Nigerian economic system and to reflect its credence and acknowledgment of this, the Government must hold little concern policy at the top of its docket. It has to set concrete stairss in topographic point to guarantee they are able to turn and thrive. This undertaking should non be the exclusive function of Government to supply fiscal aid to concerns. The SMEDC, SMEDAN, NASME and other bureaus set up to advance SME will so hold to research the option of support through equity in Nigeria. In US and the UK where equity support have been widely used, it has helped in the proviso of necessary financess for big scale growing and development. Equity support, or venture capital as it is widely known, has been the secret behind the growing of Silicon Valley, and the mass figure of fast turning high engineering companies that abound at that place. With the high figure of billionaires arising from Nigeria, the SMEDC, MSEDAN, and NASME have to happen a manner of promoting them to put their wealth in little up and coming concerns, thereby assisting them and the state to turn and thrive

Rationale of the research

This research was focused on placing those factors responsible for the hapless growing of SMEs in Lagos province in Nigeria. It is a known fact that being an enterpriser in Nigeria is really tough. The environmental challenges are so terrible that they kill the immature houses before adulthood. You need to postulate with the inaccessibility of critical resources including power and H2O supply. Typically, no affair what it is that you do as an enterpriser, you must bring forth a immense ball, if non all of your electricity demand. If you happen to be into any signifier of production or fabrication, you would necessitate to bring forth your ain H2O supply every bit good. These are some of the most basic jobs, which little and average graduated table endeavors every bit good as larger endeavors need to face on a day-to-day footing. These jobs, nevertheless, do non face SMEs in other parts of the universe including many developing states such as neighboring Ghana.

This research focused on indicating out those lacks and hinderances confronting little concerns and pondered on ways to that could assist their nutriment and profitableness.

Research aim ( s )

To look into the important factors impeding the SME development in Lagos State.

Scope of the research

This research was carried out in Lagos mainland where you find most of the fabrication SMEs and Lagos Island where you find the services and trading SMEs, 63 Entrepreneurs and directors whom have been in the concern for at least one twelvemonth were interviewed.

In chapter one, the current state of affairs of MSMEs in Nigeria and the factors impeding its growing has been discussed. Chapter two provides literature on little and medium concern with the aim of the research. Chapter three contains a short description of the field research while chapter four presents the information analysis and consequences of the research. The decisions and recommendations follow in chapter five with a mention and appendix tabular array at the terminal.


In Nigeria SMEs are by and large referred to as Small and Medium Industries ( SMI ) or Small and Medium Companies ( SMC ) but the research worker opted to utilize SME which is used globally for uniformity.

The Federal Republic of Nigeria is the most dumbly populated state in Africa ( Okpara, 1996, 2006 ) . It has boundaries with the Republic of Benin in the West, Chad Republic and the Republic of Cameroon in the E, Niger Republic in the North, and the Gulf of Guinea in the South. With a population estimated at over 150 million, one in every two West Africans is said to be a Nigerian ( Yusuf and Schindehutte, 2000 ) . The state ‘s GDP is larger than that of all states in West Africa combined and larger than all states in Africa except South Africa ( Adaya, 1998 ) .

Acknowledging the indispensable function of little concerns and private sector endeavors in general economic development, many states have instituted enterprise support webs and constructions to fuel the development of these endeavors. Nigeria is no exclusion. At assorted times since the 1970s, the authorities has designed and introduced steps to advance small-and medium-enterprise development ( Yusuf and Schindehutte, 2000 ) . These steps have included financial, pecuniary, and export inducements.The financial inducements included revenue enhancement vacations and duty grants. For case, little concerns were given a revenue enhancement vacation for the first six old ages of their operations. In footings of pecuniary support, the Central Bank of Nigeria introduced recognition guidelines necessitating commercial and merchant Bankss to apportion a part of their loanable financess to little concerns. Several developmental fiscal establishments and strategies were besides established to help little concerns, including the Nigerian Bank of Commerce and Industry ( NCBI ) , the Nigerian Industrial Development Bank ( NIDB ) , and the World Bank SME I and SME II initiatives. There were besides export inducements from the Nigerian Export-Import Bank ( NEXIM ) to excite export loan installations to little concerns every bit good as export responsibility freedoms administered by the Nigeria Export Promotion Council ( NEPC ) . Other little concern inducement plans included forces preparation, fix and care of specialised machines, and extension services. Small-business aid plans have besides been established by local and province authoritiess. Over the past six old ages, the authorities of Obasanjo ( 1999 – 2007 ) pursued policies that should supply fertile land for small-business including trade liberalisation and doing the operating environment friendlier to entrepreneurs. The International Monetary Fund ( IMF ) has agreed to back up more economic growing in Nigeria by assisting to finance substructure betterments ( Akwani, 2007 ) . In the visible radiation of these support and inducement plans, it would look sensible to anticipate that little concerns would turn and boom in Nigeria. However, the effectivity of these plans remains ill-defined, and the rate of concern failure continues to increase.

Small and medium graduated table endeavors have been long recognized as an instrument of economic growing and development. This turning acknowledgment has led to the committedness of World Bank group on SMEs sector as nucleus component in its scheme to further economic growing, employment and poorness relief. In the twelvemonth 2004 the World Bank group has approved approximately $ 2.4 billion in support of micro little and average endeavors ( World Bank, 2001, Ayyagari et. al 2007 ) While the importance of little and average graduated table endeavors has non been in uncertainty, unluckily sorting concerns into big and average graduated table is subjective and premised on different value judgement. Such categorization has followed different standards such as employment, gross revenues or investing for specifying little and average graduated table endeavors. Harmonizing to different literatures the definition varies in different economic systems but the implicit in construct is the same. Ayaggari ( 2003 ) Beckley ( 1989 ) contends that the “ definition of little and average graduated table endeavors varies harmonizing to context, writer and state ” . In state such as USA, Britain and Canada little graduated table concern is defined in footings of one-year turnover and the figure of paid employees. ( Ekpeyong and Nyang, 1992 ) In Britain for illustration little graduated table concern is conceive as that industry with one-year turnover of 2 million lb or less with fewer than 200 paid employees. In the instance of Japan it is conceptualized as type of industry, paid up capital and figure of employee. Consequently little and average graduated table endeavors are defined as those fabricating with 100million hankerings paid up capital and 300 employees. Those in sweeping trade with 300million paid up capital with 100 employees while those in retail trade with 100million paid up capital with 50 employees. In the instance of Nigeria barely do you see a distinct definition that distinguishes between little and average graduated table endeavors. However, the Central Bank of Nigeria in its pecuniary policies round No. 22 of 1988 position little graduated table industry are those endeavors which has one-year turnover non transcending 500,000 naira. ( CBN ; 1988 ) Similarly in 1990 the Federal Government of Nigeria defined little graduated table endeavors for the intent of commercial bank loans as those endeavors whose one-year turnover does non transcend 500,000 thousand naira or those endeavors with capital investing non transcending 2 million naira ( excepting the cost of land ) or a lower limit of 5 million naira. In the aftermath of Second-tier foreign exchange market ( SFEM ) , and Structural accommodation plan ( SAP ) epoch in 1986, this value has now been reviewed and increased to five million naira. Since this happened, there may be a demand to sort the little graduated table industry into micro and super-micro concern, with a position to supplying equal inducements and protection for the former. In that context, any concern or endeavor below the upper bound of N250, 000 and whose one-year turnover exceeds that of a bungalow industry presently put at N5, 000 per annum is a little graduated table industry. The National Directorate of Employment ( NDE ) construct of a little graduated table industry has been fixed to a upper limit of N35, 000. In other words a concern unit of non less than $ 240 dollar is characterized as a little graduated table concern in Nigeria. That may non be the same in other states, but that categorization may be utile in developing states, because of the low capacity of its little graduated table industry. That is why Kozak, ( 2007 ) argued that SMEs should be judged based on figure of employees or one-year turnover that fall bawl certain threshold. It is these indexs, figure of employees and or rate of bend over that tend to specify the context within which different states and economic systems situate their apprehension of little and average graduated table endeavors.

This is to state that SMEs are defined with much or less the same indexs ( No of employees, rate of turnover.etc ) the indexs are non the same in all states all the clip. In other words while figure of employee and rate of turnover are the index, the figure of employee and entire sum of bend over for specifying SMEs in different states are surely non the same. For case, the employee demands in Britain is 200, with 2million lb turnover, the same can non be said of Japan with 100million Nipponese hankerings as paid up capital and 300 paid employees. While in Nigeria, the paid employees are normally non considered of import, but more significantly is the turnover of N500,000 particularly for the intent of Commercial and Mortgage bank loans. Balunywa ( 2010 ) nevertheless affirmed that the figure of employee may non be a good index, particularly where the company is labour intensive. This is true in state like India, where labour intensivity is a policy attack to industrialisation. However, that is non to state that in some instances, merchandising organisation can non transact large concern, but yet employed few employees. In that instance, capital employed may be used as index for specifying little and average graduated table endeavors. In states where the figure of employees is an index, the figure of employee required differs from state to another. In Uganda the figure of employees for SMEs is between 5-50, ( Ngobo, 1995 ) in India it is 30-100, while in the US, is less than 500 ( Stoner, 1996 ) In Kenya, 10 or fewer people are called micro concern, while 11-50 are referred to little endeavors and 51-100 are called medium endeavors. ( Kibera and Kibera, 1997 ) . That is why in the United State of America, little concern disposal is defined as one that is independently owned and operated, is non dominant in its field and run into up employment or gross revenues criterion developed by the bureau ( Stoner 1996 ) This shows the same tendency with other states like Nigeria and Japan except that the exchange value differs in the fiscal standards. In a more general and comprehensive term Ogechukwu ( 2005 ) chronicled a general standard for specifying little and average graduated table endeavors in different states. These includes figure of employees, one-year turnover, local operations, gross revenues volumes, fiscal strength, directors and proprietors autonomy, comparatively little markets compared to their industries and capital normally supplied by single or stockholders etc. There are so many little graduated table concern units in Nigeria which qualifies within this context, most of them are in the commercial sector. However a common tendency in Nigeria today is the gradual categorization of service supplier, hotels, fast nutrient and eating houses as little and average graduated table endeavors. In a study of endeavors association, Macqueen ( 2004 ) conceive of SMEs as endeavors using 10-99 full clip employees or with a fixed capital investing of US $ 1000-500,000. Small and medium graduated table endeavors are surely non multinational company, transnational cooperation, publically owned endeavors or big installation of any sort. However they can depend on concern and ownership construction to go a big concern unit ( Macqueen 2006 ) while it can be argued that 80 % of the funding of SMEs come from proprietors, friends and households, concern signifier can take different signifier including private ownership, limited partnership, contract and sub-contracts, co-ops or associations. ( Kozak, 2007 ) Small and average graduated table endeavors have a narrow context within which its operation is carried out. However, where it is efficaciously operated it has capacity to shoot the economic growing and national development. As a consequence of this definitional differences and deficiency of cosmopolitan definition, the European Union in 2003 adopted a universally recognized definition of little and average graduated table endeavors and micro concern as companies with less than 250 employees, with regard to fiscal standards, grosss must non transcend 50 million Euro ( step as bend over ) or 43million euro ( step as balance sheet ) In add-on, the European Commission specifies footings of ownership saying that SMEs must be independent with less than 25 % being owned by outside involvement. ( EU Commission ; 2007 ) .

With the prostration of the oil monetary values in the mid 1980 ‘s, many of Government promoted big graduated table industries found it hard to beginning foreign exchange to import natural stuffs and machinery. This adversely affected capacity use, peculiarly, in the large-scale industries. This farther necessitated a alteration in policy way of Government towards private sector engagement, publicity of Small and Medium Enterprises ( SMEs ) and development of Small Scale Industries. Therefore, the 1988 Industrial Policy of Nigeria non merely recognized the polar function of the private sector but shifted industrialisation scheme from big graduated table industries to little and average industries. Government ‘s chief attempts hence became directed towards the publicity of contributing environment for the growing and development of the sub-sector. Since the Civilian Administration of 1999 led by President Obasanjo, many policies, steps, strategies and support systems to develop the SME sub- sector have been put in topographic point to assist do its merchandises more competitory. Through the development of the SMIs, Government intended to accomplish the chief aims of industrial growing and autonomy ; create employment ; enhance sustainable support and cut down poorness ; promote entrepreneurship, promote transportation of engineering and use of local resources and endowments ; mobilise nest eggs and promote capital accretion ; and incorporate SMI with big graduated table industry ( LSIs ) and create linkages with other sectors of the economic system.

In today ‘s Nigeria, industries, peculiarly little and average sized fabrication industries operate under assorted conditions and restraints, which stand on the manner to the accomplishment of organisational ends. There are, for illustration, high cost and deficit of stuffs, deficit of financess, inability to enroll competent staff. Due to its size, the single house neither has control over input factor costs or the monetary values at which it sells its end product with the consequence that inefficient and high cost houses are forced out of concern. This makes cost salvaging devices indispensable for economic endurance. Gone were the yearss when proprietors of the concerns concerned themselves with returns, or employees with wages and rewards merely ; their involvements are now besides focused on the efficient operation of the concern and use of invested resources.


The researcher`s subject is focused on MSME but really small has been said about this micro sector because they are chiefly informal and dominated by adult females. Literature supports the fact that adult females enterprisers, largely in developing states, do non hold easy entree to recognition for their entrepreneurial activity ( Ibru, 2009 ; Iganiga, 2008 ; Iheduru, 2002 ; Okpukpara, 2009 ) , whereas the rate of adult females engagement in the informal sector of the economic system is higher than males ( Akanji, 2006 ; Akinyi, 2009 ) . Lack of capital to get down or run concern led them to bespeak for credits from micro-finance establishments ( Ibru, 2009 ; Kuzilwa, 2005 ) . This is due to poverty, unemployment, low family and concern income and inability to salvage ( Otero, 1999 ; Porter & A ; Nagarajan, 2005 ; Roomi & A ; Parrot, 2008 ) . Women enterprisers, largely in developing states, lack the ability to salvage ( Akanji, 2006 ; Mkpado & A ; Arene, 2007 ) , yet nest eggs are needed to protect income, act as a security for loan and could be re-invested in the concern ( Akanji, 2006 ) . Women entrepreneurs, particularly in developing states lack preparation and entrepreneurial procedure is a critical beginning of developing human capital every bit good as dramas a important function in supplying learning chance for persons to better their accomplishments, attitudes and abilities ( Brana, 2008 ; Cheston & A ; Kuhn, 2002 ) . Again, the consequence of preparation on adult females enterprisers ‘ public presentation, particularly in developing states, has non been adequately addressed in recent literatures. Taking awareness of the curious state of affairss of most adult females in developing states in footings of poorness, low educational degrees and other social favoritisms ( Porter & A ; Nagarajan, 2005 ; Roomi & A ; Parrot, 2008 )

The statistical definition of SMEs varies by state, and is normally based on the figure of employees, capital, or the value of assets and gross revenues volume. In Nigeria SMEs are categorized based on capital, gross revenues volume and figure of employees but the sum in inquiry is non every bit high as in the Western universe because the criterion of life differs.

Ninety five per centum of private sector houses in most industrialised economic systems are made up of SMEs. Harmonizing to Rowen et Al, ( 1998 ) the celerity of industrial development success achieved in the last 30 old ages in East Asiatic economic systems have been reeling and this is attributed to SMEs. The importance of SMEs in driving economic growing is once more emphasized in the instance of Communist East and Central European states that allowed limited signifiers of officially-sanctioned SME development as a manner of bettering hapless economic public presentation and raising life criterions. Harmonizing to researches done on the failure rates of little concerns globally, it has been established that failure is higher in developing states than in developed states and the instance of Nigeria is non an exclusion. A batch of factors contribute to the jobs being faced by little concerns like ; multiple revenue enhancement, dumping, deficiency of technological know-how, deficiency of managerial accomplishments, trouble in acquiring soft loans or deficiency of finance, deficiency of equal Torahs to protect the micro and little concern endeavors against competition from multinationals and imported goods. Most of these MSMEs obtain financess from household members or micro recognition markets with really high involvement rates due to recognition policies that tend to know apart them from traveling to Bankss. Sing the tremendous potencies of the SMEs sector, and despite the recognition of its huge part to sustainable economic development, its public presentation still falls below outlook in many developing states ( Arinaitwe 2006 ) . This is because the sector in these developing states has been bedeviled by several factors militating against its public presentation, and taking to an addition in the rate of SMEs failure. These factors include the unfavourable and really rough economic conditions ensuing from unstable authorities policies ; gross undercapitalization, strained by the trouble in accessing credits from Bankss and other fiscal establishments ; insufficiencies ensuing from the extremely bedraggled province of Infrastructural installations ; astronomically high operating costs ; deficiency of transparence and corruptness ; and the deficiency of involvement and permanent support for the SMEs sector by authorities governments, to advert a few ( Oboh 2002 ; Okpara 2000 ; Wale-Awe 2000 ) .

In Nigeria, Arinaitwe ( 2002 ) in Okpara & A ; Wynn ( 2007 ) emphasis that “ bookmans have indicated that get downing a concern is a hazardous venture and warn that the opportunities of small-business proprietors doing it past the five-year grade are really slender ” they farther stated that the obstructions confronting SMEs include deficiency of fiscal resources, deficiency of direction experience, hapless location, Torahs and ordinances, general economic conditions, every bit good as critical factors such as hapless substructure, corruptness, low demand for merchandises and services, and poorness. The large houses dominate every chance for obtaining loans and natural stuffs. They attract employees by offering better rewards and benefits, and secure most of authorities procurance and contracts.

From Carter & A ; Jones-Evans ( 2006 ) position, some of the strategic jobs of little concern endeavors are ; deficiency of fiscal resources, selling jobs and client concentration, direction and human resources, deficiency of systems and controls, and engineering accomplishments. They farther explained that most little concern are undercapitalized and are unsuitably capitalized in footings of both a high debt-equity ratio and an over-reliance on short term debt. Small concern directors engage in small selling activity and have no experience of selling, they prefer to give their clip to activities that are more familiar to their merchandises. In Nigeria, there are really few or no R & A ; D for little endeavors, no or really small managerial accomplishments for the directors. They are besides characterized by informality and hapless information systems which consequences to hapless determination devising. Small concern endeavors largely lack the capablenesss of measuring new technological developments which enhances inventions. However, there are still suites for betterment in Nigeria ; therefore little concern endeavor sector is acknowledged to hold immense potency for employment coevals and wealth creative activity in any economic system. The issue of dumping by industrialised states is earnestly impacting the development and growing of SMEs in developing states particularly Nigeria.

There is unequal information and a really high per centum of deficiency of consciousness about the SMEIES plan that was structured out particularly for SME nutriment and development. Entrepreneurs seldom attend seminars and workshops organized by SMEDC and other organic structures that promote SME development in Nigeria mentioning different ground

Research Question ( s )

What are the major factors impeding MSME development in Lagos.

Research Hypothesis

The handiness of basic substructures has a positive correlativity to the end product of MSMEs and control the early SME mortality rate in Nigeria.

Greater consciousness and preparation for enterprisers have a positive impact by enabling them know what is required of them, where to travel in order to acquire aid and factors to see before taking major concern determinations.

The proper execution of SMIEIS by Bankss will travel a long manner in assisting advanced enterprisers finance their undertakings and concerns alternatively of depending on households and friends.

The new revenue enhancement act being debated by the senate when passed, will assist unify all the concern revenue enhancements from local, province and federal degree so that the issue of multiple revenue enhancement will be stopped or reduced drastically.


This research was carried out in Lagos State of Nigeria ; Nigeria is a West African Country with more than 154 million people populating at that place. Lagos is a mega metropolis with more than 15 million people!

Target group, Sampling and clip Agenda

The mark group comprised of enterprisers, Business directors and bank directors who are one manner or the other involved in fabrication, piecing, services rendering concern and trading.

A sampling frame of 90 MSMEs and 20 Banks were chosen at random, but merely 63 of the MSMEs responded and were interviewed or returned back our questionnaires to the full filled. It was more hard to acquire the bank functionaries responsible for the SME subdivision since they were particular group attached merely to head offices of the Bankss. The chief standard used was their willingness to take portion in the research. Sixty three per centum ( 63 % ) of the members of the trying frame of 100 MSMEs responded and took portion in the research.

During the research period, a figure of activities took topographic point and are presented in the tabular array holla ;

Research clip tabular array


Time period

Year 2010

Year 2011







Preliminary field study & A ; sample finding


Pre-testing of questionnaires & A ; accommodation


Data aggregation and organisation


Data analysis and field study composing


Field study entry

Research Area

The research country was carried out in Lagos ; Lagos has an estimated population of 15million people and was officially the capital of Nigeria but now the concern capital of Nigeria where every of import concern or authorities have a sort of presence. Lagos contains the highest concentration of SMEs compared to other provinces of the state coupled with its propinquity to the Warf in Lagos. 80 % of the goods that come into Nigeria come through Lagos, through the air via the international airdrome, through the sea via Warf or through land via the lodgers. Most enterprisers that are into export prefer Lagos every bit good because it has common boundary with Cotonou ( Benin Republic ) and caters for about the whole of West Africa.

Data Collection

The information collected was both primary and secondary. Primary information was collected via interviews and utilizing a structured questionnaire to foreground the factors impeding the MSME advancement in Lagos. The questionnaires were pre-tested anterior to the existent information aggregation. Some of the inquiries in the original ushers were changed but still in such a manner that the intended information were still realised. Out of 98 questionnaires given out, a sum of 51 was received to the full filled out while 12 interviews were conducted doing up 63 % of my sampling frame.

Secondary information was collected by reexamining different Small and Medium Enterprises Investment and Equity Scheme ( SMEIES ) , SMEDC, NASME, SMEDAN paperss and Nigerian concern diaries

Partner Institution ( s )

The Research Partner was SMEDC subdivision in Lagos, SMEDC is a semi-autonomous establishment that provides, directs and supports SMEs in Nigeria. It works under the Ministry of Industry and Trade. Its principle function is to advance the development of SMEs in Nigeria in order to recognize the vision 2020 end. There other Government bureaus that promotes SME but SMEDC is the most active in the SME development sector.

Contact Established

During the research period, I was able to set up contact with Development Agency of Nigeria ( SMEDAN ) Lagos subdivision which is headquartered in Victoria Island. SMEDAN was established by the SMEDAN Act of 2003 to advance the development of the MSME sector of the Nigerian Economy.

I besides established and keep contact with the coordinator of SME Development Centre ( SMEDC ) in Lagos, Mr Henry Ogochukwu.

SMEDC offers the undermentioned services ;

National web for Small and Medium Enterprises ( SME webs ) ,

Particular free concern publicity for all SME Network registered members,

Skills and thoughts development enterprises ( SKIDI ) ,

Seminars on concern growing schemes such as concern planning, human resources development, gross revenues, publicity and selling schemes, financing tips ( where to acquire hard currency to get down or turn your concern ) , fiscal and office direction, investing and securities and many more.

Bing advised on how to avoid dearly-won concern errors

Encountered Problems

There were tonss of child and major jobs encountered during informations aggregation, I realised during this period that schoolroom theories are sometimes rather different or antonym of what you see when you are in the field. The first major job was traveling from point A to B, Lagos is a Mega City with more than 15Million people populating at that place. I end up traveling to merely one assignment in the twenty-four hours if the houses i want to see are in different locations. A journey that should hold taken 45minutes to 1hour terminal up taking 3 or 4hours because of traffic congestion, you have merely a really short window of clip to travel about if you do n’t desire to be caught in the first-come-first-serve hr traffic jam. There is a really hapless MSME informations aggregation in Nigeria even with the so called organic structures established by the Government and private organic structures to assist and organize the SMEs. This deficiency of informations created troubles in obtaining the coveted sampling frame. The individual that was to be my contact in SME development Centre said that I have to pay him before he can assist me. Some of the interviewed enterprisers and concern directors were unwilling to portion information while others gave out false information in some instances. Some of them are leery that the information obtained might be shared with their challengers even after all the confidences given to them that the informations are strictly for research intents. There was a drug fabrication company were I went to more than three times with assignment and could non still see the director or concern proprietor. In some instances I have to direct soft transcripts of the questionnaire per electronic mail because the 1s I dropped for the director was misplaced or non given to the designated individual. One of the enterpriser asked me if there is any direct benefit that his company will obtain from my research, that the governments does non care if they are doing net income or non. In one of my assignments in the outskirts of Lagos, I have to park my auto and utilize a motorcycle because the route was so bad that its lone trucks and possibly 4wheel thrusts that could travel through without acquiring stuck.

Changes made in research design

The first major alteration was to diminish the figure of MSMEs to be interviewed from 100 to 63, Lagos is a really large metropolis and traveling from one location to the following is a really large challenge.

The 2nd major alteration made to the original research design was trashing one of the two questionnaires ; the questionnaire for the enterprisers had really small alteration while the 1 for the recognition establishments was discarded due to the trouble in making the officers or caput of SME subdivisions which can`t be found in all subdivisions but the caput offices merely.

The 3rd alteration was made in the interview guide administered to the enterprisers and MSME proprietors. Some inquiries were dropped or changed after the pre-testing of the usher to modify and accommodate to the jobs being faced.


The information collected was organized and analyzed by utilizing the Statistical Package for Social Scientists ( SPSS ) computing machine plan. Descriptive statistics were used to depict the general features of the sample, variables and indexs and relationships between them.

Properties of the sample

The sample was heterogenous in nature. It consisted of different features such as: age groups, gender, places in the concern, instruction degrees, different activity lines, and concern position and operation countries. The subsequent subdivisions illustrate each property in item.

Age of respondents

The sample consists of grownups with age scope from 18 to 65 old ages as presented in the figure1 below.

Education degree

Position of gender of respondents

Line of activities

Business position

Area of concern operation

Properties of variables and indexs

Training offered to MSMEs

SMEIES services provided to MSMEs

Training offered to MSMEs

Business incubation services

Utility of SMEIES fund to SMEs

Awareness of SMEIES to MSMEs

MSME capacity sweetening

Formalization procedure

Technology acquisition

Generation/Introduction of new merchandises

Utility of webs to MSMEs

Entree to export markets

Relationship between the variables


Micro, Small and average graduated table endeavors are long believed to be instrument of economic growing and development. This has been true in developed economic systems as experience in the United State of America, Britain, Japan, Germany and many other developed and industrialised states. The same can non be said of the development states, peculiarly Nigeria where most SME public presentations are abysmal. There are more than adequate policies from the Government that promote and support MSME development in Nigeria but the job lies in the execution of those policies and the creative activity of consciousness for the multitudes and concern communities. Most corrupt functionaries hijack these policies and doing it really hard for echt SMEs to profit without giving payoff or being dealingss to powerful politicians or dealingss to those functionaries in charge of the financess expense.

The research worker noticed other jobs that like dumping which most makers and bargainers complained bitterly about forces clients to purchase the inexpensive foreign goods instead than the place made one. Nigeria is still a 3rd universe state which makes the purchasing power of people there to be low, people prefer to purchase inexpensive goods than purchasing original 1s that will last certainly longer than the inexpensive 1s. A consonant revenue enhancement for MSMEs will travel a long manner in


The restraints and jobs identified in the survey greatly affected the industries and partially explicate the grounds behind the not-so-good public presentation recorded by SMEs during the period of the research. The undermentioned actions are hence suggested to be taken by Government and other stakeholders to better the public presentations of SMEs in Lagos State and Nigeria in general.

a. Since Government policy steps influence the environment under which these industries operate, deliberate policy is needed on the portion of Government to make clime that is contributing and favourable to the growing, development and profitable operation of little and average sized industries. Consequently, it is recommended that Government strengthens SMIEIS, BOI and other funding Windowss and lower involvement rates and other cost of financess and besides see the enlargement, in range and operation, of the Industrial Development Centers, and heighten other beginnings of finance available to the industries. The SMEs could besides set up a fund to finance their on the job capital and average term loans and do the best usage of hire purchase options instead than straight-out purchase. There is besides the demand to give equal promotion to intrigue that are intended to profit the SMI.

B. Improvements in substructures such as changeless supply of electricity, H2O and transit systems are rather necessary. This will cut down initial and operating costs to the industries. Therefore, unless the state of affairs of power and alternate energy supplies are addressed, the makers, little, medium and big, will go on to see terrible restraints in operation and their merchandises will of all time stay less qualitative and uncompetitive. Besides, Government has to take speedy actions to better the security and route web conditions because these substructures are besides cardinal to concern operations.

c. The ongoing reforms particularly in the power sector should be efficaciously and expeditiously implemented without farther hold so as to turn to epileptic power supply job in the state. Adequate inducements should be given to promote investing in the energy sector. This will assist in turn toing deficits presently witnessed in power supply. Adequate investing inducements should be put in topographic point to promote investing in Independent Power Project ( IPP ) . This could be patterned along the line of bunchs ( micro grids ) , which will bring forth power and feed the national grid. This is of import, given the current short autumn in energy coevals and the demand to hike capacity enlargement in future. The fabrication sector could take part in this strategy through energy Service Companies.

d. The issue of insecurity should be desperately addressed, as investors ‘ assurance will be eroded.

e. Small and Medium Enterprises Equity Investment Scheme ( SMEEIS ) should supply a wide mix of installations including loans and working capital support. The strategy should turn to the current reluctance of Bankss to back up Small and Medium Enterprises.

f. The rehabilitation of the bing route webs every bit good as the building of new 1s should be given precedence by the authorities. This will ease free flow of goods and services. The railroad transit system in the state peculiarly the railroad should be wholly overhauled and made functional to cut down transit troubles.

g. The Manufacturing sector, as a consequence of the current substructure degeneracy will for sometime remain uncompetitive. Therefore, authorities demands to exert political influence on ECOWAS to set on keep the ongoing dialogues on the Economic Partnership Agreements between European Union and West African States.

h. Government should harmonise revenue enhancements and levies to cut down torment of SMI and heighten contributing environment for making concern ;

I. MAN, NASSI and NASME should set up an Agency to function as a platform for obtaining contracts from Government and to beginning and procure majority natural stuffs at lower costs and beginning markets for SMI merchandises ;

j. Nigerians are called upon to be loyal and patronize merchandises made by SMEs.

k. To hike the development of local natural stuffs, there is the demand for increased local content sourcing and use of natural stuffs by industries that will promote inter-industry linkages and cut down dependence on imported 1s.

l. There is the demand for Government to develop its petrochemical and steel turn overing Industries, as these histories for over 60 % of natural stuffs demands and to circulate and commercialize the research findings of assorted research bureaus.

m. The study consequence suggests that SMEs employ Nigerians in all cells, and this is healthy for Nigeria with big human resources. This farther suggest that the demand for Governments calculated intercessions to ease enlargement in the sector and considerable addition in capacity use to make room for new employment chances and aid in employment coevals. The thought of cost control has long been introduced to big concerns and its construct developed and put to utilize for their ain benefits. The evident features, restraints, challenges and jobs of the little and average sized industries made it more appropriate for them to develop strategies that could heighten the development and usage of sound cost control techniques for the endurance and growing of the Industries.

n. Management should, through the budgeting, engagement procedure, and the assignment of duty, create an environment which allows the workers to develop their full potency and to exert duty through ego control. There is the demand for little and average sized industries to present incentive strategies that secure workers ‘ committedness towards accomplishing lower limit costs to the organisations. Non-economic inducements should reenforce the economic 1s, instead than being at odds forces. Management may besides supply such extra strategies as may counter the hostile attitudes of lower direction and non-supervisory workers towards cost salvaging devices that may be introduced by it.

o.To salvage Government-controlled industries, there is the demand to encompass the plan of privatising the industries. Full commercialisation will non be a sufficient redress, as this alternate allows the Government to hold significant say in wide policies and assignment of Directors and top direction staff. Denationalization entails the dismantlement of Government shareholding and control in SMIs and the transportation of such ownership and control to private investor. Other benefits that will accrue from the denationalization strategy include the followers: –

( I ) It will alleviate authorities of immense and turning load of financing the investing and working capital demands of the industries. This will liberate fiscal resources to run into other pressing societal committedness of authorities.

( two ) By liberating the SMEs on trust on authorities subventions, denationalization will promote them to finance other operations through the capital market and fiscal establishments.

( three ) The plan insulates the companies from Government intervention in their directions. This will enable them to liberalise buying processs, apologize labour and staff patterns, better internal efficiency and heighten better public presentation.

p. Government should ordain Torahs censoring inexpensive goods from China or other goods being dumped by other western states or increase the responsibilities for such goods so that the locally manufactured 1s can still be competitory.

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