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INTRODUCTION
Nigeria as a nation, has gone through the first two stages, the first being a situation where the economy is dominated by subsistence activity where output is consumed by producers rather than traded. Any trade is carried out by barter where goods are exchanged directly for other goods. Agriculture is the most important industry and production is labour intensive using only limited quantities of capital. Resource allocation is determined very much by traditional methods of production.
The Central Bank of Nigeria defines small and medium enterprises in Nigeria according to asset base and number of staff employed. The criteria are an asset base between N5 million and N500 million, and a staff strength between 20 and 300 employees.
Medium-scale businesses typically result from the slow and steady growth that results from a successful small business. As a company earns more revenue, it sets aside the capital needed for buildings, equipment and more employees, eventually bridging the gap between small business and large corporations. The Small Business Administration can audit the size of your company and provide a definitive answer concerning its status as a medium-sized business.
The definition of medium-sized industries may vary among different countries throughout the world, making business dealings complicated to companies that aren't prepared. For example, medium-sized businesses in the United Kingdom may have up to 250 employees, far short of the 500-employee limit of most United States medium-sized companies. A medium-sized U.K. business may have trouble partnering with certain U.S. medium-sized businesses because of the production differences.

CHARACTERISTICS OF A SMALL-SCALE BUSINESS
A few examples of small-scale businesses include a flea market or shopping mall booth, a consultancy business, or even a computer repair shop that moves into retail space. Small-scale businesses typically consist of one owner and his shop. The business owner sells products and/or services supplied by a franchise company or created by the owner himself. This type of business is flexible, which means that the owner can generally set hours at any time to accommodate customers.

LOW STARTUP COSTS
The initial startup costs for a small-scale business are usually pretty low, depending on the specific business model and what products or services are being sold. A small-scale business selling retail goods at flea markets will only need funds to buy initial inventory and pay for a spot at the flea market. Likewise, the owner of a small business selling homemade goods only needs to worry about purchasing materials to make the goods. Small-scale businesses that offer consultation services, such as tax preparation or nutritional services also have very low overhead costs.
Portability: A small-scale business is generally portable, making it easy to set up and tear down. Holiday gift shops that sell candles and novelty items are a perfect example of portability; all that's typically required is empty space at a shopping mall with a small table or booth to display products. Small-scale businesses also need a way to accept payments. Small credit card terminals and portable cash registers are perfect for these needs.
Employees: Usually very few employees, if any, work for a small-scale business. This type of business may have one or two employees for busy times. Typically, however, such businesses cannot afford to pay wages since a majority of the profits goes back into the business or pays for the owner's personal expenses. As such, owners often staff small-scale businesses themselves, allowing them to keep whatever profits they make.

BENEFITS OF SMALL AND MEDIUM-SCALE BUSINESS TO THE ECONOMY
1. Stimulation of indigenous entrepreneurship.
2. Development of local technology.
3. Production of primary and intermediate product.
4. Promotion of effective resource utilization.

PROBLEMS MILITATING AGAINST SMALL AND MEDIUM-SCALE BUSINESS
1. Poor capacity building.
2. Inadequate/poor infrastructure.
3. Lack of institutional credits.
4. Shortage of technical expertise.

ROLE OF BANKING SECTOR IN DEVELOPMENT OF SMES

The role of the banking sector in the failure of sme's in Nigeria cannot be over flogged; a study identified poor access to finance as the most critical constraint on small and medium scale enterprises in Nigeria. In fact, 50 percent of the surveyed enterprises received external finance while 79 percent indicated lack of financial resources as a major constraint (see Guardian, Nov, 26, 2001). In Dec. 2001, the bankers committee decided that all banks in Nigeria would set aside 10% of their profit to start a scheme called the Small and Medium Industries Equity Investment scheme, left to me this was a charade because by the definition of the scheme a small business is "any enterprise with a maximum asset base of =N=200 million excluding land and working capital and must have a staff of a minimum of ten people and a maximum of 300 people" it therefore means that over 70% of the population have been disenfranchised from using this scheme and only those in the upper echelon of society can use the scheme and therefore the aim of starting up small businesses that will grow into mega companies is defeated. The Nigerian banking sector `does not have the requisite manpower to help develop the economy. Their staffs are not trained to seek out small businesses that would yield good dividends in the long run; they only know how to go after deposits.

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