Project – Contribution of support to growth of small and medium enterprises (SMEs). A study of Ikeja local government Area, Lagos State
CHAPTER ONE
INTRODUCTION
- Background to the Study
The contribution of support to the growth of small and medium enterprises (SMEs) in Nigeria has been a subject of extensive research. According to a study by Oyelana et al. (2018), the support provided by the government and other institutions plays a significant role in the growth and development of SMEs in Nigeria. The study found that financial support, in the form of loans and grants, significantly impacts the growth of SMEs, enabling them to expand their operations and increase their profitability.
In addition to financial support, the role of non-financial support cannot be overlooked. A study by Akinboade and Kinfack (2013) highlighted the importance of non-financial support, such as training and development, business advice, and networking opportunities, in enhancing the growth of SMEs. The study found that these forms of support help SMEs to improve their management skills, understand market dynamics, and build strategic relationships, which are crucial for their growth and survival.
However, the effectiveness of support to SMEs in Nigeria is influenced by several factors. According to a study by Oyewole et al. (2013), the impact of support on SMEs’ growth is moderated by factors such as the business environment, the level of entrepreneurial skills, and the accessibility of the support. The study suggests that for the support to be effective, it should be tailored to the specific needs of SMEs and should be easily accessible.
Despite the significant role of support in the growth of SMEs, there are challenges that limit its effectiveness. A study by Oke et al. (2013) identified several challenges, including inadequate funding, lack of awareness of available support, and bureaucratic procedures in accessing support. The study recommends that these challenges should be addressed to enhance the contribution of support to the growth of SMEs.
The role of support in the growth of SMEs in Nigeria is also highlighted in a study by Oyewole et al. (2013). The study found that support, particularly in the form of financial assistance and business advice, significantly contributes to the growth of SMEs. However, the study also noted that the impact of support is not uniform across all SMEs, suggesting that the effectiveness of support may depend on the specific characteristics of the SMEs.
In conclusion, the literature suggests that support plays a significant role in the growth of SMEs in Nigeria. However, for the support to be effective, it should be tailored to the specific needs of SMEs, should be easily accessible, and the challenges limiting its effectiveness should be addressed.
- Statement of the Problem
The growth and development of Small and Medium Enterprises (SMEs) in Nigeria have been stunted due to a myriad of challenges. Despite their significant contribution to the Nigerian economy, SMEs are often overlooked in terms of support and resources (Aremu & Adeyemi, 2011). The lack of support for SMEs has resulted in a low growth rate, which in turn affects the overall economic development of the country.
One of the major problems faced by SMEs in Nigeria is the lack of access to finance. According to a study by Oyelana & Adu (2018), SMEs in Nigeria struggle to secure loans from financial institutions due to high interest rates, stringent collateral requirements, and a lack of credit history. This lack of financial support hinders the growth and expansion of these enterprises.
Another significant problem is the lack of infrastructural support. SMEs in Nigeria often operate in environments with poor infrastructure, such as inadequate power supply, poor road networks, and limited access to technology (Oyelana & Adu, 2018). This lack of infrastructure not only increases the cost of doing business but also limits the potential for growth and expansion.
Furthermore, the lack of skilled manpower is another challenge faced by SMEs in Nigeria. According to a study by Aremu & Adeyemi (2011), many SMEs in Nigeria lack the necessary skills and expertise to manage their businesses effectively. This lack of skills and expertise often results in poor business performance and low growth rates.
The lack of government support is also a significant problem. Despite the critical role of SMEs in the Nigerian economy, the government has not provided adequate support in terms of policies and programs to foster their growth (Aremu & Adeyemi, 2011). This lack of government support has resulted in a hostile business environment for SMEs.
The lack of support for SMEs in Nigeria is a significant problem that needs to be addressed. Without adequate support, SMEs in Nigeria will continue to struggle, and their potential for growth and contribution to the economy will remain untapped. Therefore, there is a need for concerted efforts from all stakeholders, including the government, financial institutions, and the private sector, to provide the necessary support for the growth and development of SMEs in Nigeria.
- Aim and Objectives of the Study
The aim of the study is to examine the contribution of support to growth of small and medium enterprises (SMEs). The specific objectives are:
- To find out if Government financial support can improve the performance of small and medium enterprises (SMEs) in Nigeria.
- To analyze the types and levels of support currently available to SMEs in Nigeria.
- To assess the impact of these support systems on the growth and development of SMEs in Nigeria.
- To identify gaps in the current support system for SMEs in Nigeria and propose potential solutions to address these gaps.
- Research Questions
The research questions are buttressed below:
- To what extent will Government financial support improve the performance of small and medium enterprises (SMEs) in Nigeria?
- What types and levels of support are currently available to SMEs in Nigeria?
- What is the impact of these support systems on the growth and development of SMEs in Nigeria?
- What are the gaps in the current support system for SMEs in Nigeria and what potential solutions can be proposed to address these gaps?
- Research Hypothesis
The hypothetical statement of the study is stated below:
Ho: Government financial support cannot improve the performance of small and medium enterprises (SMEs) in Nigeria
Ho: Government financial support can improve the performance of small and medium enterprises (SMEs) in Nigeria.
- Significance of the Study
The significance of the study on the contribution of support to the growth of small and medium enterprises (SMEs) is manifold and far-reaching. Firstly, this study will provide a comprehensive understanding of the current state of SMEs in Nigeria. It will shed light on the challenges and opportunities that these enterprises face, thereby providing a realistic picture of the SME landscape in the country. This information is crucial for policymakers, investors, and entrepreneurs who are interested in the SME sector.
Secondly, the study will analyze the types and levels of support currently available to SMEs in Nigeria. This includes financial support, infrastructural support, and capacity building initiatives among others. By doing so, the study will provide a detailed account of the support mechanisms in place for SMEs, which can be used as a reference point for future initiatives.
Thirdly, the study will assess the impact of these support systems on the growth and development of SMEs in Nigeria. This will provide empirical evidence on the effectiveness of these support systems, thereby informing future policy decisions and strategies aimed at promoting SME growth.
Fourthly, the study will identify gaps in the current support system for SMEs in Nigeria and propose potential solutions to address these gaps. This will contribute to the body of knowledge on SME development and provide practical recommendations for improving the support system for SMEs in Nigeria.
Fifthly, the study will contribute to the literature on SMEs in developing countries, particularly in the context of Nigeria. It will add to the existing body of knowledge and provide a basis for further research in this area.
Lastly, the findings of this study could potentially influence policy decisions and strategies aimed at promoting SME growth in Nigeria. By identifying the strengths and weaknesses of the current support system, the study could guide policymakers in designing more effective support mechanisms for SMEs.
- Scope of the Study
The study examines the contribution of support to growth of small and medium enterprises (SMEs). A study of Ikeja local government Area, Lagos State.
- Operational Definition of Terms
Contribution: In the context of this study, contribution refers to the role or influence that a particular factor, such as support, has on a specific outcome, such as the growth of SMEs. It can be seen as the input or effort made to achieve a certain goal or result.
Support: Support can be defined as the assistance or backing provided to an individual, group, or organization. In the context of SMEs, support can come in various forms, including financial aid, training, resources, or advice, which are provided to help these enterprises grow and develop.
Growth: Growth refers to the process of increasing in size, quantity, value, or strength. In the context of SMEs, growth can be measured in various ways, including the increase in revenue, expansion of workforce, or the ability to reach new markets.
Small and Medium Enterprises (SMEs): SMEs are non-subsidiary, independent firms which employ fewer than a given number of employees. This number varies across countries. The most frequent upper limit designating an SME is 250 employees, as in the European Union. However, some countries set the limit at 200 employees, while the United States considers SMEs to include firms with fewer than 500 employees. SMEs are crucial for the economic growth and employment in many countries.
Project – Contribution of support to growth of small and medium enterprises (SMEs). A study of Ikeja local government Area, Lagos State