CHAPTER ONE
1.1 INTRODUCTION
One of the prominent features of the
economic structure of most developing countries are the small side contribution
to government development plan made by industrial sector. Consequently, many of
those countries are presently faced with problem of formulating and
implementing a well conceived programmed a industrial development plan that
will reverse the unfortunate trend ensuring that this dream of a perfect,
integrate and consistent patter of industrialization is achieved, such storage
must be appropriate to these countries condition and levels of development. it
is in this line that small seek industry has been recommended to fill the gap.
The theme of this study is financial
problem facing small scale industries is kwara state. The study aims at
throwing more light on the basic problem facing small scale industries which is
relevant to the
economy and by viewing the available source of finance in some small scale
industries in kwara state.
More over, the present economic
situation in the country calls for serious attention to be paid to
diversification. A situation where a country depends mainly on a single product
for the foreign exchange earning is dangerious. Hence, any effort to develop
the impact substituting industries should be encouraged small industries
present an opportunity for the country to provide locally and therefore limit
to a considerable extent the drain on our foreign exchange.
Lastly, any measure for developing the
rural urban migration should pay a greater attention to the public and
development of the small scale industries.
1.2 IMPORTANCES OF SMALL SCALE INDUSTRIES
It
could be right to also why the research the study important.
The importance of the study originated
from the single fact that finance is the life wire of any business. It can be
looked at as the ability to purchase things. Finance is sued by a business in
its operation just as much as labour and materials purchasing power can transfer
from one person to another by lending of money and can thus, be supplied to business
of a price just as physical goods and services of labour. Like market and
labour finance should be bought in the favorable market and used in the most
effective and economical ways
Also the important of small scale
industries is better evaluated against
the background of the objective laid up for it in peculiar circumstances prevailing
in various countries of the world especially it’s contribution towards removal
of bottlenecks and other inhibition of industrial growth). Among it’s very
grant importance is it’s contribution toward removal of indigenous entrepreneur
initiative for modern industrial development as emerging industrialist build up
their potential in the small scale industries for the greater task of
industrial management.
The prevalent problems of shortage of
funds skilled labour is steamed through the encouragement and establishment of
industries requiring affordable capital and skilled labour of small scale
industries.
The problem of limited market is
involved through localization of production centers is primary market area. The
income and therefore effective demand of the people is increased through
increased employment for the rural labour force.
Furthermore, the scheme permits special earliest
facilities to be find the establishment that have nothing to attract the
instructional credit agencies and these facilities the acquisition of machinery
raw material factory accommodation as well as encouraging manpower training.
Also, the inform, choice of ambitions
industrialist in term of technology industry or product lines plant size
equipment product process will be greatly reduced when they have personally
experienced small specialize industries with requirements commitment and risk,.
Management techniques are also advanced
in the small scale industries to facilitate the growth of management and
marketing potential of indigenous industrialists as to be able absorb demand
change of the growing and complex society.
Small businesses also pre-empty the used
lack of knowledge on standard and appealing product designs that are common
with small scale industrialist of developing countries.
Lastly, fervently hope that useful ideas would come out for
investors on the source of finance and obtaining some when required.
1.3 SCOPE OF STUDY
As earlier mentioned the focus of this
study was financial problem facing small scale industries in kwara state the
research project examine and studies the related problem and prospects in the
investment of small scale industries in kwara state with particular reference
to Global soap and detergent industries ilorin located in Ilorin the state
capital and as a barometer of activities of small scale industries in other divisional
head quarter and in Nigeria at larger. This research work has therefore enunciated
the back problem setting small scale industries in raising funds to finance its
programme.
More over, the questionnaires which have
been distributed and filled deals with certain questions aimed to prove social
background of the respondent as it can affect their business life. Other
special questions deal with capitalization staff straight government role in is
development, assistance needs and recommendations.
Information have been collected from the
ministry or trade and industry, kwara state investment corporations federal
ministry of trade business registration units official sets.
However in view of the fact that only
fifty small scale industries have been served questionnaire all of which were
located in
township it was not possible to make a broad nation wide generalizations of the
result obtained.
1.4 RESEARCH METHODOLOGY
The approach to this research consist of
fold work questionnaire have been distribution to a randomly selected investor
within the town and where some of the respondent cannot read and write the
research has helped to fill the questionnaire on their behalf. After the
questionnaire have been completed and returned to the researchers the data been
transcribed into analysis data sheet and prepared for small scale industries.
The questionnaire had been divided into such a way
that it had shown a section for personal information capitalization staff
strength and a section dealing with problem of incorporation and useful
suggestion for future development.
Data were collected through personal interviewed
journals text books business and daily newspaper financial reports by eminent personalities
and periodicals.
1.5 Hypothesis
Hypothesis can be defined as a tentative
assumption made in order to draw out and text its logical and empirical
consequences it can be denied as a position condition or principle which is
assumed perhaps without behalf in order to draw out its logical consequences
and by this method test its accord with facts which are known or may be
deteremined. Four hypothesis were formulated to determined the factors
responsible for poor investment in small scale industries.
i Poor financial affect the success of
small scale industries.
ii Lack of credit facilities from banks and
other financial institution affect the chance of success in small scale
industries
iii Poor management is largely responsible for
the inability of the small scale industries to survive in the small scale
industrial sector enjoy little patronage from the government.
THEORETICAL CONCEPTS AND ITS CHARACTERISTICS
The definition of small scale industry
concepts at any point in time could this is because the industrial covered by a
university acceptable definition of small scale industry in any particular
state or country no means definitive. As far as the industry of kwara state is
concerned the term small scale industry has undergone a lot of revision through
time. For example at the inception we used to refer to such industries
concentration in the financial bracket of
N500. This was later revisal to
industries with invested capital of between N1000-N5000,000 to be given to
small scale industries.
Today, definition also permit the
inclusion of establishment employing up
to fifty people. Nevertheless, it is regarded as feasible option to solve
problem of industrial development. As a result of small scale industries have
been assigned very important roles in economic developing countries. The centre of management
studies.
of .
has classified small scale industries
into four groups, These are;
i.
Handicraft and cottage
industries which are usually establishment employing up to nine person.
ii.
Small scale industry
which are establishment employing 10-99 person.
iii.
Medium scale industry
employing 100-249 person.
iv.
Large scale industry
employing 250 person or more.
The
same centre defined a small scale industry as an industry in which managers personally perform all the functions
of management without taking active part in the production. Since in almost all
cases in establishment employing below
ten person, the manager or proprietor actually participates in production . Handicraft
and cottage industries will be excluded from the centre are accepted.
CHARACTERRISTICS
Small scale industry is most often characterized by
the managers being the owners.
Independent in this case means that it is independence from outside
share holder control over management decision. The same manager or proprietor
handles or supervises the financing production marketing and the personnel of
the enterprises.
Equity capital is supplied by an
individual or group this places the small scale industries is contract to
companies where equity stock are traded on stock exchange .
The manager or proprietor finds it
difficult to borrow shot term or long
term capital through organizational financial institution but relies heavily on relations
money under personal savings or profit
of enterprises.
The operations of small scale
business are essential local, one interpretation of this is that the local may varies
with weather there is saves
retailing whole sailing or manufacturing
. however, local usually means that the employee and owner live in the same
general areas. For whole selling and manufacturing business particularly market
may be else where but production of the warehouse function would usually be in
one location. The industry closely integrated
with and meet only the immediate need of wider or distance market.
The establishment is generally weak
poorly equipped and relevant to request
or even accept assistance for
reason of ignorance prejudice or fear that
information about the enterprises might reach the tax authorities or a near by competitor.
The rate of failure is high because of
the dominance of the sole proprietor. Although since it is relatively easy for
single individual to start a small industry the replacement rate is not also
high and the number of unit has a tendency to multiply.
Little or no account of business cost
and revenue is kept and the banking system is hardly utilized is kept and the
banking system is hardly utilized the result is that banking facilities for
business financing and expansion are exported to only few of the industrialist.
The level of education of the proprietor
is usually very low with a consequent low level of business management
techniques skill and market information.