Present Situation of Small Scale Business in Nigeria

Present Situation of Small Scale Business in Nigeria

Presently, small scale organization shows their greatest strength in the ears of wholesale retailing service industries and contract construction.  But the truth is that most of these industries are experiencing dwindling fortunes.  This has been blamed partly on the consumers ebbing purchasing power.

Nigeria is presently experiencing unprecedented inflationary trend according to Nzelibe (1996) “the federal government introduction of structural adjustment programme in Septembers 1986 has pushed up prices of commodities to the point that capital investment on goods rewires a large sum of money. “much of everyday thinking of financial matter new centers on strategies for dealing with inflationary effects on the value of naira.  Evidence abound that naira does not change in value with the passage of time but in its purchasing power which has been so weakened drastically by inflation that the survival of small scale business is harder than ever before.

There are speculation in international monetary funds quarters that if things do not change their will be eminent failure of most small scale business in Africa and other third world countries. This, Nigeria which was once describe as the richest country in Africa is now graded as one of the poorest country in African.  This promoted Mazi Olouabunwa (1998) to opine that government should as a matter of urgency adopt measures to address these problems in the 1998 budget.  Such measure he said should induced salary/ wages increase reduction of personal income tax as well as ensuring the government to reduce the tariff charged on imported raw materials as well as eliminating multiple taxes charged by the three tiers of government.  The present situation of small scale business in Nigeria is also compounded by government policies of allowing cheap imports from Asian countries which is presently being felt mostly in soap manufacturing industries cosmetics and other durable goods.

Also Nigeria prolonged period of inflation which has invalidated most economic statistics to data, makes it more complex for any sound furcating about the failure of economic  conditions for small scale business.  It becomes all the more different when inflation is operating at four hundred percent level.  Small scale enterprises cannot borrow money from banks and financial institutions now because they are being restrictive in their lending policy and their interest rates are too high for many small scale investors.  Nzelibe (1996) bring us to accept that small scale investors cannot ignore inflation, but must take positive actions to deal with it for the survival of their business during this turbulent economic  times. They should endeavour to deal with the day to day situation as best as they can.  They must anticipate and accommodate inflation within their plans even before it come by being alert to make every possible change in these cost which they can control.

Here are some suggested survival guides for small scale enterprises owner during inflation

These include:

1.       Avoid sales for credit and ensure adequate cash flow.

2.       Do everything possible to increase productivity.

3.       Increase inventory carefully on popular items and drop non-moving items

4.       Be prepared to change course rapidly on events of sudden down turn

5.       Eliminate cost in every way possible.


In Nigeria small scale industrial development as a conscious strategy for propelling the growth of the economy could be said to data back to the early years of post independence.  Strategy provides a business organization the concept of its business activities.  The logic of the importance of strategy formulation is that organization has a strategy either consciously or unconsciously formulated.  This is why Stonner (1982) defines strategy as the  overall response of a business organization over its environment.

According to O.B.A. Obanla (1989) various policies and schemes have been ill-fated to because and are now long forgotten in Nigeria.  Note able in sight among past policies and schemes are the establishment of the federal loans board and the regional corporations the small scale industries credit scheme (SSICS).  The creation of industrial development centers (IDC) relevant ministerial establishment of federal and state levels in the civil service.  the Nigeria bank for commerce and industry (NBCI) initiatives and others are the  central bank of Nigeria (CBN) small and medium enterprises (SME) a pose loan schemer to the economic reconstruction fund.  The national directorate for employment (NDE), small scale industry (SSI) and graduate employment programme and other initiatives.

A comprehensive account of low the government wish to embark on the promotion and development of small scale industries was given in the third national DEVELOPMENT plan (1975-1980).  It explicitly stated that the main objectives of a programme for the development of small scale industries were the creation of employment opportunities, mobilization of local resources, mitigation of rural-urban migration and more over distribution of industrial enterprises in different parts of the country. These were to be achieved through complementary assistance to small scale entrepreneurs in financial management and technical aspects.  The main vehicle designated for administering the incentives were the industrial development centers (IDC) and the state small scale industries credit scheme (SSICS)

According to Obank (1989) it was certain that the relevant authorities had not lacked very reasonable and realistic recommendations for the development of the small scale enterprise sub-sector.  What appeared to have been lacking was the will power to evolve appropriate institutional mechanisms for enduring a comprehensive co-ordinated   system of assisting policy formulation implementation and appraisal.  The result was that achievement of government programmes was not commensurate to expectation.

The cornerstone of the existing assistance programme was the small scale industries credit scheme (SSICS) under which supervised credit loans were given to small- scale industrialists.  The ministry of commerce and industries in Delta state undertook the scheme through its small scale industries division.  Also the state ministry of commerce and industries provided facilities for advisory service appraisal of feasibility studies in plant services for sick industries and consultancy service to the small scale industries.

It was this quest for more that spurred this investigation into carrying out the study with a view to suggesting resilient policies strategies and instruments for the systematic and rapid development of small scale industries in Nigeria.


It is very glaring in Nigeria that government business policies and programmes have been directed to large scale business enterprises to the detrainment of small scale business.  In recent years the large scale enterprises have been constantly enjoying such direct benefit as credit, foreign exchange & protection from sever competitions through quotas and licensing in some cases small scale business enterprises are ignored and at best paid up service by the government concerned.  Business within this class operates largely outside the system of government benefits and hence has little or no access to the formal credit institutions.

But having realized that small scale industry is the bedrock of the countries economic development, government has set up many institutions to help in providing the needed support to finance these enterprises. To this end a mix of  financial institutions have evolved over the years which include the following:


The small scale industries credit scheme was introduced in the years 1971 by both federal and state government to assist in meeting the credit need of small scale enterprises.  They are more liberal to small scale entrepreneurs in meeting certain conditions than the private lending institutions such as commercial and merchant banks.  The problem that led to the dept of this programme is the problem of inadequate funds especially at the loans as well as those benefiting from the loans. As a result of this government backed out of the scheme in the year 1979& establish the Nigeria bank for commerce and industries ( NBCI) as the apex credit institution to assist small scale enterprises .


This was established by the federal government of Nigeria in 1978, this is the apex institution for financing small scale enterprise.  One of the reasons of setting up this bank is to bring some prudence and financial discipline to bear on small scale enterprise scheme (SSES) as well as small scale industries credit scheme and hopefully ensure a more efficient utilization of scarce financial resources for the development of viable small scale business. In addition to its regular lending functions, the bank is to administer the federal ministry of industry’s special fund for small-scale business under a soft loan agreement.  The source of fund for NBCI includes equity capital grants from the government and short falls arising from commercial and merchant bank.  Inability to meet the recommended lending levels to small-scale business under the central bank credit guidelines.

—This article is not complete———–This article is not complete————
This article was extracted from a Project Research Work/Material Topic

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