The problem of capital security in
the operations of small-scale enterprises has been a major obstacles to the
development of industrial sectors and this explains why government financial
assistance has been manly directed towards this direction. In recent times, the
government has devoted a lot of financial resources to this secret in order to
liberate the entrepreneurial skill of Nigeria.
The Nigeria Bank for Commerce
and Industry (NBCI) through loan and equity participation, finance business
start ups and expands the business with emphasis on manufacturing and service
oriented small-scale and medium-scale firms since 1980.
In 1989, National Economic
Reconstruction Fund (NERFUND) was established by degree two to correct the
short fall in the provision of fund to small and medium-scale enterprises. By
September, 1990, the fund had been able to mobilize N5.6 billion in domestic and foreign currencies for lending the
local enterprises (since 1986) another important government programmes for
small-scale business sectors is Small And Medium Scale Enterprises Loan
Facilitating (SMELE) design to boost finance to the sector. Its total fund base
in put at N415.8 million with
three credit components.
These consultancy, training and working capital needed
for the establishment for the establishment of new small-scale business and
expanding existing ones, pilot credit guarantee schemes and equipment and
leasing funds to consist small-scale enterprises that are undercapitalized. In
the same way, the credit guarantee scheme is expected to be funded by the three
levels of government in Nigeria, the Central Bank and NERFUND.
Another is the establishment of
micro-finance to assist the small-scale enterprises, though such banks have
been established as planned but the outcome is not encouraging, the banks are
not carrying out their duties as expected, in the sense that those who truly
needs the assistance are not the ones which the loan is given to and also the
producers involved in collecting loans is not easy as most of the owners of
such businesses are not learned. Small-scale enterprises can be financed
through debt capital which can be raised from various sources; it includes
banks such as commercial banks, merchant and development banks, private
financial institutions and other financial intermediaries of various
instructions. In addition, financial assistance is also contained in the
monetary and credit guide lines which vary from year to year depending on the
basic aim of increasing loan facilities to the sector at considered rates.
Fiscal policy measures such as pioneer status, import tax relief, import duty
relief, capital’s depreciation allowance and other forms or tariff measures
have been put in place to create assistance or aids as budgetary measures,
Ochejele (1992).
Federal government active
participation in promoting small-scale enterprises is also traceable to the establishment
of Industrial Development Centre (IDC). Essentially, Industrial Development
Centers are aimed at providing extension of loan application, training of
entrepreneurs, managerial assistance product development, product planning and
control and other extension services. Apart from the Owerri Industrial
Development, other Industrial Development Centre have been initiated at Zaria,
Kano, Port-Harcourt, Oyo, Ikorodu, Benin, Oshogbo, Bauchi, Kano and Abeokuta,
thus over the years the government has provide an array of assistance to
enhance the operation of the small-scale enterprises in Nigeria, Oyewande
(1991).