The
concept “small scale enterprise” has been defined in many ways by many authors
or scholars to suite their environment and thinking. Small-scale enterprise has
contributed enormously to the development of Nigeria economy via employment
generation, income creation, and poverty reduction. Of course, this can be seen
in the number of effort made by the government to develop this sector.
The topic “problem and prospects of
financing small-scale enterprises in Nigeria” has been thought for concern for
most researchers in our country. This is not only because small-scale
enterprise have a lot to offer to our society or the inaccessibility of the
small-scale enterprises to acquire resources to operates upon, but because the
mechanism of operations employed by them is subjected to the influence of the
market.
Notable
among the writers is Drucker (1977.p.6), who stated in his work that in every
developing country, except those in which government totally owns, runs and
controls in the economy, small business have proven themselves to be a major
vehicle of development and the engine of social and economic growth.
According
to Scholder(1998), collaborated Druckers view, he believes that small business
can offer a good solution to the twin problem of a pressing need for higher and
increasing employment. The above fact portrays the importance of the survival
of small business in the content of national development.
In general
terms, the meaning of small-scale enterprises varies from country to
country,
enterprise to enterprise as well as financial institution to another. There
have been attempts by many authors to define small-scale enterprises in terms
of employments, asset and value or money sales volume, though the definition
has proven unsatisfactory in some respect. This irresolution stems largely from
the averse character of varying enterprises to the cost of project which is
used as an interior or parameters, price inflation may render the definition
meaningless in the short term. If, however, the number of employees is used as
a yard stick, the definition would tend to ignored the fact that some firms are
purely capital intensive and therefore need few employees; their sales turnover
and profit may be relatively high or the need for a large number of employees
may not really be called for and such firms may still have fantastic year
billings, Aladekomo (2003;p.2).
The
committee for Economic Development (CED) in the United States, considered a
business to be a small-scale when at least two of the following characterics
prevail.
(a)
The
business operation is local (though a market is not to be local).
(b)
Size within the enterprises is relatively
small (that is, the business is small when compared with the biggest unit)
(c)
Individual owners or a small group furnishes capital.
From
the above features we can summarize by saying that a small business is the one
that is managed and controlled by its owners, highly personalized, largely
local in its area of operation, it is relatively small in size within the
enterprises and largely dependent on internal sources for capital to finance
its growth. Most of these features give rise to most of the problems faced by
small business and their needs in Nigeria.
The central Bank of Nigeria in February 1998,
came up with a definition of small-scale enterprises, it states that for the
lending purpose of merchant banks, a small-scale enterprises is one with a
labour size of 11-100 workers or a total cost of not more than N50 million
including working capital but excluding the cost of land, while commercial
Banks on their own view, states that a small-scale enterprise is one with an
annual turnover not exceeding N500, 000.
The
centre for industrial Research and Development (CIRD),Obafemi Awolowo
University defines small scale enterprises as a business which as a business which total investment capital
will not exceed N250000 and employees should not more than 50 full time
workers.
According
to Obiaguzor (2001), small-scale enterprises is defined as an establishment
whose annual turnover should not exceed N500000 and also a dominant form of
business enterprises in any economy whether developed or developing. He also
opined that small-scale enterprises play an important role in the economic
development of most countries of the world. But unfortunately, small-scale
business has not been accorded the respect and the necessary financial and
other support they deserve to make them grow. He was also of the view that
financial institutions that have been established to grant loan to small scale
enterprises have not yielded fruits, as result of fear by the lending
institution which emanate from the perceived inability of the small-scale
business to re-pay.
The
Nigeria industrial development bank classified small-scale enterprises with
cost(investment and working capital) not exceeding N750000. The federal
government interest and recognition of small-scale enterprises is now well
articulated. The major criteria set throughout the work for describing small
scale enterprises is the enterprises average i.e. any enterprises average, such
criteria may include;
a.
Types
of enterprises
b.
Types
of ownership
c.
Initial
capital outlay not more than N50,000,000
d.
Financial
strength
e.
Relative
size
f.
Number
of employees from 11-100
g.
Volume
and value of sales.