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.

Small-scale enterprises have many characteristics which distinguish it from large scale enterprises and which also justifies separate analysis of their roles in the economic development of countries. The report on financing of small-scale enterprises in Nigeria had identified the following as the major characteristics of small-scale enterprises.
1.                  LARGE NUMBER: The small-scale enterprises are large in number when compared to large-scale enterprises. This is because the money/capital needed to establish the business is relatively small and may not need legal provision to be fulfilled before they are set up.
2.                  INADEQUATE SPECIALIZATION: There is usually no much specialization/proprietor handles or supervises the financing, production, marketing and personnel of the enterprises.
3.                  INDEPENDENT MANAGEMENT: The manager is usually the owner of the business and as such it is independent, unlike the large scale business where the management is in most cases different from the owners; hence, usually dependent.
4.                  INADEQUATE CAPITAL: The working capital is usually small due to the fact that it is financed by the owners, friends or close relatives, not like in large-scale enterprises where they collect loans from financial institutions and contributions from partners.
5.                  LACK OF ACCOUNTING RECORDS: The small-scale enterprises have little or no accounting records. The small-scale business owner believes that the maintenance of book of accounts and other business records is costly and necessary.
6.                  ONE-MAN BUSINESS: Small scale enterprises in Nigeria are operated like a sole proprietorship i.e. it is been owned and managed by the owner of the business.

Small-scale enterprises play important or significant roles in the economic development of any nation especially the developing ones. (Enudu,1999:p.22).
The growth of the country depends to a extent, on the standard and development of small-scale business. In revolutionary economy, small-scale enterprises are a legitimate and viable component in any strategy for reconstructing the economy. The roles played by small-scale enterprises n economic growth and development are highlighted below.
1.                  EMPLOYMENT GENERATION: Small-scale business has come to be known as a major source of employment. They employ the majority of all non-government workers in the country and this trend seem to be the increase. In 1970, of the estimated wage employment of 1.38 million, 622,000 persons (forty five percent) were employed in small non-agricultural enterprises. Nigeria is currently facing problems of unemployment and rural urban migration. This has been compounded by frightening turnover of post-primary school leavers, polytechnic university graduates every year. In this case small-scale enterprises can create jobs opportunities for this group of people and reduce the rate of rural urban drift. Enudu (1999:p222) stated that in Nigeria today, small-scale business have offered employment to thousands of young school leavers and retired civil servants. Noted that in study carried out in 1962 in Eastern Nigeria by the United State Agency for Inter-National Development, the number of small-scale enterprises was 10, 722 with total employment figure of 28, 721. Okafor (1996: p.114) posits that documented evidence suggests that about 30% of the entire working population are employed by small-scale enterprise. This shows that small-scale plays an important role in reducing the rate of unemployment in our country.
2.                  PROMOTION OF COMPETITION: Small-scale enterprises act as a check against monopoly and encourage competition, through improved prices and services to customers. The small entrepreneur is in intimate contact with market needs. Possessing practical technical competence is very necessary in competition. A small firm cannot, of course compete with large firm across the board. But a number of small businesses, each competing in its own particular area, and its own particular way, together have the desired competitive effect.
3.                  WASTE UTILIZATION: small-scale enterprises make use of waste material from big enterprises for further production. Eze (2009:p.224) observed that the artisans at the Ogbete industrial area popularly called “Tinker shade” for instance, produce lost of spare parts for industrial machinery and often provide lots of maintenance services. The graft bodies of obsolete imported vehicles and buses into wide variety of buses and vehicles of different shapes, some toilet roll companies use waste paper from printing presses for the production of toilet rolls.
4.                  INTRODUCTION TO BIG BUSINESS: Every business has it starting points, small business serves as a nursery for entrepreneurial talent and they grow, in some cases, into large enterprises. Many large organizations all over the world today started as small business, some individuals may have a fear for entrepreneurship in large enterprises but owning to the shortage of capital and other resources they are able to realize this only through the establishment of small firms.
5.                  CATERING FOR SMALL DEMAND: Small manufacturing establishments have advantage in meeting highly specialized or individualized demand or in catering to a small volume of market or one requiring frequent readjustments because of style changes or for other reasons. Here the flexibility of the small firm stands it in good stead. Their bureaucratic procedures and relatively large overhead expenses may handicap large enterprises. It does not play for them to produce short “runs” of non-standard terms, but the small factory can often do so, for profit motives.
There operating are as highlighted below: sales personnel’s attend to the customers or patients, they give drugs to the patients as recommended by the doctors or medical practitioners while the secretary takes care of purchasing of drugs, it is the duty of the secretary to know which drugs that is available and that which is out of stock and thus communicate the management. The cashier takes care of what ever cash that comes into the company, all payment for drugs bought are made through the cashier and also gives account of all the daily sales, expense, deposit money at the end day in the bank and also days the workers at the end of the month as instructed by the director. The nurses gives medical attention to the patients, that they gives drugs and injections as directed by the doctor. The doctor is the one that gives medical attention and prescribe drugs for the patients and then direct them to the nurse who gives the drugs to them. The secretary meets with the manager every month to let him know what drugs that are not available at the store, and then purchases such drugs that are needed. But before the drugs are purchase the director will be informed, and that will
Enable  him to acquire from the cashier if profit are made or not before purchase are made, if profits are made, more of such drugs will be purchased and vice versa.
Lady flora beauty salon in Bida is owned by Mrs. Florence Ramatu know as lady flora. The salon was established n June, 2004. The workers comprises of both males, and females, there are six apprentice, five workers which include two boys and three girls. The boys fix nails, weavon, barbing etcetera. While the girls take care of both medical and pedicure, planting of hair, fixing and so on. The owner of the salon acts as the manager and cashier and also purchases all the necessary requirements needed and pay his workers at the end of the month.
            Brief history of ennack computer business centre
This computer centre was established in the year 2001, by Mr. Ennack Ogbonna Okoh. Their operations includes publications, printing, computer training etc. there are i5 (fifteen) workers in the business centre and their mode of operation as follows:
            Five workers are in charge of the training section, six are responsible for printing and publications of documents in the business centre, one person works as a cleaner in the establishment, while one acts as a cashier who collects all the money realized from the business for the day, one among the workers as a secretary, while the owner of the business establishment is the manager and sees to the overall running of the business, takes records of sales, and pays the workers on the 27th day of every month.
it is a fact that capital constitutes a major bone in the rapid growth and development of small-scale industry in Nigeria. The importance of capital in any business setting can not be over stretched. Financing generally appears to be a crucial issue in determining whether a business should be set up, or other words, as stated earlier, Business does not require finance for it initial take-off but also need adequate funds to operate and expand effectively.
            Hence, the issue of finance and its adequacy are major areas of concern to any entrepreneur. Generally, the sources of finance open to small-scale business Include: owners capital, financial institutions, government, non-banking institutions and other sources: Akabueze (2002.p-23).
1.                  OWNER’S CAPITAL: This is perhaps the most important source of finance to most small-scale enterprises in Nigeria. Generally, the capital used in this business is money gotten  from personal savings of the owner or members of the same family who came together to donate money to state up a business. About 97% of the total money use to finance a small-scale business come from this source in Nigeria, while it is estimated that between 60% and 75% in Sirraleone and averages about 65% in some parts of India. Several reason could be advanced for the source available to small-scale enterprises.
The major reasons is that small-scale business do not have access to the capital market, even with the recent introduction of the second-tier securities market by the Nigeria Stock Exchange, it is still obyious that many small-scale business will be unable to meet up with the requirement needed to collect loans.
Another reasons why the owners capital donates other sources of finance to small-scale enterprises is the fact that savings do not require any formalities or bottlenecks, before it would be used in financing small-scale business. In other words, the case with which the decision to raise this sort of finance and the speed at which such decision would be executed makes personal savings or owners capital indisputable because it is the most popular and attractive source of finance to small-scale enterprises.
2.               FINANCIAL INSTITUTION: The financial institution comparises of commercial banks, merchant bank insurance companies and development banks. Their roles in providing financing assistants to small-scale enterprises has been critized  by experts.
            Commercial and merchant banks can provide wide range of financial assistance to small-scale enterprises such as monetary loan to facilitate their projects, Financing collateral security for mortgage loans. Demand deposits, acting as stock brokers, executors as well as providing references to small-scale business to obtain credit from other organizations. In addition, this financial institutions can manage funds for small-scale enterprises and provide them investment counseling and advice, obvious areas of need which most financial institutions have neglected include export promotion marketing, managerial and technical assistance.
3.         GOVERNMENT SOURCE: Apart from the bottleneck red-tap associated with government sources, Osoba (1978) noted that the federal government financial assistance to this sector (small-scale enterprises) through Nigerian Bank for commerce and industrial (MBCI) is far from enough. Considering the problems associate with security government finance (bottleneck, bribering and favoritism) small-scale enterprises recommended the establishment of a special bank (as already existing for agricultural development) to cater for the varying need of small-scale enterprises.
            As a solution to collateral requirements of commercial banks, he suggested that the government should guarantee such as it is with agriculture. The government should also establish an insurance company similar to that of agricultural sector for the purpose of insuring small-scale enterprises manageable risk.
4.         NON-BANKING FINANCIAL INSTITUTIONS: The prominent member of this group whose main purpose of creation is to assist small-scale business is the National Directorate of Employment (NDE) there are mere to grant loans, mostly to young school leavers and graduates with the aim of setting them up in life. Another one in this group is the hire purchase by companies; they give out subsidies of their company products on installmental basses e.g. of such companies are the New Nigerian Development Company, the National Economic Reconstruction Funds, which has so far given out loans to help set up small-scale business, there have given about N12 billion for about 373 projects.
5.         OTHER SOURCES: This includes loans gotten from friends, relations and family members. The trade creditor can also give out loan though with expected returns, discount companies are also part of this group, since they give case discount to small-scale enterprises.
            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).

            Problems are the constraints that hinder the rapid growth and development of small-scale enterprises sub-sector. They range from financial problem, management problem to marketing problem. However option differs as to the level of intensity of each one, these factors constitute a blockage in the need foe small-scale growth, opinion regarding to cause and solution to these problems also differ. In Nigeria, as in most countries of the world both developed and under developed, small-scale business are faced with number of problems which despite so much efforts to assist the sector have seem abortive, often the motion has been that only problem which small-scale business faced is that of inadequate finance and other problems are sub-summed under it.
            In as much as it is acknowledge that the problem of inadequate finance is a major impediment to the development of small-scale enterprises most especially in the developing countries, other problems such as poor transportation and infrastructural development, restricted market of the products and services of public sector official, non-enforcement of official guidelines, poor preparation of project proposal by small-scale entrepreneurs, should be recognized as in habiting the development of the sub-sector.
            The problem of inadequate infrastructural facilities has a major handicap to the meaningful development of small-scale business Nigeria. These problems which include lack of adequate power supply and housing facilities, inefficient production of goods and services. In particular, apart from state capitals and perhaps other major cities, most towns and villages in Nigeria do not have access to electricity supply, and even when electricity supply available, it is far from being constant and these have made the products to be costly because another means of energy will be employed to produce such products.
            The in numerable problems and drawbacks rising from the storage of infrastructural facilities cannot be over emphasized particularly in the rural areas. In deed this has frustrated the promotion small-scale enterprises as it is in Afikpo North Local Government Area.
In such manner as to provide a lasting solution to the current problem of imbalance in the distribution of industries between the rural and urban areas, and thus check the perennial rural urban drift which has heightened social tension in Nigeria. The fact remains that there have been a glaring lack of co-ordinate policy at both the national and state level relating to financing technical and managerial assistance to small-scale business. It is yet be seen that this sub-sector has received full and appropriate attention required for its fundamental growth from the federal and state government despite the often rhetorical expositions, as has been rightly noted, there is no central focus to co-ordinate the few institutions that exists.
            Additionally, there is intractable problem of restricted market for their products or services they render often, they are faced with undue competition from the already well established firms in the enterprises where they belong or choose to operate. The Nigeria experience in particular is pathetic (sad or pity). Instead of government organizations and individuals to give this sector the necessary encouragement and patronage, they give it to big firms and organizations, they tend to forget that “Rome was not built in a day” for instance, the federal government and corporate institutions always prefer the services of big foreign architectural firms to that of an indigenous small young Nigerian firms.
            The problem associated with small-scale entrepreneurs themselves must be mentioned often; these entrepreneurs lack the necessary technical and management know-how to operate effectively and are very recalcitrant to taking full advantage of outside assistance programme. Moreover, there is also the problem of improper accounting and poor record keeping and other deficiencies of small-scale entrepreneurs. Having enumerated the above factors as impeding the growth of small-scale business, one should not be carried away by the euphoria of the whole facts. In other words, we are aware of the fact inadequate finance remains the most fundamental issue in any discussion on problems militating against sub-sectors. Adequate finance is required both far the initial take-off as well as the expansion of the business. But more often than not, these enterprises lack knowledge of appropriate sources of finance and also ignorant of the advantage inherent in adopting different methods of financing. Moreover, these entrepreneurs lack the skill to presents their financial cases to potential investors and lenders.
            It has been rightly observed that the financial problem stems from the fact that the bulk of funds available to small-scale business originated from the owner of the business, the inability to borrow funds from the organized Capital Market. In addition, institutions are often unwilling to provide financial facilities for this enterprise mainly because of their high rate of failures, loan defaults, poor accounting and poor-record keeping. Hence, most of them are faced with recurring problem of inadequate finance.
            The finance discussed above are far reaching implication of this small-scale establishment. Apart from the fact that financial constrains limit the ability of small-scale enterprises from engaging in efficient production, it also hinders their ability to engage may not find it easy to offer competitive credit terms usually given to large firms. Also partly; due to financial problems, a small-scale business cannot afford to contract highly qualified workers as it exist in large corporations. This has been held to be partly responsible for the bad accounting practices and inefficient operations witnessed in many small firms such as in Afikpo North Local Government Area.
            The banking sector tends to be lukewarm in meeting the credit requirements of the small-scale enterprises. This is because of inadequate prepared project proposal, incomplete financial documentation and inadequate collateral including the inability to raise the required equity contribution by the small-scale enterprises. As a result, working capital is still a major constraint on production; more worrisome is the inability of the small-scale enterprises to tap available finance from the Capital Market. This has been attributed to their aversion to disclosure and ownership dilution, although some blamed this phenomenon on the cumbersome requirements and procedure for listing on the stock exchange.
            Inadequate financial resources as well as desire to operate with limited openness on the part of proprietors lead many small-scale enterprises to employ semi-skilled or unskilled labour.

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