Definition of small, medium and large scale enterprises
depend from one country to another as well as involvement of economic scheme.
In Nigeria
the definition of small and medium scale enterprise are taken from the meeting of
the Nigeria
council of industry held on July 2001 in Markurdi Benue
State (Ositayo 2001).
Micro or cottage industry: Any industry with a labour
size not more than 10 workers or total cost of not more than N.5million
excluding cost of land.
Small scale enterprise: Any industry with a labour
size of 11 – 100 workers or total cost not more than N50million including
working capital excluding cost of land
Medium scale enterprise: An industry with a labour
size between 101 – 300 or total cost of over N50million but not more than
N250million excluding cost of land.
Large scale enterprise: An industry with a labour size
of over 3003 workers or total cost of over N200million working capital
excluding the cost of land.
For the purpose of small and medium enterprise equity
and investment scheme, small and medium enterprise is defined as any enterprise
with a maximum asset base of N1.5billion excluding land and working capital with
no lower or upper limit of staff (CBN 2006).
Alternative Definitions:
World Bank since 1976: firm with fixed assets (Excluding
land) less than US $250,000 in value are small scale enterprises USAID in the
1990s: firms with less than 50 employees and at least half the output is sold
(mead 1994)
UNIDO’S
Definition for developing countries
Large = firms with 100 workers
M = firms with 20 – 99 workers
S = firms with 5 – 19 workers
For
industrialized country
I = firms with 500 workers
M = firms with 100 – 499 workers
S = firms with less or equal 99 workers
From the definitions above, it can be said that there is
no unique definition for these enterprises thus, an operational definition is
required. In some country e.g Malawi
the definition is based on three criteria level of capital investment, number
of employee and turn over.
However alternative criteria used defining small and
medium enterprise is the value of fixed assets in the organization.
ROLE OF THESE ENTERPRISE
Small and medium have been recognized as the engines thought
which the growth objectives of developing countries can be achieved. It has
been the major area of concern to many policy makers in on attempt to
accelerate the rate of growth in low income countries.
They are potential sources of employment and income in
many developing countries it is estimated that SME, employ 22% of the adult
population in developing countries. (Daniels 1994, Daniels and Nigeria 1992,
Fisseha 1992, Gallagher and Robson 1995).
However, some authors have contended that the job creating
impact of small scale enterprise is a statistical flaw ie it does not take into
account offsetting factors that makes the net impact more modest (Biggs,
Grindle and Snodgrass 1988). It is argued that increase in employment of SME is
not always associated with increase in productivity.
Nevertheless, the important role performed by these
enterprises cannot be overlooked. They are able to adapt more easily to market
conditions given their broadly skilled technologies that is why within the
industrial sector people tends to choose small and medium scale enterprise
because of its enormous advantages over large scale enterprise seeing the
following propositions.
Large scale industry:- (i) Has not been an engine of growth and a good
producer of employment (ii) already receive enormous support through general
trade, finance, tax policy and direct subsidies.
Small scale and medium scale
enterprise:-
i. Mobilize
funds which otherwise would have been idle.
ii. Have
been recognized as a seed-bed for indigenous entrepreneurship.
iii. Are
labour intensive, employing more labour per unit of capital than large
enterprises.
iv. Promoted
indigenous technological know – how
v. Are able
to compete (but behind protective barriers)
vi. Use
mainly local resources, thus have less foreign exchange requirements.
vii. Cater for
the needs of the poor
viii. Adapt
easily to customer’s requirements. (flexible specialization) and are able to
withstand adverse economic conditions.
ix. Ensure
income stability
Because of their regional dispersion and their labour
intensity they slow the flow of migration to large cities where the can
contribute to the more even distribution of economic activity. They also
improve the efficiency of domestic markets and make productive use of scarce
resources thus, facilitating long term economic growth.
PROBLEMS FACING THESE ENTERPRISES (Small scale and medium enterprise)
The problems facing the SMES are in two fold; they are
the one faced by the enterprise in the course of t heir daily operation and the
one constraining the institutions established to provide credit facilities to
SMEs enterprises.
During the course of their daily operation one of the
problems faced by SMES is
1. Inadequate instructional facilities.
2. Lack of tarred roads, electricity, phone
lines
3. Inadequate credit facilities
4. Lack of managerial expertise
5. Banks ask for collateral before they can offer
credit facilities
6. They
cannot compete favourably in the globalization market and cannot compete with
imported goods.
7. They
have inadequate access to new production techniques.
8. They
have less capital to buy modern production goods.
Large scale
enterprise don’t have much problem though they have not been engine growth of
economy they have receive enormous support through general, trade, financial,
tax and other subsidies. The problem facing SMEs is poor funding, under capitalization,
loan default, lack of professional staff and over lapping.
TOPIC
STANDARD MEASUREMENT OF SMALL SCALE, MEDIUM SCALE AND LARGE SCALE ENTERPRISECOURSE TITLE:
AGRICULTURAL DEVELOPMENT POLICY AND PLANNING
COURSE CODE: AEM 811
DEPT: AGRIC ECONOMIC EXTENSION AND MANAGEMENT