STANDARD MEASUREMENT OF SMALL SCALE, MEDIUM SCALE AND LARGE SCALE ENTERPRISE



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 ENTERPRISE

COURSE TITLE:
AGRICULTURAL DEVELOPMENT POLICY AND PLANNING

COURSE CODE: AEM 811


DEPT: AGRIC ECONOMIC EXTENSION AND MANAGEMENT

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