FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND

DEVELOPMENT OF SMALL

STATE, NIGERIA

DEP

TAWAL DAUDA SALE PG/M.ED/ 11/ 58802

FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND

DEVELOPMENT OF SMALL-SCALE ENTERPRISES OPERATING IN PLATEAU

STATE, NIGERIA

PARTMENT OF VOCATIONAL TEACHER E

FACULTY OF EDUCATION

Fred Attah

Digitally signed by: Content manager’s

Name

DN : CN = Webmaster’s name

O= University of Nigeri

OU = Innovation Centre

I

FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND

SCALE ENTERPRISES OPERATING IN PLATEAU

DUCATION

: Content manager’s

Webmaster’s name

O= University of Nigeria, Nsukka

OU = Innovation Centre

II

TITLE PAGE

FINANCIAL IMPEDIMENT TO THE SUSTAINABLE GROWTH AND DEVELOPMENT OF SMALL-SCALE ENTERPRISES OPERATING IN

PLATEAU STATE, NIGERIA

BY

TAWAL DAUDA SALE PG/M.ED/ 11/ 58802

DEPARTMENT OF VOCATIONAL TECHEAR EDUCATION (BUSINESS EDUCATION UNIT)

FACULTY OF EDUCATION UNIVERSITY OF NIGERIA, NSUKKA, ENUGU STATE

SUPERVISOR: DR. E. A. C. ETONYEAKU

OCTOBER, 2015

III

APPROVAL PAGE

This Project has been approved for the Department of Vocational Teacher

Education, University of Nigeria Nsukka.

By

--------------------------------- -------------------------- DR. E. A. C. ETONYEAKU PROF. C.A. IGBO Supervisor Head of Department ---------------------------------- External Examiner

--------------------------------- PROF. U. C.Umo Dean of Faculty

IV

CERTIFICATION

This is to certify that TAWAL DAUDA SALE, a post graduate student of the

Department of Vocational Teacher Education University of Nigeria Nsukka, with the

registration number PG/MED/11/58802, has satisfactorily completed the requirements for

the research work for the award of Masters in Business Education. This project work is

original and has not been submitted in part or in full for any other degree of this or any

other institution.

------------------------------- ------------------------------- DR. E. A. C. ETONYEAKU TAWAL DAUDA SALE Supervisor Student

V

DEDICATION This work is dedicated to God Almighty and Tawal’s Family.

VI

ACKNOWLEDGEMENTS

To God Almighty be all Glory, honor and thanksgiving for His enablement,

strength, health and wisdom to conclude this programme. Thank you Jesus.

My sincere gratitude goes to my supervisor, Dr. E.A.C. Etonyeaku for patiently

nurturing me with his wealth of experience. You are a model, a counselor and a

motivator. May the good lord richly bless you in Jesus name. It is difficult to fine words

with which to thank all members of VTE family; HOD, Prof. (Mrs.) C.A Igbo, Prof. E.E.

Agomuo, Prof. (Mrs.) C.A Obi, Prof. Osinem, Dr. E.O. Ugwoke and Mrs. Uju Umela,

I appreciate my friends and colleagues who supported me in special ways; Oga

lucky, Anvah Moses, Yaro Tunga, Okoye Hyacinth, Madam Chindungsu, Madam

Roselyn (Class Rep.), Juta Jery, Abanyam (Frenny), Oga Kinsley (vte class rep.), My

Nehemiah Joshua (Nduka), Mrs. Philip kparevfa, all vte PG and Business Education

students of 2011/2012 session.

The researcher is indeed grateful to Baba and Mama Amos Sale (Family) Brother

Yilchir, Uncle Luther, Bro Kefas, Agustine Audu, Biswe, Sunday, Kismang, Gomos,

Gobir, Manpan, Emma, Ropshakka, Batmun, Zenwen, Gaklime, Akila, Gaksewe, Gakle

Kefas COCIN Mannung Reverends, Pastors, Elders, Ushers, Youth and Women

Fellowships, Choir among others. To all my colleagues in BOPs Enugu State Command,

ACP. Daniel Osayande, ASP. Benedit, Sgt. Onyi Joseph , and officer of computer Officer

Ops.

Finally, the researcher is indebted to his beloved members of his family; late Mr

Tawal Sale, Mama Mrs. Esther Tawal Sale, Mr. and Mrs. Vongsing Nicholas, Arch. and

Mrs. Felix Sale, Dr. and Mrs. Tawe Godwin, Mr and Mrs. Tawe Rotnen and My Darling

Miss. Ndam Dorkat. Thanks for your spiritual, moral, social and financial sacrifices. May

the good Lord Bless you all in Jesus name, Amen.

VII

TABLE OF CONTENTS

TITLE PAGE i

APPROVAL PAGE ii

CERTIFICATION iii

DEDICATION iv

ACKNOWLEDGEMENTS v

TABLE OF CONTENTS vi

LIST OF FIGURE ix

LIST OF TABLES x

ABSTRACT xi

CHAPTER ONE: INTRODUCTION

Background of the Study 1

Statement of the Problem 7

Purpose of the Study 9

Significance of the Study 9

Research Questions 11

Research Hypotheses 11

Delimitation of the Study 12

CHAPTER TWO: REVIEW OF RELATED LITERATURE 15

Conceptual Framework

• Meaning of Small-Scale Enterprises

• Role of Small- Scale Enterprises

• Financial Impediments Encountered by Small-Scale Enterprises

• Fund Raising by Small-Scale Enterprises and Credit facilities available to

Small-Scale Enterprises

• Government Financial regulatory Policies in Small - Scale Enterprises

VIII

• Ways of Ameliorating the Financial Impediments of Small-Scale Enterprises.

Theoretical Framework

• Life Cycle Theory.

• Theory of Growth and Size of Firm

Related Empirical Studies 41

Summary of Reviewed Literature 46

CHAPTER THREE: METHODOLOGY

Design of the Study 49

Area of the Study 49

Population for the Study 50

Sampling and Sampling Technique 50

Instrument for Data Collection 50

Validation of Instrument 51

Reliability of the Instrument 51

Method of Data Collection 52

Method of Data Analysis 52

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA

Research Question 1 54

Hypothesis 1 56

Research Question 2 58

Hypothesis 2 59

Research Question 3 61

Hypothesis 3 63

Research Question 4 65

Hypothesis 4 67

Findings of the Study 69

Discussion of Findings 75

IX

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIO NS

Re-statement of the Problem 84

Summary of Procedures Used 86

Principal Findings of the Study 87

Implications of the Study 92

Conclusion 95

Recommendations 96

Suggestions for Further Studies 97

References 98

Appendices 104

X

LIST OF FIGURE

Figure 1 Schematic representation of Impediments to the Growth of Small Scale Enterprises in Plateau State 63

XI

LIST OF TABLES

Table 1 Mean ratings on how accessibility of credit facility impedes the growth and development of small scale enterprises operating in Plateau State 84 Table 2 T-test analysis for comparing data obtained from proprietors and employees on the extent to which accessibility of credit facility impede the financing of small scale enterprises in Plateau State 86 Table 3 Mean ratings on how government financial regulatory policies impede the growth and development of small scale enterprises operating in Plateau State 88 Table 4 T-test analysis for comparing data obtained from proprietors and employees on the extent to which government financial regulatory policies impede the financing of small scale enterprises in Plateau State 97 Table 5 Mean ratings on how poor financial management practice impedes the growth and development of small scale enterprises in Plateau State. 92 Table 6 T-test analysis for comparing data obtained from proprietors and employees on the extent to which insecurity of life and property impede financing of small scale enterprises in Plateau State 94 Table 7 T Mean ratings on the ameliorating the financial impediments of small scale enterprises operating in Plateau State.. 96 Table 8 T-test analysis for comparing data obtained from proprietors and employees on the strategies for ameliorating the financial impediments of small scale enterprises operating in Plateau State 98

XII

Abstract The study of Financial Impediment to the Sustainable Growth and Development of Small-Scale Enterprises Operating in Plateau State, Nigeria employed a descriptive survey design. The study covered only the central senatorial zone in the state with five local governments namely; Pankshin, Mangu, Bokkos, Kanke, and Kanam local government. The population for the study was 206 made up of 57 and 149 registered entrepreneurs and employees of small-scale enterprises in the six local governments in central senatorial zone of Plateau State. Since the total population of the proprietors and the employees are small and manageable no sampling was carried out. The instrument for data collection was a structured questionnaire titled ‘Financial Impediments to Small-Scale Enterprises Questionnaire’, (FISSEQ). The questionnaire items were developed based on the information gathered from the literature reviewed. The questionnaire was subjected to face-validation by three experts. Two of the validates came from the Department of Vocational Teacher Education, University of Nigeria, Nsukka and one of them is from department of Vocational and Technical Education, Ahmadu Bello University Zaria, in Kaduna State. The reliability of the instrument was done using Cronbach Alpha (α) method. The coefficient result yielded 0.86 which was used to establish the internal consistency of the instrument. The researcher with the help of three research assistants administered the questionnaire to the respondents. The data collected for the study was analyzed using mean to answer the research questions and standard deviation to determine the closeness or otherwise of the responses from the mean, while t -test statistic was used to test the null hypothesis of no significant difference at the probability of 0.05 level of significance at relevant degree of freedom with the use of Statistical Package for Social Sciences (SPSS). It was found out that inaccessibility of credit facility, government financial regulatory policies, and poor financial management practices impede the growth and development of small scale enterprises in Plateau State. From the findings of the study, it was recommended amongst others that government and other financial institutions operating in Plateau State should make credit facilities available to all categories of small scale enterprise and should ensure adequate monitoring of how the small scale enterprise utilized the funds.

XIII

CHAPTER ONE INTRODUCTION

Background of the Study

Business exists in different forms and sizes. A business can be undertaken on a

small scale, medium scale or large scale basis. Small and Medium Enterprises (SMEs)

are seen as driving forces that promote and contribute immensely to the economic

development of any country. Small-Scale Enterprises (SSEs) are the backbone of an

economy as major contributors of job creation and play an important role as efficient

providers of intermediate goods and services to large firms (Muhammed, 2010).

The concept of Small-Scale Enterprises (SSEs) varies from country to country,

region to region and from agencies to agencies. Different authors often use different

parameters such as the number of employees, sales volume, turnover and capital to

differentiate small, medium and/or big scale enterprises (Ahmed, 2006). However, these

parameters do not provide uniform benchmark for all industries. Furthermore, what is a

big capital today may become small in years to come (Aremu and Adeyemi, 2010).

Consequently, there are as many definitions of SSEs as there are scholars and institutions.

Makhbul (2011) stated that small scale industries (SSIs), small scale businesses (SSBs),

and small scale enterprises (SSEs) are some of the terms that are used interchangeably to

describe small and medium scale enterprises (SMEs). The author further stated that SSEs

or SMEs are very heterogeneous group because these enterprises embrace a wider variety

and diverse forms ranging from tailors and garments, textiles, furniture producers, wood

XIV

cutting mills and bakeries. Others include villages, handicrafts centers and weavers, small

machine shops, restaurants to computer software firms using sophistication and skills.

The National Council on Industry (NCI, 2001) categorized SMEs into three major

concepts of industrial enterprises in Nigeria: Micro/Cottage Industry, Small-Scale

Industry and Medium-Scale Industry. Micro/Cottage Industry is described as an industry

with a total capital of not more than N1.5 million, including working capital but

excluding cost of land, and/ or a workforce of not more than 10 workers. Small-Scale

Industry in the other hand is described as an industry with a total capital of over

N1.5million, but not more than N50 million including working capital but excluding cost

of land and/or a workforce of 11- 100 workers. The term Medium-Scale Industry refers to

as an industry with a total capital of over N50 million, but not more than N200 million,

including cost of land, and/or, a workforce of 101-300 workers.

The Central Bank of Nigeria (2008) defined small-scale enterprises as those

businesses whose annual turnover was not more than N500, 000. The Federal

Government of Nigeria (2008) defined small-scale enterprises for purposes of

commercial bank loans as those with an annual turnover not exceeding N500, 000, and

for Merchant Bank Loans, with capital investments not exceeding 2 million naira

(excluding cost of land) or a maximum of N 5 million. The National Economic

Reconstruction Fund, NERFUND (2003) put the ceiling for small-scale industries at N10

million. While the Central Bank of Nigeria (2004) agreed with the definition given by

Small and Medium Industries and Equity Investment Scheme, SMIEIS (2004) on SSEs as

any enterprise with a maximum asset base of less than N50 million (equivalent of about

XV

$0.43 million) excluding land and working capital, and with the number of staff

employed not less than 10 (otherwise will be a cottage or micro-enterprise).

In this study, Small-Scale Enterprises (SSEs) consist of all business organizations

whose total capital is not more than N10 million including the cost of land and workforce

capacity between 1 to 20. This definition is also in line with that of National Council on

Industries, NCI (2001), which categorized SSEs as small and usually managed as sole

proprietor with self-employment as a key element of such enterprises. SSEs are generally

considered to be non-subsidiary, independent firms which employ less than a given

number of employees. Small firms are mostly considered to be firms with fewer than 20

employees (Bello, 2007).

The National Development Plans in Nigeria for four years since independence had

laid emphasis on industrialization through the encouragement of local manufacturing

industries (Ayozie, 2008). As part of the proactive strategies, the federal government of

Nigeria through the Ministry of Industry, Trade and Investment has flagged off the

University Entrepreneurship Development Programme (UNEDEP) to promote self-

employment among youths from institutions of higher learning. Similarly, recently the

federal government established the Youth Enterprise With Innovation in Nigeria

(YouWiN) as a way of encouraging young entrepreneurs (UNEDEP). This was in

recognition of the leading role which the local sector is expected to play in the

industrialization strategy of the government as well as the overall development of the

economy. Small-scale enterprises (SSEs) and Medium scale enterprise (MEs) form the

core of majority of the world’s economies.

XVI

A study carried out by the Federal Office of Statistics in 2003 showed that in

Nigeria, SSEs (SME) make up 87% of the economy. Small Scale Enterprises in Nigeria

are the most important enterprises in the economy due to the fact that when all the

individual effects are aggregated, the result will surpass that of the larger companies.

Small-scale enterprises (SSEs) have continued to serve the world economy as a catalyst

for employment generation, national growth, poverty reduction and economic

development. According to Osuala (2004), SSEs both in the formal and informal sectors

employ over 60% of the labour force in Nigeria vis-à-vis Plateau State.

Similarly, Plateau State is characterized by a large number of informal, small and

medium businesses and formal modern firms. The industrial activities are made possible

with the availability of tin, columbite, fertile soil, tourism (Ministry of Commerce and

Industry, Plateau State). However, in term of output, the small scale enterprises (SSEs)

and medium scale enterprises (SMEs) in 2009 accounted for 12% and 9% respectively as

compared to 10% and 8% in 2007 (Plateau State Directory, 2010). This statistics shows

that SSEs in Plateau State are in a transitional state. The small scale enterprises in Plateau

State are based more in the production of consumer goods particularly in food

production. Despite the increasing importance attached to small-scale enterprises, a lot of

SSEs still find it very difficult to effectively play their role because of the high mortality

rate.

In Nigeria vis-à-vis Plateau State, there are a lot of problems that bedevil and stunt

the growth of SSEs. According to Organization for Economic Co-operation and

Development (OECD, 2012) SSEs in Nigeria vis-à-vis Plateau state are suffering from

XVII

the consequences of policy inconsistency, insecurity, poor access to finance, poor

infrastructure, insufficient know-how and low level of technology, and so many others.

Therefore, finance is a major tool that can affect the growth and development of any

business organization. For the purpose of this study financial impediment simply refers to

every delay, hindrance, action, obstacle or retardation; any structure that makes progress

difficult to SSEs.

Every business organization, small, medium, and large operates within the

framework of financial fundamental concept, and the basic financial management

principle is financial decision: the principle (finance) is the determinant of when, where

and how to acquire funds to finance the business (Fabayo, 2009). According to Osuala

(2004), the dearth of adequate source of finance has been a major impediment that

inhibits the growth of SSEs in Nigeria vis-à-vis Plateau State. Similarly, according to

Alade (2004) collateral based financing has become increasingly difficult for SSEs,

whether as existing businesses, in their expansion states or as start-ups. The author noted

that the key components of financial impediment are weak government policies, poor

management practices and low credit facilities.

One of the financial impediments that may have been confronting SSEs in Nigeria

vis-à-vis Plateau State is not knowing how to raise funds or capital for their business.

The various ways of raising funds opportunities are not widely known to these SSEs.

According to The Nigeria Investment Promotion Commission, (NIPC, 2010) SSEs lack

knowledge of finance supply, sources and available banking and credit services. NIPC

noted that this stifles the take-off and growth of SSEs in Nigeria. Another area of

XVIII

emphasis is in management. In addition, according to Plateau State Ministry of

Commerce and Industries in 2005, banks in the state are reluctant to lend SSEs due to

their inability to meet the bank’s lending requirements such as lack of management and

entrepreneurial skills, poor and unreliable financial records among others (Abor, 2008).

Similarly, the small-scale enterprises (SSEs) financial management practice of

some of the SSEs is characterized by the highly personalized preferences and prejudices.

The attitude of some entrepreneurs to loans and that of their workers to work is

counterproductive. Many entrepreneurs (managements) when offered with credit

facilities believe that it is their share of the “national cake” (Ireghah, 2011). The author

also noted that most small-scale enterprises managers and accountants do not believe that

qualification and managerial ability are important for business growth and survival, and

so have neglected these factors as basic for the development and growth of their

businesses.

Furthermore, government is meant to act as a business regulator with the overall

aim of helping to maintain a climate of confidence and stimulate the activities of the

enterprises, so that they can have the respect for the rule of competition (Wahab and

Ijaiya, 2010). But on the contrary, government policies seem to have constituted a serious

problem to the growth of SSEs. Weak government financial regulatory policies take

different forms: regulations governing the starting of business, access to funds, interest

rates, taxation and foreign trade (Kasseeah, 2012). In many African countries vis-à-vis

Nigeria, business laws are archaic, too complex and too general in relation to SMEs, most

of whom tend to be ill informed about these laws. Government regulations on businesses

XIX

distort the operation of the free market enterprises system and impede competition; many

of the regulations require the same level of compliance for both small and large

enterprises.

From all the problems mentioned it is obvious that the government have not been

able to realign their policy frameworks to combat the deepening crises of development

that has plagued SSEs. Therefore, since business ideas cannot survive without proper

financing, there is the need to intensify efforts to promote business support services for

SSEs with a view to upgrading them to sound and sustainable business entities.

Statement of the Problem

Small scale enterprises (SSEs) and medium enterprises (MEs) form the core of

majority of the world’s economies. SMEs contribute to improved living standards, bring

about substantial local capital formation and achieve high level of productivity and

capability. The sector has also been identified as vehicles for employment generation and

providing opportunities for entrepreneurial sourcing, training, development and

empowerment. The Federal Office of Statistics of Nigeria stated that small-scale

enterprises make up 87% of the economy. As part of the proactive strategies, the federal

government of Nigeria through the Ministry of Industry, Trade and Investment has

flagged off the University Entrepreneurship Development Programme (UNEDEP) to

promote self-employment among youths from institutions of higher learning. Similarly,

the federal government established the Youth Enterprise With Innovation in Nigeria

(YouWiN) as a way of encouraging young entrepreneurs, to stem youth restiveness and

their involvement in social vices as well as to engage them in productive economic

XX

activities. Furthermore, the Central Bank of Nigeria (CBN) recently launched a N220

billion Micro Small and Medium Enterprises (MSME) Development fund. The aim was

to provide funds at a cheap cost and longer terms compared to what is obtain at

commercial banks.

Despite the increasing importance attached to small-scale enterprises, a lot of

SSEs still find it very difficult to effectively play their role because of the high mortality

rate of these small firms especially in Plateau State. According to the Small and Medium

Enterprises Development Agency of Nigeria (SMEDAN, 2013), 80% of small businesses

die before their 5th anniversary. Some of these constraints have been identified to

include high interest rate, banks’ apathy to financing SMEs because of the perceived risks

in the system, multiple taxation, poor accounting system, weak management system,

marketing, economic, planning and finance.

It is often conceived that faster economic growth will not be possible without

finance. Realizing that finance is the propeller that key the engine for the running of any

business organization, this study is undertaken to identify the financial impediments

(weak government financial regulatory policies, low credit facilities, mismanagement and

poor financial practices) to the sustainable growth and development of small scale

enterprises operating in Plateau State and proffer strategies for ameliorating these

impediments.

XXI

Purpose of the Study

The general purpose of this study was to determine the financial impediments to

sustainable growth and development of Small-Scale Enterprises operating in Plateau

State. Specifically, the study will sought to:

1. determine the extent to which level of inaccessibility of credit facility impede the

growth and development of small scale enterprises in Plateau State.

2. determine the extent to which government financial regulatory policies impede the

growth and development of small scale enterprises in Plateau State.

3. determine the extent to which poor financial management practices impede the

growth and development of small scale enterprises in Plateau State.

4. determine strategies for ameliorating the financial impediments to sustainable

growth and development of Small-Scale Enterprises operating in Plateau State.

Significance of the Study

The findings of this study would be of tremendous benefits to owners

(entrepreneurs), Managers and Accountants of small scale enterprises (SSEs) and

medium scale enterprise (SMEs) operating in Plateau State, youths, other researchers and

the governments (policy makers) of Plateau State.

The result of this work would provide useful information to existing and potential

entrepreneurs (business owners) on the possible ways of sourcing funds to business

organization at a low interest, thereby overcoming their financial challenges and bringing

about growth and development. Owners of small scale businesses will get to understand

some of the mismanagement practices that are counterproductive to the business.

XXII

Youths in the state can easily become aware of possible sources of capital to start

or expand their businesses, because the study will expose possible ways of accessing

funds from both government and non-governmental agencies. Findings from this study

will enable the youths to be more focused, self employed and as well reduce the rate of

crime and unemployment in the area.

The Management of small scale enterprises will benefit by addressing financial

impediments such as source of credit facilities and policies that often hinder the growth

of their businesses. This will enable the management to boost their financial strength.

Managers and accountants and accountants of SSEs can easily access valuable

information, such as accurate and timely information on market opportunity, technology,

business practices and regulations and also assist them to take a full advantage of these.

Policy makers of Plateau State will become aware of the financial inhibitors such

as insecurity, weak policies, inadequate collateral and non-timely information to small

scale businesses. It will enable policy makers in formulating measures and policies as

follows: Encouraging the commercial financial institutions to participate in SSEs

financing and providing incentives and rewards to the commercial financial institutions

for their excellent performances; Providing SSEs with human-resource capacity building

with financing to help them to develop financial tools for their enterprises; Developing

the risk assessment and risk based regulatory framework for the SMEs financing;

Establishing a special financial institution for SSEs which will provide fund and venture

capital for the start-up business and improving liquidity for SSEs to improve product

quality and access to new technology.

XXIII

Finally, the study will serve as source of literature to both students and lecturers,

thereby adding to the world of knowledge. Future researchers can carry out their study in

similar area based on the recommendations of this work.

Research Questions

In the course of this study, the following research questions will be answered;

1. To what extent does the level of accessibility of credit facility impede the growth

and development of small scale enterprises operating in Plateau State?

2. To what extent do government financial regulatory policies impede the growth and

development of small scale enterprises operating in Plateau State?

3. To what extent does poor financial management practice impede the growth and

development of small scale enterprises in Plateau State?

4. What are the strategies for ameliorating the financial impediments of small scale

enterprises operating in Plateau State?

Hypotheses:

The following null hypotheses were formulated for the study and will be tested at

0.05 level of significance:

Ho1: There is no significant difference in the mean responses of proprietors

and employees on the extent to which accessibility of credit facility impede the

financing of small scale enterprises in Plateau State?

Ho2: There is no significant difference in the mean responses of proprietors

and employees on the extent to which government financial regulatory policies

impede the financing of small scale enterprises in Plateau State

XXIV

Ho3: There is no significant difference in the mean responses of proprietors

and employees on the extent to which insecurity of life and property impede

financing of small scale enterprises in Plateau State

Ho4: There is no significant difference in the mean responses of proprietors and

employees on the strategies for ameliorating the financial impediments of small

scale enterprises operating in Plateau State

Delimitation of the Study

The study is delimited to small scale enterprises (SSEs) operating in the Central

Senatorial zone of Plateau State. The zone comprises of five local government areas

namely; Pankshin, Mangu, Bokkos, Kangke and Kannam. The study was be based on the

opinions of entrepreneurs and employees of the small scale enterprises operating within

this zone in the state. Finally, medium and large business enterprises operating in the

central senatorial zone were not involved in the study.

XXV

CHAPTER TWO

REVIEW OF RELATED LITERATURE

The related literature for this study was reviewed under the following sub- headings:

1. Conceptual Framework

• Meaning and Roles of Small-Scale Enterprises

• Financial Impediments Encountered by Small-Scale Enterprises

• Fund Raising by Small-Scale Enterprises and Credit facilities available to

Small-Scale Enterprises

• Government Financial regulatory Policies.

• Financial Management Practices of Small-Scale Enterprises

• Strategies for Ameliorating the Financial Impediments of Small-Scale

Enterprises.

2. Theoretical Framework

• The Life Cycle Theory.

• Theory of Growth and Size of Firm

3. Related Empirical Studies

4. Summary of Reviewed Literature

XXVI

Conceptual Framework

A concept is a mental representation, which the brain uses to denote a class of

things in the world. According to Eboh (2009), a concept is an idea, thought or

devolution of abstract system of thoughts, by which science investigates, interprets, and

understands particular segment of reality of phenomenon. Concepts are mental

representations that allow the researcher to draw appropriate inferences about the type of

entities we encounter in our everyday lives.

Conceptual framework is a tool researchers use to guide their inquiry; it is a set of

ideas used to structure the research, a sort of map that may include the research question,

the literature review, methods and data analysis. According to sociologists Haralambos

and Holborn (2008), a conceptual framework enables the researcher to find links between

the existing literature and his own research goals. Conceptual frameworks, according to

educational researcher Smyth (2004), are structured from a set of broad ideas and theories

that help a researcher to properly identify the problem they are looking at, frame their

questions and find suitable literature. The framework spells out the context and forms of

relationship or interactions between phenomena, as well as the process or flow associated

with the interactions. Through the conceptual framework, the researcher can show the

relationships of the different constructs that he wants to investigate.

Meaning of Small-Scale Enterprises

Over the years, Nigeria government has seen small-scale enterprises (SSEs) as

the cradle for industrialization and a prerequisite for rapid economic growth and self-

reliance. Despite the important roles played by SSEs in Nigeria, there is no generally

XXVII

agreed or universally applicable definition. Numerous factors related to a given socio-

economic environment, tend to influence the definition of SSEs (Aremu, 2010). The

definition of small scale industry varies with the culture and peculiar circumstances of the

person attempting the definition. Studies on small scale enterprises identified more than

fifty different definitions in seventy-five countries (Agbasi, 2010). In Britain for instance,

the standard definition of small scale enterprises that it is a business with an annual

turnover of two million pounds sterling or less, with less than two hundred paid

employees. In United States, the size of a business is measured using several criteria

including the number of employees, total sales volume and total assets. Any business that

employs more than one hundred people or grosses less than one million dollars is

considered small in United States, whereas, in Nigeria, this definition perfectly fit into

medium scale business. Similarly, in Japan small businesses are described as “Ocusho

Kigyo” which refers to small and medium firms that may secure capital up to one

hundred million Japanese yen and less than 299 employees in manufacturing (Fatoki, and

Adeyemi, 2010). This therefore makes it relatively difficult to attempt to define small

scale enterprise differently from medium scale enterprise.

In Nigeria, a small scale business is understood to be an independent business

undertaking where operational, major decision(s) making and administrative management

are in the hands of one or partners of about two (2) persons who have a total assets less

than two million naira (N2 million) and a relatively small share of the market and does

not have more than 100 employees (Osuala, 2004). Most activities in Nigeria that can be

categorized as SSEs are small and usually managed as sole a proprietor with self-

XXVIII

employment as a key element of such enterprises (IADB, 2011). The Monetary Policy

Circular No. 22 of the Central Bank of Nigeria (2004) defined small-scale enterprises as

enterprises whose annual turnover was not more than N500, 000. The Federal

Government of Nigeria (2006) also defined small-scale enterprises for purposes of

commercial bank loans as those with an annual turnover not exceeding N500, 000, and

for Merchant Bank Loans, those enterprises with capital investments not exceeding 2

million naira (excluding cost of land) or a maximum of N 5 million.

In this study, Small-Scale Enterprises (SSEs) consist of all business organizations

whose total capital employed is not more than N5 million including the cost of land and

workforce capacity between 1-20. This definition is essential because it laid down

parameters under which a business may take advantage of the different incentives created

by government for the growth of the SSEs sector. Some of these incentives according to

Kauffman (2005) include export incentives, technical assistance and tax relief. The

definition also gives room for more small scale business operators to participate in the

national economic development prospect and also stressed the abilities of SSEs in high

employment generation capacity.

Role of Small-Scale Enterprises

The government of Nigeria have made several policies/decisions to switch from

capital intensive and large scale industrial projects which was based on the philosophy of

import development to Small and Medium Scale Enterprises which have better prospects

for developing domestic economy, thereby generating the required goods and services

that will propel the economy of Nigeria towards development.

XXIX

To better understand the role of SSEs, there is the need to analyze the economic

history of both emerging market and industrialized countries like China, Korea, India,

Turkey, Italy, Holland, UK etc. The Italian fashion industry was virtually built on the

backbone of "Mum and Pop" cottage industries (Ojo, 2009). China has made a name for

itself as the world's "work-house" just on the basis of low-tech manufacturing activities.

Simply put, the earliest manifestations of SSEs in advanced countries were cottage

industries that later transformed into industrial complexes and high tech factories: In

China SSEs employ over 50% of the work force while In US, SSEs account for over

50%.

Small scale enterprises in Plateau State is seen as the backbone to

industrialization and are a key source of economic growth, dynamism and flexibility. In a

Plateau State Handbook (2006), the government has realized that the objective of

transforming the state into a major industrialized economy depends critically on the

private sector performing the leading role in investment management through the growth

in SSEs. A study conducted by the Federal Office of Statistics (20012) showed that 97%

of all businesses in Nigeria employ less than 100 employees, implying that 97% of all

businesses in Nigeria are to use the umbrella term, "small businesses". The SSEs sector

provides, on average, 50% of Nigerians’ employment, and 50% of the countries’

industrial output (Ayozie, 2008). Indeed, there appears to be an agreement that the

development of SSEs in Plateau State is a right step towards building a vibrant and

diversified economy. Given that a large proportion of Plateau State population relies

either directly or indirectly on small and medium enterprises for survival, Small

XXX

enterprises then serves as a key source of new jobs, innovation, economic dynamism and

greater social growth (Bello, 2007).

Financial Impediments Encountered by Small-Scale Enterprises.

Small scale enterprises (SSEs) have become a popular phrase in Nigeria since this

administration. Hopefully this signifies a growing realization as to the core values that

SSEs can deliver to Nigerians such as Job Creation, Poverty Alleviation and Foreign

Exchange Conservation. Nevertheless, Small scale enterprises in Nigeria have not

performed creditably well due to some challenges. These challenges have led to the slow

growth of SSEs in Nigeria and Africa at large. For example, only about 3 per cent of

SSEs expanded beyond three employees after start-up ((Aremu, 2010)). This situation has

been of great concern to the government, citizenry, operators, practitioners and the

organized private sector groups. According to Alasan and Yakubu (2011), most SSEs

particularly in Nigeria vis-à-vis Plateau State die within their first five years of existence.

Ana (2008) revealed that smaller percentage of these SSEs goes into extinction between

the sixth and tenth year while only about five to ten percent of young companies survive,

thrive and grow to maturity. Many factors may have been identified as the likely reasons

to the premature death of this sub-sector. Alasan and Yakubu (2011), stated that key

among these factors include insufficient capital, lack of focus, inadequate market

research, over-concentration on one or two markets for finished products, lack of

XXXI

succession plan, inexperience, lack of proper book keeping, irregular power supply,

infrastructural inadequacies (water, roads etc). They added that factors such as lack of

proper records, inability to separate business and family or personal finances, lack of

business strategy, inability to distinguish between revenue and profit, inability to procure

the right plant and machinery has drastically stunt the growth of SSEs in Plateau State.

Many authors categorized these problems in different ways. Whiteman (2011)

summarized these problems into two major categories: micro and macro problems. While

the micro problems are those that are inherent in nature and operations of the SSEs, the

macro problems are those that are inherent in the economy thereby making the business

environment difficult for the SSEs to strive or operate. To conclude on the major

constraints facing small-scale enterprises in Nigeria, Obi (1991) pointed out that the issue

of misappropriation of funds and wrong channeling as a major hindrance to the growth of

SSEs in Nigeria. she observed that the plan by the federal and state governments to

provide modest loan to small scale-business operations was a flop, because loans were

granted in most cases on political grounds rather than on commercial or project viability

considerations. She noted that what was supposed to be revolving fund designed to

benefit so many SSEs owners ended up as a bonanza for a few and it become virtually

impossible to recover most of the loans.

But for the purpose of this study the researcher will focus mainly on the financial

impediments (weak government financial policies, low credit facilities, mismanagement

and poor practices) facing small-scale enterprises in Nigeria.

XXXII

Fund Raising by Small-Scale Enterprises

Financial impediments simply refer to every delay, hindrances, actions, obstacles

or progress; any structure that financially makes progress difficult to SSEs. Finance is

regarded as the propeller that keys the engine of business organizations, therefore;

adequate supply of funds becomes necessary to both new and existing businesses

((Aremuetal, 2010). According Levine (2007), the two major ingredients that must be

present before starting a small business are: Entrepreneurial motivation - This is the zeal,

drive that brings about the vision to start up and Finance a business. Of this two, they

noted that finance carries the heavier weight because with the strongest zeal and

determination, there will be frustration without finance. In most cases, the initial finance

investment comes from the promoter's personal savings or, contribution from family and

friends. Most of the times, this is not always sufficient for a good starting. Therefore, the

major difficulty faced by SSEs in Nigeria vis-à-vis Plateau State is that of lack of access

to short and long term finance (World Bank, 2005).

Every business organization, small, medium, and large operates within the

framework of financial fundamental concept, and the basic financial management

principle is financial decision: the principle (finance) is the determinant of when, where

and how to acquire funds to finance the business (Fabayo, 2009). An entrepreneur must

determine business planning stage, the amount of financial resources needed or required

by the business and how and where to raise the funds.

One of the financial impediments that may have been confronting SSEs in Nigeria

vis-à-vis Plateau State is not knowing how to raise funds or capital for their business.

XXXIII

The various ways of raising funds opportunities are not widely known to these SSEs. One

of the major problems identified as being responsible for the slow disbursement of the

SMEEIS funds in the first few years of its introduction was lack of awareness among the

intended beneficiaries (World Bank and UNDP, 2009). The organizations noted that this

is partly due to limited exposure to timely business information. SMEEIS added that

SSEs often do not have sufficient information about how and where to raise funds. IFAC

(2010), in their study reported that SSEs need more information and knowledge on fund

raising avenue than that of large businesses, because SSEs are more prone to loan request

refusal. The Nigeria Investment Promotion Commission (NIPC, 2010) noted that SSEs

lack knowledge of finance supply, sources and available banking and credit services.

NIPC noted that this stifles the take-off and growth of SSEs in Nigeria.

Another financial impediment is in the area of sourcing for funds through lease.

Leasing is one of the types of financing that overcome the collateral problems that SSEs

experience in financing (IFAC, 2010). Lease is a contractual relationship between a

leaser and a leassee. It is a medium-term financing that is supposed to be a helpful source

of finance. According to the Chartered Institute of Management Accountants (CIMA,

2000), a lease is a contract between a leaser and a leassee for the hire of a specific asset.

The leaser retains ownership of the assets and conveys the rights to use of the asset to the

leassee for an agreed period of payment specified rental. There are basically two types of

lease arrangements (Beck and Demirgüç-Kunt, 2011). First, the financial lease in which

the leassee pays for use of the equipment with the option of purchasing it at the end of the

lease. The term of the financial lease has duration equal to most of the economic life of

XXXIV

the asset. Second, the operating lease in which the lessee rents the equipment from the

lessor and the lessor retains ownership and claims depreciation on taxes. An operating

lease is a short-term lease that is cancellable by the leassor or leassee upon due notice to

either party. Ovi (2005) explained that in some quarters, leasing has become the single

most important source of external finance for SSEs; hence it does not require down

payments and collaterals.

However, there is low utilization of lease financing by both large industries and

SSEs in developing countries especially Nigeria, with leasing being only less than 2 per

cent as a source of financing for SSEs compared to 15 per cent access to bank loans

(Beck and Demirgüç-Kunt, 2011). They observe that leasing and factoring as a source of

finance for SSEs are underdeveloped in emerging economies. Several studies conducted

in Africa show that the leasing market is underdeveloped and where it exists it tends to

serve large establishments. Ahmed (2001) noted that there is a huge demand for leasing

among SSEs in Nigeria, Tanzania and Uganda but the share of lease financing to

manufacturing industries remain insignificant. The extent to which the manufacturing

industry’s access to lease financing in Africa is not well documented. Nevertheless, the

share of manufacturing in lease financing suggests that SSEs are at a disadvantage. For

instance, in Nigeria only 6 per cent of the values of leased equipment are in the

manufacturing sector and 18.6 per cent in the construction and mining sectors (IFAC,

2010). According to Oboh (2004), leasing accounts for only 1 per cent of outstanding

total credit to the private sector. In Rwanda, only 7 per cent of the assets financed under

leasing are plants and machinery, with vehicles accounting for 65 per cent; and only 123

XXXV

per cent of the leases are in manufacturing and mining sectors. Leasing as presently

operated in Nigeria vis-à-vis Plateau State has become a source financial impediment to

SSEs.

Another similar source of finance to small scale enterprise is hire-purchase. This is

supposed to be a convenient approach to finance enterprises in purchase of plant and

equipment. Nnanna (2001) explained that hire-purchase is a credit sales agreement by

which the owner or supplier of an asset grants the purchaser the authority to take

possession of the assets until the purchaser has satisfied all the terms of the contracts. The

high cost of acquiring equipments through hire-purchase agreement is a financial

impediment to entrepreneur in raising funds (Nnanna, 2001). Hence, the cost of acquiring

equipments in hire-purchase is higher and above the market price. According to Ajayi

(2002), hire-purchase option can only be considered as a last resort in raising funds for

any SSEs operating in Nigeria. He explained that the cost-effectiveness is low, because

the entrepreneur sometimes pays twice the asset value on the long run.

Education has been identified by many scholars as another fund raising-

impediment to SSEs in Nigeria. Obitayo (2002) opined that SSEs with only basic formal

education (First School Leaving Certificate) have more restricted access to institution

finance including the short term working capital to meet fluctuating needs. He noted that

due to their low educational status, the SSEs find it difficult to keep accounting records.

Similarly, Sanda (2006) observed that because most Nigeria SSEs are not highly

educated unlike their counter parts in the developed countries, they face difficulties

XXXVI

gaining access to information on the contemporary approaches of raising funds for

business expansion.

Credit Facilities Available to Small-Scale Enterprises

Credit is not an end in itself; it is a means to an end. The ultimate goal is to affect

productivity (Nigeria Investment Promotion Commission, 2004). The best business ideas

will not survive without proper financing. It is a valid concern for entrepreneurs, as

financing is the lifeblood of a business. Available credits from the banking sector have

been plagued with high interest rates (UNDP, 2007). The organization added that lending

rates to agriculture, manufacturing and the oil and gas sectors have reached about 30 per

cent, with unofficial rates climbing to about 35 percent. Financial experts noted that there

is limited incentive on the part of the banks to lend to the real economy. Banks will rather

maximize the significant spread between low savings and deposit rates and fixed income

yields. SSEs should be recognized as a special group of SMEs that is critical for

industrialization in Africa, and requires specific policies and incentives. A 2001 World

Bank survey on Nigeria's firms showed that although 85 percent of the firms had

relationships with banks, not all of them had access to external credit. The financial

sector in most African economies especially in Nigeria is characterized by very low

levels of financial intermediation and weak capital markets, which cannot effectively

supply the financial resources and other products needed by the private sector (Makhbul,

2011).

In A survey conducted by World Bank in 2010 on Nigeria’s Firms shows that

the larger a firm, the more likely it is to have access to external sources of

XXXVII

credit. Almost 100 percent of firms with more than 250 employees have access to credit

compared to only 52 percent of micro-enterprises (small firms). Interestingly,

over 90 percent of foreign firms have access while less than 60percent of

indigenous firms’ do. According to an economic report from the Central Bank of Nigeria

(2011), the aggregate net credit by banks to the domestic economy fell by 2.7 per cent

and 0.1 per cent in the second and first quarters of the year respectively. In Plateau State,

there has been a steady decline in aggregate credit to the economy, and the private sector

in particular (PSD, 2008).This is largely due to the sustained monetary tightening,

significant rise in government domestic borrowing, and attractive yield of government

bonds and treasury bills. Lack of adequate credit for SSEs traceable to the reluctance of

banks to extend credit to them owing among others to poor documentation of project

proposals as well as inadequate collateral by SSE operators. Weak demand for products

arising from low and dwindling consumer purchasing power and lack of patronage of

locally produced goods by those in authority.

In a study of four African countries: Kenya, Nigeria, Zambia and Zimbabwe, it

was found that the percentage of SSEs receiving bank credit ranged from 8.2 per cent in

Zimbabwe to 24.6 percent in Kenya (Cleark,2005). According to Kasseeah (2012), Small

Scale Enterprises are more constrained in the use of collateral, long-term relationship and

reputation, which eased information problems. Lack of collateral was the most constraint

that SSEs face in accessing lines of credit from the formal financial system (Oh, 1994;

Falkena, 2002).

XXXVIII

Focusing on the issue of collateral in accessing funds, Basil (2005) argues that

lack of collateral is the most important obstacle to SSEs in having access to the formal

financial institutions. In a study of six African countries, Bigsten, & Gebreeyesus (2007)

observed that most lending was collateralized and the value of collateral was typically

high, on average more than twice the value of the loan. However, in most low income

countries, such collateral as land and buildings did not have good titles to real estate and

so in the event of non-payment, there were delays in the exercise of contract rights to

possess collaterals and liquidate the business (Wattanapruttipaisan, 2003). There are

several factors that lead to problems of access to bank loans by the SSEs both from the

perspective of the banks and SSEs. It is argued that SSEs lack corporate governance,

equity and forward-looking vision while the banks are ill-equipped to supervise SSE

loan-portfolio perspective of the banks, they do not have specialized staff and appropriate

financing frameworks for SSEs.

Small and medium-scale business entrepreneurs also source for funds though

Trade Credit. Trade Credit is the most common form of short-term financing. It is an

inter-business credit granted by the suppliers, who allow the buyers to collect goods and

services on credit, based on mutual confidence established between the supplier and the

implied obligation on the buyer, to pay the cost at a later date (Basil,2005). Small-scale

enterprises operators are slow in sourcing finance through trade credit because it provides

only very minimal amount in relation to the capitalization, rehabilitation or working

capital requirement of enterprises. Basil claimed that trade credit as a source of finance to

SSEs has most often hindered the continual operation of the benefiting entrepreneurs.

XXXIX

Another area of emphasis is in management. The small-scale enterprises (SSEs)

management process is characterized by the highly personalized preferences, prejudices,

and attitudes of the firms’ entrepreneur, owner and/or owner-manager (Jennings and

Beaver, 2009).

Accounting procedures are programmatic, more numeral than principle and more

susceptible to change, they often represent alternative way of applying the same

principle. They pointed out that the accounting systems of most SSEs lack standards

hence, no proper assessment of their performances. This creates opportunity for

mismanagement and eventually leads to the death of the business. Izedomi (2011) noted

that, most small-scale enterprises managers and accountants do not believe that

qualification and managerial ability are important for business growth and survival, and

so have neglected these factors as basic for the development and growth of their

businesses. Similarly, Basil (2005) stated that banks are not left alone in the restrictions

to lending to SSEs as the promoters themselves (SSEs) contribute to the inherent

impediments. According to him, most loan application from SSEs are poorly prepared,

documented and presented. The author stated that banks are unable to appraise the loan

application due to poor application and feasibility study. To him, most SSEs are unable to

provide equity contributions which are usually set at between 25 and 30 percent of total

project cost and are therefore, unable to obtain loans. Closely related to this is the issue of

collateral which SSEs are unable to provide.

Another major area of concern to SSEs is in area of marketing. This is because

when correctly used, subjective values may be added to these products. The consumers

XL

will perceive these products as superior to those of competitors and consequently, profit

margins may be increased. But as noted, poor quality, unawareness of competition, poor

promotion, poor distribution, and poor pricing method constitutes to the failure/collapse

major failings of small-scale enterprises in Nigeria vis-à-vis Plateau State (Izedomi,

2011). The author noted that one of the major marketing problem facing small business

enterprises in Nigeria is lack of understanding and the application of marketing concept.

In a study conducted by Izedomi (2011), this was conspicuously exposed. Most Plateau

State, small business owners equate ‘marketing’ to ‘selling’ and this is reflected in their

various dysfunctional business behaviors against customer satisfaction and good business

orientation. Izedomi noted that the adoption and application of marketing concept is one

sure way by which small business enterprises can grow and secure a place in the 21st

business environment. Because marketing skills and knowledge are teachable, they can

only be acquired through training and experience but unfortunately, many small scale

entrepreneurs lack the necessary time and funds to embark on such training.

Another poor financial management practice of SSEs in Plateau State is wrong

attitude of Entrepreneurs and their workers. The attitude of some entrepreneurs to loans

and that of their workers to work is counterproductive. Some entrepreneurs when offered

credit facilities believe that it is their share of the “national cake”, (Ireghah, 2011). These

SSEs therefore mismanage such opportunities. Ireghah added that since salaries or wages

of workers in SSEs are smaller compared to those in large-scale multinationals, some of

these workers engage in eye service and are not productive. According to Oboh (2004),

XLI

SSEs indulged in habit of loan diversion. The author noted that after obtaining loans,

some SSEs utilize the loan for the purpose other than which they were advanced thereby

making loan repayment very difficult if not impossible. In addition to this, is the issue of

loan defaults. Oboh observed that there are few instances where SSEs willingly redeem

loan covenants on due date, even when their businesses are profitable going concerns.

Government Financial Regulatory Policies in Small-Scale Enterprises

The government of any country is a super- body that exerts enormous power in a

given nation. By this implication, it has the capacity and ability to influence almost every

institution under its jurisdiction. Government acts as a business regulator with the overall

aim of helping to maintain a climate of confidence and sanity to stimulate the activities of

the enterprises, so that they can have the respect for the rule of competition (Wahab and

Ijaiya, 2010). Nigeria Governments policies seem to have constituted a serious problem

to the growth of SSEs.

The beginning of harsh government policies toward SSEs in Nigeria can be traced

back to 1982 with the introduction of “stabilization measures” which resulted in import

controls and drastic budget cuts (Rungani and Fatoki, 2010). These, in turn, adversely

affected the subvention to the financial institutions established to provide financial

assistance to the SSEs. For example, in 1983, out of a total of 8,380 applications for loans

received from the SSEs for a total of 46.66 million naira was disbursed. He noted that as

the economic situation deteriorated, the government introduced the Structural Adjustment

Programme (SAP) in 1986. Since the strategy of liberalization and deregulation of

interest rates was implemented, interest rates have continued to increase. The SSEs,

XLII

which prior to the SAP had been granted concessionary rates of interest (particularly for

agricultural and housing loans), had great difficulties obtaining credit of a Stabilization

Securities Account (SSA) whereby the banks were debited with liquidity in their accounts

with the Central Bank.

In many African countries vis-à-vis Nigeria, business laws are archaic, too

complex and too general in relation to SMEs, most of whom tend to be ill informed about

these laws. Laws regarding licensing, taxation, factories zoning, availability of land are

inadequate, punitive or non-existent. Those governing leasing, credit sales and mortgages

negatively affect the financing and acquisition of equipment by SMEs. In the same vein,

Andreas (2005) in an empirical study titled analysis of the impact of government policies

on SSEs/SMEs (entrepreneurial development) in Nigeria vis-à-vis Plateau State, noted

that government policies and programs on SSEs are concentrated in the cities where there

is strict competition between the SSEs products and large scale business. ILO (2000)

stressed that regulatory policies often aimed at developing other sector of the economy

have unintended negative impact on SSEs. For instance, trade liberalization intended to

boost export revenue often stifles local substitutes. According to ILO (2000), this

argument is emphasized in the summary by the organization for Economic Co-operation

and Development (OECD 1997) below:

……. While some regulations may deliberately favour SSEs

(many regulations exclude the smallest businesses), in

general the adverse impact of regulations on SSEs can be

particularly harmful. This is because small-scale

XLIII

enterprises are less equipped to deal with problems arising

from regulations since they have less capacity than larger

firms to navigate through the complexities or regulatory

and bureaucratic network. Small-Scale Enterprises are

more likely to be hampered by regulations because their

strength stems from their flexibility. Some regulations

designed to prevent entry into the market by dynamic small-

scale businesses are particularly detrimental.

Similarly, Whiteman (2011) noted that the frequent changes, and sometimes

conflicting government monetary policies, have also tended to hurt the SSEs. For

example, while the government increased total credit allocation to SSEs from 16 to 20

per cent, the same government removed excess liquidity in the banking industry through

increase in the minimum rediscount rate (MRR).

Unstable government policy has not been helpful to small scale industries. This

has destabilized and indeed sent many small scale industries to early fold ups. Instability

in government policies had caused some establishments to collapse. One of such policies

is that of the 1980s when government specified that cocoa should not be exported in raw,

unprocessed form after a specified deadline. Many industries had to import machineries

only for the government to reverse this policy. He noted that this actually affected so

many in the cocoa industry. Riots, ethnic clashes, etc. have resulted in loss of lives and

properties of entrepreneur. In recent times, Nigeria has had a lot of disturbances like;

XLIV

Kaduna, Kano, Jos religious riots, ethnic clashes in Lagos, Tiv-Jukunv, Warri, Ife-

Modakeke, etc. It becomes very difficult for some SMEs to come out of these

predicaments. Patrick etal (2010) also noted that the frequent changes in government

policies regarding SSEs often undermine its implementation. They noted that there is no

genuine commitment on the part of government, private sector and labour union in the

achievement of the stated objectives. Government regulations on businesses distort the

operation of the free market enterprises system and impede competition; many of the

regulations require the same level of compliance for both small and large enterprises.

Rungani & Fatoki, (2010) opined that monetary and fiscal policies on SMEs discriminate

against their development. These includes: Inadequate fiscal measures, unfavorable

monetary issues like high interest rates, unavailability of credits, poor access to credit,

inadequate financial structures, Interest rates that are sometimes higher than the rate of

returns on investments. This discourages entrepreneurs from borrowing or crippling the

business of those who borrowed but were unable to repay.

Developmental policies weigh in favour of large firms and sometimes foreign –

owned firms leaving SSEs in a distressed and vulnerable position (Ovia, 2004). The

author noted that incidence of multiplicity of regulatory agencies and taxes has always

resulted in high cost of doing business and poor management practices, and low

entrepreneurial skill arising from inadequate educational and technical background of

many SSEs promoters. Similarly, Kasseeah (2012) noted that another impediment is in

government improper implementation of its policies. To him the government inability to

recruit trained manpower and adequate equipment to aid the extension services of SSEs

XLV

tends to affect their performance. According to Obi (1991), the development centers were

not endowed with adequate manpower to carry out technical appraisal of applications for

loans from surging applicants. Another area is misappropriation of funds and wrong

channeling. Obi (1991) pointed out was the plan to provide modest loan to small scale

business operations was a flop, because loans were granted in most cases on political

rather than on commercial or project viability considerations. What was supposed to be

revolving fund designed to benefit so many SMEs owners ended up as a bonanza for a

few and it became virtually impossible to recover most of the loans.

From all the problems mentioned it is obvious that Nigeria have not been able or

willing to realign their policy frameworks to combat the deepening crises of development

that has plagued SSEs during the past two decades.

Ways of Ameliorating the Financial Impediments to the Growth and Development

Small-Scale Enterprises

African countries vis-à-vis Nigeria have recognized that there is the need to

intensify efforts to promote business support services for SSEs with a view to upgrading

them to sound and sustainable business entities. These services should include

accounting, strategic marketing and management, and financial literacy. The SSEs must

enter the formal sector – equity-based registration, maintenance of accounting records,

maintaining auditing accounts, compliance with the tax system, and having clear strategic

focus of the business (World Bank 2010).

Some of the countries in Asia have created special financial institutions to cater

for SSEs needs (Oh, 1994; UNCTA 2001). However, as UNCTAD (2008) noted, such

XLVI

institutions introduced in some countries (such as Colombia, India, Japan, Pakistan,

Republic of Korea and Turkey) have had mixed success with some experiencing

problems of poor loan portfolio performance, declining profitability, and becoming

unsustainable. UNCTAD maintained that the SSE sector is usually segmented by size

categories without paying attention to the nature of economic activities. Most government

policies tends to homogenize challenges and solutions to SMEs as applying to SSEs.

Osuala (2004) opined that SSEs should be recognized as a special group of SMEs that is

critical for industrialization in Nigeria vis-à-vis Plateau State, and should require specific

policies and incentives. Often time, the financing problems of SSEs are usually lumped

together with other SMEs focusing on working-capital needs. In contrast, SSEs in

addition to working capital require long-term financing to support investments in

machinery and equipment.

In order to promote small-scale industrialization in African countries, it is

important for governments to design policies and incentives tailored towards the

promotion of SSEs, distinct from those that apply to SMEs in general (UNIDO, 2007).In

terms of financing needs of SSEs, they require to finance plant and equipment in addition

to working-capital needs. Most of the strategies for the promotion of SSEs access to

finance tend to focus on working-capital needs through short-term credit, ignoring capital

financing needs that are usually medium to long-term (Nichter and Goldmark, 2009). The

financing of SSEs is complex as the needs vary from country to country, thus country

specific solutions are required to address these gaps. They noted that it is also important

that the problem of financing SSEs must be addressed holistically. While increasing the

XLVII

volume of finance is necessary, addressing the technical needs of SSEs and ensuring the

environment is conducive for profitable investments are equally important. Marrand

Tubaro (2013) reveals that one of the most effective ways of building sustainable small

businesses is by creating a linkage between them and commercially viable Microfinance

Institutions (MFIs). To them, Micro finance institutions will be able to finance

creditworthy low-income entrepreneurs, who otherwise would have no access to

mainstream banks.

There is the need to improve the supply-side issues in African economies.

Competitive banking systems should enable the banking sector to engage strategically

with SSEs as the competition becomes stiff in corporate banking (Marr, 2012). As has

been demonstrated in Latin American countries, banking finance to SSEs has become a

strategic segment of commercial banks owing to competition in corporate-and retail-

banking sectors.

Stock markets in Africa are relatively new. Most of the stock exchanges that exist

in Africa were created after 1990. Out of 53 African countries, there are more than 20

active stock markets (UNDP, 2003). According to Marr, (2012) there are 29 stock

exchanges in Africa representing 38 national capitals but only six of these were

established prior to 1990. Some of the oldest stock exchanges include the Egyptian

Exchange established in 1883, Johannesburg Stock Exchange (JSE) founded in 1887,

Casablanca Stock Exchange founded in 1929, the Nairobi Stock Exchange established in

1954, Nigeria Stock Exchange founded in 1960 and the Stock Exchange of Mauritius

XLVIII

(SEM) established in 1988. Although there has been noticeable growth in stock markets

on the continent in terms of numbers and market capitalization, most of these markets are

thin with the number of stocks listed as small as three firms (Hermes and Lensink, 2011).

The awareness and ability of the SSEs to identify the various sources of raising

funds from both internal and external agencies will ameliorate their financial

impediments in their sourcing abilities. Information is the source through which the

SSEs’ awareness is created. Access to relevant time and reliable information on the

various sources of internal and external agencies for funds is very vital for running

successful SSEs. Osuala (2004) explained that planning is critical to the success of any

business. Without planning, a business merely drifts along without any real direction. He

further explained that planning allows the manager to replace ‘I think’ with ‘I know’.

According Osuala, planning help the managers to define planning mission of their

business and create strategies, policies, and procedures. Financial planning is concerned

with the future activities of business financial resource that will ensure the realization of

some goals (Gana, 2001). The more important services are: awareness on government

policies and procedures; it enlightens an operator of SSEs on the general macro-economic

system; enable him to know when and how to benefit from any government assistance in

fund raising from external agencies;

The World Bank has characterized the different types of actions needed to

eliminate these various barriers affecting SSEs as ‘three-pillars’ (World Bank 2000). The

first pillar involves inputs of finance through SSE credit lines, development of micro-

finance banks, or setting up equity capital funds. The second pillar involves actions

XLIX

designed to establish “fair and transparent” tax systems and improvements to the

regulatory framework The third pillar involves the creation of supportive institutions and

support networks. For example, the PHARE programme of technical assistance has been

active in setting up enterprise agencies such as the NEPA in Macedonia and other

agencies and training programmes to support SSE development through the provision of

“real services” in the form of information, advice and training.

The concept of business incubation as a source of financing small and medium

scale business through external agencies is not widely known among Nigerian operators.

Akpokerere (2009) suggested that the various SSEs stakeholders should organize an

integrated action plan which must highlight alternative sources of financing SSEs. The

author stressed that source of fund such as business incubation has made enormous

impact in ameliorating financial impediments in fund generation in South Africa. Some

of the regulations in Nigeria need to be addressed because they are harsh and unfriendly

for business operators.

L

SCHEME

FINANCIAL IMPEDIMENTS TO

SMALL-SCALE ENTERPRISES

GROWTH AND

DEVELOPMENT OF SSEs

Theoretical Framework

LOW ACCESSIBILITY

TO CREDIT FACILITIES

POOR FINANCIAL

MANAGEMENT PRACITCES

WEAK GOV’T FINANCIAL

REGILATORY POLICIES

LOW LEVEL OF EDUCATION

PROPER RECORD

KEEPING IN BUSINESS

RAPID GROWTH AND

DEVELOPMENT OF SSE

TAX HOLIDAY AND SPECIAL COMMERCIAL

COURT FOR SSEs

PROVISION OF SEED FUNDS

AND VENTURE CAPITAL

SPECIAL POLICIES

AND INCENTIVE

STRATEGIES FOR AMELIORATING THE

FINANCIAL IMPEDIMENTS OF SSEs

SLOW GROWTH AND

DEVELOPMENT OF SSEs

LI

A theory is a group of related ideas that provides guidance to a research project or

business endeavor. According to Zima (2007), theoretical framework is a process of

identifying a core set of connectors within a topic and showing how such fit together or

are related in some way to the subject. The theoretical framework is a foundation for the

parameters, or boundaries of a study. The main benefit of a theoretical framework is that

it can help a researcher or writer to determine problem areas, content considerations,

research questions that need to be addressed, and the methodology or way in which the

researcher plans to go about finding an answer to the research question.

Life Cycle Theory

The stage model or life cycle theory of firm was propounded by Mueller 1972, and

was commonly used to describe the progression of the success of firm through growth

phases. This mean that Organisations are born, grow, and decline. Sometimes they

reawaken, sometimes they disappear”. Life-cycle models generally describe the dynamic

within the growth process as “S-shaped”: a slow growth in the early development is

followed by a rapid growth, before the dynamic tends to slow down again.

The stage model or life cycle theory of firm is significant to this study because it

outlines sources of finance typically available at various growth stages of the firm, along

with potential financing problems that may arise at each stage. At the start-up, the

commonly held view is that firms have difficulty accessing external finance. According

to the author the most important and commonly-used sources of finance at this stage are

personal savings of the firm owner, and finance from friends and family members. In

extreme cases, particularly in the face of competition, the firm may not be able to

LII

continue in business. As successful firms survive nascent and start-up phases, and

matures through growth stages, personal funding becomes relatively less important as

investment finance is increasingly sourced from retained profits.

Basically, life-cycle models helps in identifying points on the growth curve where

the risk of crisis or at least a serious slowdown in growth is high. Therefore the life cycle

theory of firm is related to this study because it provides a heuristic framework for the

understanding of Small-Scale enterprise development and justified the reason for the high

mortality rate of small-scale business.

Theory of Growth and Size of Firm

The theory of growth and size of firm was propounded by Garnsey 1998. The

conventional wisdom in economic theory has long held that, due to economies of scale

and scope, the growth of businesses is positively related to their sizes. Large firms were

typically expected to have advantages over small firms and so grow more rapidly. It was

also thought that the small firm sector would play a relatively insignificant role in

regeneration and transition growth. Garnsey observed that, “most studies relating to

periods since 1885 show that small firms grow more quickly than larger firms”.

These empirical studies confirm that in contrast to the orthodox views, small

businesses grow faster than large businesses and this reveals the need for more study in

the area of small-scale businesses. There are several possible explanations of the reasons

for the faster growth of small scale business are; small-businesses are initially uncertain

about their costs, they enter the market at less than minimum efficient scale and over time

grow to reach it.

LIII

A second explanation is that large firms suffer from diseconomies of scale. This is

often linked to the increase in managerial costs as firm size increases and the costs of

coordinating across an expanding span of control encounter limits placed by bounded

rationality. A third explanation was giving by Alnus and Nerlinger (2000) that firms react

asymmetrically to exogenous shocks in the short run. Given short run U-shaped cost

curves, small firms which operate below minimum efficient scale will expand output

when prices rise, while larger firms above minimum efficient scale will not. Conversely,

small businesses will not react to price falls while large firms will reduce output.

The theory of growth and size of firm is significant to this study because it shows

that smaller firms have higher tendency to grow compare to bigger firms. This is because

small businesses do not suffer from diseconomies of scale such as managerial costs and

do not react to price fall as large firms do. The theory will help both government and

private individual to increase the focus on small scale enterprises instead of large

business organizations for meaning growth and development.

Related Empirical Studies

This section dealth with empirical studies done in the area of small- scale

enterprises (SSEs).

As early as 1969, Goldsmith (1969) provided the first cross-country empirical

study documenting the existence of a link between finance and growth. The study used

ex-post facto or retrospective and prospective designs together with descriptive design

and descriptive comparative as well as correlation design. 335 questionnaires were

distributed to respondents and were the ones used for analysis. Further studies followed

LIV

confirming the existence of a strong positive link between the functioning of the financial

system and growth. The study created a vacuum by studying only on the link between

finance and growth of businesses without identifying the major financial constraints

faced by these SSEs. This study will fill the vacuum by identifying the major financial

constraints experienced by SSEs and recommendations on how to alleviate the problems.

In a similarly study conducted by Levine in 2005, finance foster growth as they produce

exact information about possible investment; monitor investment and exert corporate

governance after providing finance; facilitate the trading, diversification, and

management of risk; mobilize and pool savings; and ease the exchange of goods and

services. The work by Levine created a gap by stressing mainly on the importance of

finance to business organization without proffering possible means of acquiring these

finance.

Furthermore, in a research study conducted by Idemobi (2012) on “Factors that

Impede the Sustainability of Small-Scale Enterprises (SSEs) in a Typical Sub-Saharan

Africa context in south-East Nigeria”. The author found out that poor infrastructural

facilities (especially electricity, water and roads), lack of access of formal sources of

credit, high incidence and prevalence of violent crime leading to high operational costs

are the major impediments to sustaining the growth and survival of small and medium

enterprises. Idemobi noted that due to cost of production especially high cost of self-

generated electricity, small and medium enterprises collapse at an alarming rate in

Nigeria. The study recommends that the government should urgently address the issue of

poor infrastructural facilities especially electricity supply and establish an SME stimulus

LV

package to rejuvenate SME’s development and sustainability. The work by Idemobi is

related to this study because it centers on general impediments to sustainable growth of

SSEs but created a vacuum by not adequately addressing the key components of financial

impediments such as weak government financial policies, insecurity and low credit

facilities which this work intend to address.

Nwoke (2008) conducted a research work on ‘Financial Management of Small-

Scale Enterprises in Nigeria. The major purpose of the study was to determine how small

businesses manage their finance. The finding revealed that: lack of appropriate

experience, poor planning, poor financial record-keeping, inflation among others is some

of the factors affecting financial management of SSEs. Based on the findings, the author

recommended that managers and accountants of small firms should strengthen their firms

by raising more capital using the right type of finance for the right assets. Financial

controllers or accountants in small scale businesses should improve in the area of

planning. Nwoke’s work is related to the present work because both of them focus

financial management practice of SSEs. The present study will also close the gap created

by addressing not only the financial management constraint but other financial

constraints such as credit facilities and regulatory policies available for SSEs in Plateau

State.

Ana (2008), carried out a survey research on the “Role of Institutional Policies on

the Growth of SSEs in North-Central Nigeria”. The researcher used a sample population

of 232 and a questionnaire as the instrument for data collection. The study showed that

small-scale enterprises are instrument of economic growth and development in Nigeria.

LVI

The study found that institutional and policy supports to have not been able to address the

challenges sufficiently. The culpability of SSEs could be attributable to the government

and the SSEs entrepreneur themselves. The researcher recommended that government

should ensure that finance should be made available to SSEs to ensure adequate support

and growth.

Alasan and Yakubu (2011) conducted a study on Small and Medium Scale

Enterprises and Economic Growth in Nigeria: Abuja, Nigeria. The study revealed that

lack of access to relative cheap and effective source of finance have been identified as the

major factors hindering their contribution to economic growth. On this basis, the study

assesses specific financing options available to SSEs in Nigeria and contribution with

economic growth via investment level. The Spearman’s Rho correlation test was

employed to determine the relationship between SSEs financing and investment level.

The analysis reported a significant Rho value of 0.643 at 10%. This indicated that there is

significant positive relationship between SSEs financing and economic growth in Nigeria

via investment level. Descriptive statistics were also used to appraisal certain financing

indicators. The study finally, proffers that accessibility to relative low interest rate

finances should be provided to small and medium enterprises in Nigeria in order enhance

economic growth. This study focused mainly the link between growth and SSEs without

looking at the main strength of every business organization which is finance.

In another study relating to finance conducted by Kasseeah in 2010, the study

provided a survey of the recent literature on the financing decisions of small and

medium-sized firms across various countries. The main motivation of the study was that

LVII

small and medium-sized firms differ significantly from large firms, and the latter

represent a much larger share of firms in almost all economies. Kasseeah explore the

various financing sources of small and medium-sized firms and survey the literature to

determine if traditional capital structure theories are able to explain the capital structure

decisions of these firms. The finding of the study indicates that although small firms have

a variety of sources of finance at their disposal they tend to restrict themselves to only a

few, of which internal finance, retained earnings and bank finance dominate. The present

study will focus mainly on the financial impediments SSEs and the ways of ameliorating

these impediments

To conclude on the related empirical studies of SSEs, Aremu (2011) also

conducted a survey research on Establishing Small and Medium Scale Enterprises in

Nigeria: Problems and Prospects. The study buttressed that the role of small and medium

scale enterprises (SMEs) cannot be overemphasized given its relevance’s in resource

mobilization, utilization and overall contribution to gross domestic product (GDP) of a

nation. It serves as the engine of rapid economic growth and development as it respond to

the macro economic problems militating against developing nations like Nigeria. The

study concluded that if policy implementation is enhanced through efficient monitoring

and period review as well as provision of infrastructure, the SMEs, will be empowered

which could serve then as an engine of growth to the Nigeria economy.

All the research studies mentioned in this sub-heading are related to the present

study because they are concerned with the effect and growth of SSEs/SMEs in term of

poor financial management practices or other impediments, such as lack of appropriate

LVIII

experience, poor planning, poor financial record-keeping and inflation. The present

research is therefore, geared towards identifying the financial constraints to the

sustainable small-scale enterprises and recommend possible strategies to these

constraints.

Summary of Reviewed Literature

The reviewed literature revealed that Small scale enterprises in Nigeria vis-à-vis

Plateau State is seen as the backbone to industrialization and a key to economic growth,

dynamism and flexibility. The definition of small scale industry varies with the culture

and peculiar circumstances of the person attempting the definition. In this study, Small-

Scale Enterprises (SSEs) consist of all business organizations whose total capital

employed is not more than N5 million including the cost of land and workforce capacity

between 1-20. Nevertheless, Small scale enterprises in Nigeria have not performed

creditably well due to some challenges.

One of the major financial impediments confronting SSEs in Nigeria as shown by

literature reviewed is knowing how to raise funds or capital for the business. The various

ways of raising funds opportunities are not widely known to SSEs. Another impediment

is the area of poor financial management practice of SSEs. The attitude of some

entrepreneurs to loans and that of their workers to work is counterproductive. Similarly,

government at the federal, state and local levels is responsible for maintaining and to

stimulating the activities of the enterprises through regulations and policies. But in

Nigeria, governments’ policies seem to have constituted a serious problem to the growth

SSEs.

LIX

Two theories were used to support this study: The stage theory of firm described

the progression of the success of firm through growth phases. This means that

Organizations are born, grow, and decline. The theory is significant to this work because

it outlines sources of finance typically available at various growth stages of the firm,

along with potential financing problems that may arise at each stage. The Second is the

theory of growth and size of firm which reveals that in contrast to the orthodox views,

small businesses grow faster than large businesses.

Several empirical studies were reviewed in the area of small- scale enterprises

(SSEs). Goldsmith (1969) conducted a study the existence of a link between finance and

growth. The study created a vacuum by studying only on the link between finance and

growth of businesses without identifying the major financial constraints faced by these

SSEs which the present study is aimed to fill. In a similar research conducted by Idemobi

(2012) on “Factors that Impede the Sustainability of Small-Scale Enterprises (SSEs) in a

Typical Sub-Saharan Africa context in south-East Nigeria”. The author found out that

poor infrastructural facilities (especially electricity, water and roads), lack of access of

formal sources of credit, high incidence and prevalence of violent crime leading to high

operational costs are the major impediments to sustaining the growth and survival of

small and medium enterprises. This study created a vacuum by not adequately addressing

the key components of financial impediments such as weak government financial

policies, mismanagement and poor financial management practices.

Furthermore, mismanagement and poor financial practice of SSEs operators has

been identified as key to financial impediment (Nwoke, 2008). Nwoke finding reveals

LX

that: lack of appropriate experience, poor planning, poor financial record-keeping,

inflation among others are some of the factors militating against the growth of SSEs.

Nwoke’s work is related to the present work because both focuses on financial

management practice of SSEs. The present study will also close the gap created by

Nwoke by addressing not only the financial management constraint but other financial

constraints such as accessibility to credit facilities and regulatory policies available for

SSEs in Plateau State.

Finally, the present work will focused on providing possible strategies of

ameliorating the financial impediments.

CHAPTER THREE

METHODOLOGY

This chapter presents the procedure used in carrying out this study and is

organized under the following sub-heading: design of the study; area of the study;

LXI

population for the study; sample and sampling technique; instrument for data collection;

validation of the instrument; reliability of the instrument; method of data collection and

method of data analysis.

Design of the Study

The study employed a descriptive survey design. A descriptive survey design

focuses on the people, beliefs, opinions, attitudes, motivation and behaviours. Through

descriptive surveys, researchers identify present conditions, prevailing needs as well as

provide information on which to base sound decision (Osuala, 2001). The design is

suitable for this study because the study will ascertain the opinions of the entrepreneurs

of small-scale enterprises in the Nigerian economy.

Area of the Study

This study was carried out in Plateau State. Plateau State is one of the North

central states of Nigeria. The state is made up of seventeen local government areas with

three senatorial zones. The study is to cover only the central senatorial zone in the state

with five local governments namely; Pankshin, Mangu, Bokkos, Kanke, and Kanam local

government. The people of the central zone are predominantly farmers, civil servants and

commercial business men and women. The local governments in the state are

characterized by many shops owned proprietors/proprietress. The choice of the area is

also influenced by the researcher’s familiarity of the area and interest to contribute

meaningfully to the economic growth of the area.

Population for the Study

LXII

The population for the study was 206 made up of 57 and 149 registered

entrepreneurs and employees of small-scale enterprises in the six local governments in

central senatorial zone of Plateau State. The numerical strength of the registered small-

scale enterprises was obtained from the Ministry of Commerce and Industry Directory

(SME Unit) Plateau State. The break-down in the local government in the central zone is

as follows: Pankshin (11 and 38 registered entrepreneurs and employees respectively),

Mangu (15 and 43 registered entrepreneurs and employees respectively), Bokkos (10 and

27 registered entrepreneurs and employees respectively), Kangke (11 and 22 registered

entrepreneurs and employees respectively) and Kannam (10 and 19 registered

entrepreneurs and employees respectively). (Source: Ministry of Commerce and Industry

Directorate (SME Unit) Plateau State).

Sample and Sampling Technique

The population for this study consists of 206 registered proprietors and employees

of small-scale enterprises in Plateau State. Since the total population of the proprietors

and the employees is small and manageable no sampling was carried out.

Instrument for Data Collection

The instrument for data collection was a structured questionnaire titled ‘Financial

Impediments to Small-Scale Enterprises Questionnaire’, (FISSEQ). The questionnaire

items were developed based on the information gathered from the literature reviewed.

The questionnaire was divided into two parts. Part one sought for general information on

the personal data of the respondents; part two comprises of questionnaire items which is

further divided into four sections, A-D.

LXIII

Section A dealt with impediments encountered by Small-Scale Enterprises in obtaining

credit facilities from financial institutions in Plateau State. The Section covers

questionnaire items 1 to 11. The response categories of Very High Extent, High Extent,

Moderate Extent, Low Extent and Very Low Extent were used.

Section B dealt with the extent to which government financial regulatory policies create

financial impediment to Small-Scale Enterprises in Plateau State. The section covered

questionnaire items 12 to 17. The response categories of Very High Extent, High Extent,

Moderate Extent, Low Extent and Very Low Extent are were used.

Section C dealt with the extent to which mismanagement and poor financial practices

impede the financial growth of Small-Scale Enterprises in Plateau State. The section

covered questionnaire items ranging from 18 to 25. The response categories of Very High

Extent, High Extent, Moderate Extent, Low Extent and Very Low Extent were used.

Section D dealt with research question five. This research question sought to ascertain the

strategies for ameliorating the financial impediments of Small-Scale Enterprises. This

section covers questionnaire items 26 to 37. The response categories for section D were

Strongly agree, Agree, Slightly agree, Disagree and Strongly disagree.

Validation of the Instrument

The questionnaire was subjected to face-validation by three experts. Two of the

validates came from the Department of Vocational Teacher Education, University of

Nigeria, Nsukka and one of them is from Vocational Teacher Education, Ahmadu Bello

University, Zaria, in Kaduna State. These experts were requested to validate the

questionnaire items in terms of clarity, wording, appropriateness and adequacy of the

LXIV

items for the study. Their observations and recommendations were effected in drafting

the final copy of the questionnaire.

Reliability of the Instrument

The instrument was subjected to a reliability test to establish the internal

consistency of the questionnaire items. The reliability of the instrument was done using

Cronbach Alpha (α) method. The choice of Cronbach Alpha was based on the fact that

the questionnaire items are of multiple response type and provides for a more stable

measure of homogeneity. The coefficient result yielded 0.86 which was used to establish

the internal consistency of the instrument.

Method of Data Collection

The researcher with the help of three research assistants administered the questionnaire to

the respondents. The questionnaire items were explained to those respondents who cannot

read with understanding. The research assistants were briefed on how to administer the

questionnaire.

Method of Data Analysis

The data collected on the research questions were analyzed using the mean (x) and

standard deviation. Each item in the questionnaire was computed by multiplying the

frequency count by each response category with the corresponding value of the response

category and divided by the number of responded to each question. The hypotheses were

tested using t-test statistic at 0.05 level of significance. The statistical real limit of of

numbers was used to analyze the data as follows:

Response Categories points limit

LXV

Very High Extent 5 4.5 - 5.00

High Extent 4 3.5 - 4.50

Moderate Extent 3 2.5 - 3.50

Low Extent 2 1.5 - 2.50

Very Low Extent 1 0.5 - 1.50

and

Strongly Agreed 5 4.5 – 5.00

Agreed 4 3.5 – 4.49

Fairly Agree d 3 2.5 – 3.49

Disagreed 2 1.5 – 2.49

Strongly Disagreed 1 0.5 – 1.49

Decision Rule

Real limit of numbers was used to take decisions for the research questions 1-3,

while for research question 4, a cut off value of 2.5 and above was accepted as agreed,

while any value below 2.5 was considered disagreed. For the hypotheses, any item with a

P-value (significant (two tailed) greater than 0.05, was accepted as postulated that is there

is no significant difference, but any item with a P-value less than 0.05, was rejected.

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

LXVI

The data generated for this study was statistically analyzed and presented in this

chapter. In doing this, the research questions and hypotheses were used as basis for the

analysis, interpretation and discussion of results. The findings of the study and discussion

of findings are also presented in this chapter.

Research Question 1

To what extent does the level of accessibility of credit facility impede the growth

and development of small scale enterprises operating in Plateau State?

Table 1

LXVII

Mean ratings on how accessibility of credit facility impedes the growth and development of small scale enterprises operating in Plateau State. N=206 S/NO Items Statement X SD Rmk

1. Financial institutions consider small-scale enterprises as risky and small in size, therefore, show little interest on them.

3.25 .81 ME

2. Reluctance of financial institutions to grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau State.

3.15 .77 ME

3.

Banks are ill-equipped to supervise small-scale enterprises loan-portfolio which impedes their credit accessibility in Plateau State.

3.11 .80 ME

4.

The value or quantity of trade-credit to enterprises of small-scale businesses depends solely on the supplier’s willingness and not the customer’s demand or request.

3.09 .90 ME

5.

Low credit is associated to banks’ inability to appraise the loan applications of small-scale enterprises due to poor application and feasibility study.

3.09 .90 ME

6. The wrong attitude of some entrepreneur to loans and that of their workers is counterproductive because some entrepreneurs when offered credit facilities; believe that it’s their share of the national cake.

3.00 .73 ME

7. Due to high insecurity of lives and properties, financial institutions, individuals and groups in Plateau State find it difficult to give loan to small-scale enterprises.

2.94 .79 ME

8.

Due to low level of income in Plateau State, banks and individuals are not able to raise adequate credit facilities to small-scale enterprises.

2.96 .85 ME

9. Inability of small-scale enterprises to provide sufficient collateral impedes their financial growth in Plateau State.

3.02 .79 ME

10. Ignorance of how and where to obtain credit facilities impedes small-scale enterprises financial strength.

2.94 .82 ME

11. Mismanagement and low financial planning of small-scale enterprises impedes their success in accessing credit facilities.

2.97 .77 ME

Key: X= Mean, SD= Standard Deviation, ME= Moderate Extent

LXVIII

Table 1 presented the mean ratings of respondents on how inaccessibility of credit facility

impedes the growth and development of small scale enterprises operating in Plateau

State. All 11 items recorded mean ratings ranging from 2.94 to 3.25 indicating moderate

extent, The standard deviation ranges from 0.73 – 0.90 indicating that the respondents

were not far from each other in their opinions.

Hypothesis 1

There is no significant difference in the mean responses of proprietors

and employees on the extent to which accessibility of credit facility impede the financing

of small scale enterprises in Plateau State.

LXIX

Table 2

T-test analysis for comparing data obtained from proprietors and employees on the extent to which accessibility of credit facility impede the financing of small scale enterprises in Plateau State N=206 (Proprietors = 57; Employees = 149 S/NO Items Statement X1 SD1 X2 SD2 df t-cal Sig. Rmk

1. Financial institutions consider small-scale enterprises as risky and small in size, therefore, show little interest on them.

3.19 .81 3.28 .80 204 -.66 .51 NS

2. Reluctance of financial institutions to grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau State.

3.09 .76 3.17 .77 204 -.73 .47 NS

3.

Banks are ill-equipped to supervise small-scale enterprises loan-portfolio which impedes their credit accessibility in Plateau State.

3.04 .80 3.14 .80 204 -.85 .40 NS

4.

The value or quantity of trade-credit to enterprises of small-scale businesses depends solely on the supplier’s willingness and not the customer’s demand or request.

2.98 .90 3.13 .90 204 -1.03 .30 NS

5.

Low credit is associated to banks’ inability to appraise the loan applications of small-scale enterprises due to poor application and feasibility study.

2.98 .90 3.13 .90 204 -1.03 .30 NS

6. The wrong attitude of some entrepreneur to loans and that of their workers is counterproductive because some entrepreneurs when offered credit facilities; believe that it’s their share of the national cake.

2.91 .76 3.04 .72 204 -1.13 .26 NS

7. Due to high insecurity of lives and properties, financial institutions, individuals and groups in Plateau State find it difficult to give loan to small-scale enterprises.

2.91 .76 2.95 .80 204 -.27 .74 NS

8.

Due to low level of income in Plateau State, banks and individuals are not able to raise adequate credit facilities to small-scale enterprises.

2.98 .81 2.95 .87 204 .22 .83 NS

9. Inability of small-scale enterprises to provide sufficient collateral impedes their

3.02 .83 3.03 .77 204 -.08 .94 NS

LXX

financial growth in Plateau State.

10.

Ignorance of how and where to obtain credit facilities impedes small-scale enterprises financial strength.

2.95 .87 2.93 .79 204 .11 .91 NS

11.

Mismanagement and low financial planning of small-scale enterprises impedes their success in accessing credit facilities.

2.95 .83 2.98 .75 204 -.33 .79 NS

Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant

Table 2 presents the summary of t-test analysis on the responses of proprietors

and employees on the extent to which accessibility of credit facility impede the financing

of small scale enterprises in Plateau State. The data revealed that all 11 items had

probability values greater than 0.05 indicating that there is no significant difference in the

mean responses of proprietors and employees on the extent to which accessibility of

credit facility impede the financing of small scale enterprises in Plateau State.

Research Question 2

To what extent do government financial regulatory policies impede the growth and

development of small scale enterprises operating in Plateau State?

LXXI

Table 3

Mean ratings on how government financial regulatory policies impede the growth and development of small scale enterprises operating in Plateau State N=206 S/NO Items Statement X1 SD1 Rks

12. Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs, in Plateau State.

3.01 .80 ME

13. Government’s policies instability regarding business organizations in Plateau State has not been helpful especially to small scale enterprises.

3.07 .77 ME

14. Developmental policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in a distressed and vulnerable position.

3.10 .77 ME

15. The incidence of multiplicity of regulatory agencies and taxes has always resulted in high cost of doing business and poor management practices for small-scale enterprises in Plateau State.

3.05 .76 ME

16.

There is no genuine commitment on the part of government, private sector and labour union in the achievement of the stated objectives of small-scale enterprises.

3.06 .77 ME

17. There has been complains regarding tedious registration and certification processes in Plateau State i.e various bodies have their requirements and require money and time.

2.90 .77 ME

Key: X= Mean, SD= Standard Deviation, ME= Moderate Extent Table 3 presents the mean ratings of respondents on how government financial regulatory

policies impede the growth and development of small scale enterprises operating in

Plateau State. All 6 items recorded mean ratings ranging from 2.90 to 3.10 indicating

moderate extent, The standard deviation ranges from 0.76 – 0.80 indicating that the

respondents were not far from each other in their opinions

Hypothesis 2

There is no significant difference in the mean responses of proprietors and employees on

the extent to which government financial regulatory policies impede the financing of

small scale enterprises in Plateau State

LXXII

Table 4

T-test analysis for comparing data obtained from proprietors and employees on the extent to which government financial regulatory policies impede the financing of small scale enterprises in Plateau State. N=206 (Proprietors = 57; Employees = 149) S/NO Items Statement X1 SD1 X2 SD2 df t-

cal Sig Remark

12. Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs, in Plateau State.

2.98 .86 3.02 .78 204 -.30 .76 NS

13. Government’s policies instability regarding business organizations in Plateau State has not been helpful especially to small scale enterprises.

3.11 .77 3.06 .77 204 .37 .71 NS

14. Developmental policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in a distressed and vulnerable position.

3.05 .74 3.12 .78 204 -.57 .57 NS

15.

The incidence of multiplicity of regulatory agencies and taxes has always resulted in high cost of doing business and poor management practices for small-scale enterprises in Plateau State.

2.96 .73 3.10 .78 204 -1.14

.26 NS

16.

There is no genuine commitment on the part of government, private sector and labour union in the achievement of the stated objectives of small-scale enterprises.

2.96 .73 3.10 .78 204 -1.14

.26 NS

17.

There has been complains regarding tedious registration and certification processes in Plateau State i.e various bodies have their requirements and require money and time.

2.86 .77 2.92 .78 204 -.50 .62 NS

Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant

Table 4 presents the summary of t-test analysis of the mean responses of

proprietors and employees on the extent to which government financial regulatory

policies impede the financing of small scale enterprises in Plateau State. The data

LXXIII

revealed that all 6 items had probability values greater than 0.05 indicating that there is

no significant difference in the mean responses of proprietors and employees on the

extent to which government financial regulatory policies impede the financing of small

scale enterprises in Plateau State

Research Question 3

To what extent does poor financial management practice impede the growth and

development of small scale enterprises in Plateau State?

LXXIV

Table 5

Mean ratings on how poor financial management practice impedes the growth and development of small scale enterprises in Plateau State. N=206 S/NO Items Statement X1 SD1 Remarks

18. While increasing the volume of finance is necessary, ensuring that the business environment is conducive (secured) for profitable investments are equally much important.

2.92 .83 ME

19. Riots, ethnic and religious clashes have resulted to the inability of most financial institutions to loan out funds to business organizations in Plateau State.

2.88 .90 ME

20.

Crises in Plateau State have resulted to burning of shops, stores, goods etc making many small-scale enterprises windup or close.

2.83 .89 ME

21. The concentration and high spending by the State government on the issue of security has lead to the neglecting of the economic policy.

3.00 .81 ME

22. The high rate of insecurity in Plateau State has created fear and anxiety in operators of SSEs and has reduced the lending ability of the banks to small-scale businesses.

3.03 .82 ME

23. Constant attack by boko-haram in Plateau State could not allow SSEs expand and concentrate on their business because they are made to pay extra-charges for community security alert.

3.09 .86 ME

24

Many friends, relations and associations find it difficult to lend to small businesses due to insecurity of lives and properties.

3.17 .69 ME

25. State of Emergency and Curfew in Plateau State due to crises has affected the financial activities of financial institutions in the State.

3.15 .78 ME

Key: X= Mean, SD= Standard Deviation, ME= Moderate Extent

Table 5 presented the mean ratings of respondents on how poor financial

management practices impede the growth and development of small scale enterprises

operating in Plateau State. All the 8 items recorded mean ratings ranging from 2.83 to

LXXV

3.17 indicating moderate extent, The standard deviation ranges from 0.69 – 0.90

indicating that the respondents were not far from each other in their opinions

Hypothesis 3

There is no significant difference in the mean responses of proprietors and employees on

the extent to which insecurity of life and property impede financing of small scale

enterprises in Plateau State

LXXVI

Table 6

T-test analysis for comparing data obtained from proprietors and employees on the extent to which insecurity of life and property impede financing of small scale enterprises in Plateau State N=206 (Proprietors = 57; Employees = 149) S/NO Items Statement X1 SD1 X2

SD2

df t-cal Sig Rmks

18.

While increasing the volume of finance is necessary, ensuring that the business environment is conducive (secured) for profitable investments are equally much important.

2.88 .80 2.93 .84 204 -.43 .67 NS

19.

Riots, ethnic and religious clashes have resulted to the inability of most financial institutions to loan out funds to business organizations in Plateau State.

2.86 .88 2.89 .91 204 -.19 .85 NS

20.

Crises in Plateau State have resulted to burning of shops, stores, goods etc making many small-scale enterprises windup or close.

2.82 .89 2.83 .89 204 -.01 1.00 NS

21.

The concentration and high spending by the State government on the issue of security has lead to the neglecting of the economic policy.

3.00 .87 3.01 .79 204 -.05 .96 NS

22.

The high rate of insecurity in Plateau State has created fear and anxiety in operators of SSEs and has reduced the lending ability of the banks to small-scale businesses.

3.07 .84 3.02 .81 204 .39 .70 NS

23.

Constant attack by boko-haram in Plateau State could not allow SSEs expand and concentrate on their business because they

3.14 .88 3.07 .86 204 .54 .59 NS

LXXVII

are made to pay extra-charges for community security alert.

24.

Many friends, relations and associations find it difficult to lend to small businesses due to insecurity of lives and properties.

3.19 .77 3.15 .67 204 .36 .72 NS

25.

State of Emergency and Curfew in Plateau State due to crises has affected the financial activities of financial institutions in the State.

3.23 .82 3.11 .76 204 .94 .35 NS

Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant

Table 6 presented the summary of t-test analysis on the mean responses of proprietors

and employees on the extent to which insecurity of life and property impedes financing of

small scale enterprises in Plateau State. The data revealed that all 8 items had probability

values greater than 0.05 indicating that there is no significant difference in the mean

responses of proprietors and employees on the extent to which insecurity of life and

property impede financing of small scale enterprises in Plateau State

Research Question 4

What are the strategies for ameliorating the financial impediments of small scale

enterprises operating in Plateau State?

LXXVIII

Table 7

Mean ratings on the ameliorating the financial impediments of small scale enterprises operating in Plateau State. N=206 S/NO Items Statement X1 SD1 Rmk

26.

Small-scale enterprises should be recognized as a special group of SMEs that are critical for industrialization in Plateau State and should require specific policies and incentives.

3.13 .80 A

27.

One of the most effective ways of building sustainable small business enterprises is by creating a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau State.

3.30 .78 A

28.

The operators of SSEs should evolve new sources of raising funds from both internal and external agencies to ameliorate their financial impediments.

3.05 .78 A

29.

Small-scale enterprises should be duly and legally registered with the appropriate government regulatory agencies in the State.

3.09 .77 A

30.

Tax holiday should be extended to small-scale enterprises in Plateau State by the State government.

3.25 .74 A

31.

Operators of Small-scale enterprises should be mandated to register as private organization or limited liability companies in the State.

3.26 .71 A

32.

Operators of Small-scale enterprises in Plateau State should improve on their record-keeping and auditing strategies.

3.07 .66 A

33.

The government of Plateau State should make proactive policies and programmes on financing of small-scale enterprises.

3.04 .72 A

34.

The government has to set the institutional framework for business, the rules of the game, and to ensure that enterprises receive appropriate incentives to facilitate efficient performance.

3.00 .77 FA

35.

The government should establish a window within the commercial court for handling SSEs.

3.05 .77 A

36.

The government should establish a window within the commercial court for handling SSEs.

3.15 .72 A

37.

The procedures laid by the current Small and Medium Industries Equity Investment Scheme (SMIEIS) in financing potential investments in small and medium scale industries should be made known and accessible.

3.09 .75 A

LXXIX

Key: X= Mean, SD= Standard Deviation, A =Agreed

Table 7 presents the mean ratings of respondents on the strategies for ameliorating

the financial impediments of small scale enterprises operating in Plateau State. All the 12

items recorded mean ratings ranging from 3.00 to 3.26 indicating agreed, The standard

deviation ranges from 0.66 – 0.80 indicating that the respondents were not far from each

other in their opinions

Hypothesis 4

There is no significant difference in the mean responses of proprietors and employees on

the strategies for ameliorating the financial impediments of small scale enterprises

operating in Plateau State.

LXXX

Table 8

T-test analysis for comparing data obtained from proprietors and employees on the strategies for ameliorating the financial impediments of small scale enterprises operating in Plateau State N=206 (Proprietors = 57; Employees = 149) S/N Items Statement X1 SD1 X2 SD2 df t-cal Sig Rmks

26.

Small-scale enterprises should be recognized as a special group of SMEs that are critical for industrialization in Plateau State and should require specific policies and incentives.

3.23 .82 3.09 .79 204 1.13 .26 NS

27.

One of the most effective ways of building sustainable small business enterprises is by creating a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau State.

3.32 .81 3.30 .78 204 .17 .87 NS

28.

The operators of SSEs should evolve new sources of raising funds from both internal and external agencies to ameliorate their financial impediments.

3.11 .79 3.03 .77 204 .59 .56 NS

29.

Small-scale enterprises should be duly and legally registered with the appropriate government regulatory agencies in the State.

3.11 .77 3.09 .77 204 .15 .88 NS

30.

Tax holiday should be extended to small-scale enterprises in Plateau State by the State government.

3.04 .78 3.34 .70 204 -2.66 .01 S

31.

Operators of Small-scale enterprises should be mandated to register as private organization or limited liability companies in the State.

3.05 .79 3.34 .67 204 -2.65 .01 S

32.

Operators of Small-scale enterprises in Plateau State should improve on their record-keeping and auditing strategies.

2.93 .80 3.13 .60 204 -1.93 .06 NS

33.

The government of Plateau State should make proactive policies and programmes on financing of small-scale enterprises.

2.93 .84 3.08 .67 204 -1.34 .18 NS

34.

The government has to set the institutional framework for business, the rules of the game, and to ensure that enterprises receive appropriate incentives to facilitate efficient performance.

2.91 .87 3.03 .73 382 -1.01 .31 NS

35.

The government should establish a window within the commercial court for handling SSEs.

2.89 .90 3.11 .75 382 -1.85 .07 NS

36.

The government should establish a window within the commercial court for handling SSEs.

3.07 .82 3.17 .68 382 -.93 .35 NS

37.

The procedures laid by the current Small and Medium Industries Equity Investment Scheme (SMIEIS) in financing potential investments in small and medium scale industries should be made known and

3.19 .74 3.05 .70 382 1.19 .23 NS

LXXXI

accessible. Key: X1= Mean of proprietor; X2 = Mean of employees SD1= Standard Deviation of proprietors; SD2= Standard Deviation of employees; Df= degree of freedom; Sig= probability value (2 tailled); t-cal= calculated values; S= significant; NS= Not Significant

Table 8 presents the summary of t-test analysis on the mean responses of

proprietors and employees on the strategies for ameliorating the financial impediments of

small scale enterprises operating in Plateau State. The data revealed that items 30 and 31

had probability values of 0.01and 0.01 respectively, which are less than the significant

value of 0.05 at 204 degree of freedom; meaning that the null hypothesis of no significant

difference was rejected on items 30 and 31. On the other hand, hypothesis of no

significant difference for items 26-29 and 32 - 37 was accepted since the probability

values ranging from 0.70 to 0.88 are greater than the significant level of 0.05. Therefore,

the null hypothesis of no significant difference in the mean responses of proprietors and

employees on the strategies for ameliorating the financial impediments of small scale

enterprises operating in Plateau State was accepted for items 26-29 and 32 - 37.

Findings of the Study

The findings of the study are organized in line with the specific purposes of the study and

hypotheses as follow

• The findings on how inaccessibility of credit facility impedes the growth and

development of small scale enterprises operating in Plateau State revealed that

financial institutions consider small-scale enterprises as risky and small in size,

therefore, show little interest on them; reluctance of financial institutions to grant

loans to small-scale enterprises because of their high rate of bankruptcy in Plateau

LXXXII

State; banks are ill-equipped to supervise small-scale enterprises loan-portfolio

which impedes their credit accessibility in Plateau State; the value or quantity of

trade-credit to enterprises of small-scale businesses depends solely on the

supplier’s willingness and not the customer’s demand or request; and low credit is

associated to banks’ inability to appraise the loan applications of small-scale

enterprises due to poor application and feasibility study. The findings further

revealed that the wrong attitude of some entrepreneur to loans and that of their

workers is counterproductive because some entrepreneurs when offered credit

facilities; believe that it’s their share of the national cake; financial institutions,

individuals and groups in Plateau State find it difficult to give loan to small-scale

enterprises due to high insecurity of lives and properties; due to low level of

income in Plateau State, banks and individuals are not able to raise adequate credit

facilities to small-scale enterprises; inability of small-scale enterprises to provide

sufficient collateral impedes their financial growth in Plateau State; ignorance of

how and where to obtain credit facilities impedes small-scale enterprises financial

strength; and mismanagement and low financial planning of small-scale

enterprises impedes the growth and development of small scale enterprises

operating in Plateau State

• The findings on the summary of t-test analysis on the responses of proprietors and

employees on the extent to which inaccessibility of credit facility impede the

financing of small scale enterprises in Plateau State revealed that all 11 items had

probability values greater than 0.05 indicating that there is no significant

LXXXIII

difference in the mean responses of proprietors and employees on the extent to

which inaccessibility of credit facility impede the financing of small scale

enterprises in Plateau State.

• The findings on how government financial regulatory policies impede the growth

and development of small scale enterprises operating in Plateau State revealed that

Nigeria Governments’ policies have constituted a serious problem to the growth of

SSEs, in Plateau State; Government’s policies instability regarding business

organizations in Plateau State has not been helpful especially to small scale

enterprises; developmental policies are in favour of large firms and sometimes

foreign –owned firms leaving SSEs in a distressed and vulnerable position; the

incidence of multiplicity of regulatory agencies and taxes has always resulted in

high cost of doing business and poor management practices for small-scale

enterprises in Plateau State; no genuine commitment on the part of government,

private sector and labour union in the achievement of the stated objectives of

small-scale enterprises; and regular complains regarding tedious registration and

certification processes in Plateau State are the government financial regulatory

policies that impede the growth and development of small scale enterprises

operating in Plateau State.

• The findings on the summary of t-test analysis of the mean responses of

proprietors and employees on the extent to which government financial regulatory

policies impede the financing of small scale enterprises in Plateau State revealed

that all 6 items had probability values greater than 0.05 indicating that there is no

LXXXIV

significant difference in the mean responses of proprietors and employees on the

extent to which government financial regulatory policies impede the financing of

small scale enterprises in Plateau State, therefore the null hypothesis was upheld.

• The findings on how poor financial management practice impede the growth and

development of small scale enterprises operating in Plateau State showed that

while increasing the volume of finance is necessary, ensuring that the business

environment is conducive (secured) for profitable investments are equally much

important; riots, ethnic and religious clashes have resulted to the inability of most

financial institutions to loan out funds to business organizations in Plateau State;

crises in Plateau State have resulted to burning of shops, stores, goods etc making

many small-scale enterprises windup or close; concentration and high spending by

the State government on the issue of security has lead to the neglecting of the

economic policy; the high rate of insecurity in Plateau State has created fear and

anxiety in operators of SSEs and has reduced the lending ability of the banks to

small-scale businesses; constant attack by boko-haram in Plateau State could not

allow SSEs expand and concentrate on their business because they are made to

pay extra-charges for community security alert; many friends, relations and

associations find it difficult to lend to small businesses due to insecurity of lives

and properties; and State of Emergency and Curfew in Plateau State due to crises

has affected the financial activities of financial institutions in the State.

• The findings on the summary of t-test analysis on the mean responses of

proprietors and employees on the extent to which insecurity of life and property

LXXXV

impedes financing of small scale enterprises in Plateau State. The data revealed

that all 8 items had probability values greater than 0.05 indicating that there is no

significant difference in the mean responses of proprietors and employees on the

extent to which insecurity of life and property impede financing of small scale

enterprises in Plateau State, therefore the null hypothesis of no significant

difference was accepted.

• Findings on the strategies for ameliorating the financial impediments of small

scale enterprises operating in Plateau State revealed that small-scale enterprises

should be recognized as a special group of SMEs that are critical for

industrialization in Plateau State and should require specific policies and

incentives; one of the most effective ways of building sustainable small business

enterprises is by creating a linkage between the SSEs and Microfinance

Institutions (MFIs) in Plateau State; the operators of SSEs should evolve new

sources of raising funds from both internal and external agencies to ameliorate

their financial impediments; Small-scale enterprises should be duly and legally

registered with the appropriate government regulatory agencies in the State;

Operators of Small-scale enterprises should be mandated to register as private

organization or limited liability companies in the State; Operators of Small-scale

enterprises in Plateau State should improve on their record-keeping and auditing

strategies; the government of Plateau State should make proactive policies and

programmes on financing of small-scale enterprises; the government has to set the

institutional framework for business, the rules of the game, and to ensure that

LXXXVI

enterprises receive appropriate incentives to facilitate efficient performance; the

government should establish a window within the commercial court for handling

SSEs; the government should establish a window within the commercial court for

handling SSEs and the procedures laid by the current Small and Medium

Industries Equity Investment Scheme (SMIEIS) in financing potential investments

in small and medium scale industries should be made known and accessible were

found out to be the strategies for ameliorating the financial impediments of small

scale enterprises operating in Plateau State.

• Findings on the summary of t-test analysis on the mean responses of proprietors

and employees on the strategies for ameliorating the financial impediments of

small scale enterprises operating in Plateau State. The data revealed that items 30

and 31 had probability values of 0.01and 0.01 respectively, which are less than the

significant value of 0.05 at 204 degree of freedom; meaning that the null

hypothesis of no significant difference was rejected on items 30 and 31. On the

other hand, hypothesis of no significant difference for items 26-29 and 32 - 37 was

accepted since the probability values ranging from 0.70 to 0.88 are greater than the

significant level of 0.05. Therefore, the null hypothesis of no significant difference

in the mean responses of proprietors and employees on the strategies for

ameliorating the financial impediments of small scale enterprises operating in

Plateau State was accepted for items 26-29 and 32 - 37.

LXXXVII

Discussion of Findings

The discussions of the findings of the study are organized in line with the specific

purposes of the study and hypotheses as follow;

The findings on how inaccessibility of credit facility impedes the growth and

development of small scale enterprises operating in Plateau State revealed that financial

institutions consider small-scale enterprises as risky and small in size, therefore, show

little interest on them; reluctance of financial institutions to grant loans to small-scale

enterprises because of their high rate of bankruptcy in Plateau State; banks are ill-

equipped to supervise small-scale enterprises loan-portfolio which impedes their credit

accessibility in Plateau State; the value or quantity of trade-credit to enterprises of small-

scale businesses depends solely on the supplier’s willingness and not the customer’s

demand or request; and low credit is associated to banks’ inability to appraise the loan

applications of small-scale enterprises due to poor application and feasibility study. The

findings further revealed that the wrong attitude of some entrepreneur to loans and that of

their workers is counterproductive because some entrepreneurs when offered credit

facilities; believe that it’s their share of the national cake; financial institutions,

individuals and groups in Plateau State find it difficult to give loan to small-scale

enterprises due to high insecurity of lives and properties; due to low level of income in

Plateau State, banks and individuals are not able to raise adequate credit facilities to

small-scale enterprises; inability of small-scale enterprises to provide sufficient collateral

impedes their financial growth in Plateau State; ignorance of how and where to obtain

credit facilities impedes small-scale enterprises financial strength; and mismanagement

LXXXVIII

and low financial planning of small-scale enterprises impedes the growth and

development of small scale enterprises operating in Plateau State. Available credits from

the banking sector have been plagued with high interest rates (UNDP, 2007). The

organization added that lending rates to agriculture, manufacturing and the oil and gas

sectors have reached about 30 per cent, with unofficial rates climbing to about 35 percent.

Financial experts noted that there is limited incentive on the part of the banks to lend to

the real economy. Banks will rather maximize the significant spread between low savings

and deposit rates and fixed income yields. SSEs should be recognized as a special group

of SMEs that is critical for industrialization in Africa, and requires specific policies and

incentives. A 2001 World Bank survey on Nigeria's firms showed that although 85

percent of the firms had relationships with banks, not all of them had access to external

credit. The financial sector in most African economies especially in Nigeria is

characterized by very low levels of financial intermediation and weak capital markets,

which cannot effectively supply the financial resources and other products needed by the

private sector (Makhbul, 2011).

In A survey conducted by World Bank in 2010 on Nigeria’s Firms shows that

the larger a firm, the more likely it is to have access to external sources of

credit. Almost 100 percent of firms with more than 250 employees have access to credit

compared to only 52 percent of micro-enterprises (small firms). Interestingly,

over 90 percent of foreign firms have access while less than 60percent of

indigenous firms’ do. According to an economic report from the Central Bank of Nigeria

(2011), the aggregate net credit by banks to the domestic economy fell by 2.7 per cent

LXXXIX

and 0.1 per cent in the second and first quarters of the year respectively. In Plateau State,

there has been a steady decline in aggregate credit to the economy, and the private sector

in particular (PSD, 2008).This is largely due to the sustained monetary tightening,

significant rise in government domestic borrowing, and attractive yield of government

bonds and treasury bills. Lack of adequate credit for SSEs traceable to the reluctance of

banks to extend credit to them owing among others to poor documentation of project

proposals as well as inadequate collateral by SSE operators. Weak demand for products

arising from low and dwindling consumer purchasing power and lack of patronage of

locally produced goods by those in authority. According to Kasseeah (2012), Small Scale

Enterprises are more constrained in the use of collateral, long-term relationship and

reputation, which eased information problems. Lack of collateral was the most constraint

that SSEs face in accessing lines of credit from the formal financial system. There are

several factors that lead to problems of access to bank loans by the SSEs both from the

perspective of the banks and SSEs. It is argued that SSEs lack corporate governance,

equity and forward-looking vision while the banks are ill-equipped to supervise SSE

loan-portfolio perspective of the banks, they do not have specialized staff and appropriate

financing frameworks for SSEs.

The findings on the summary of t-test analysis on the responses of proprietors

and employees on the extent to which inaccessibility of credit facility impede the

financing of small scale enterprises in Plateau State revealed that all 11 items had

probability values greater than 0.05 indicating that there is no significant difference in the

XC

mean responses of proprietors and employees on the extent to which inaccessibility of

credit facility impede the financing of small scale enterprises in Plateau State.

The findings on how government financial regulatory policies impede the growth

and development of small scale enterprises operating in Plateau State revealed that

Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs,

in Plateau State; Government’s policies instability regarding business organizations in

Plateau State has not been helpful especially to small scale enterprises; developmental

policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in

a distressed and vulnerable position; the incidence of multiplicity of regulatory agencies

and taxes has always resulted in high cost of doing business and poor management

practices for small-scale enterprises in Plateau State; no genuine commitment on the part

of government, private sector and labour union in the achievement of the stated

objectives of small-scale enterprises; and regular complains regarding tedious registration

and certification processes in Plateau State are the government financial regulatory

policies that impede the growth and development of small scale enterprises operating in

Plateau State. The findings are in line with the summary by the organization for

Economic Co-operation and Development (OECD 1997) stated that while some

regulations may deliberately favour SSEs (many regulations exclude the smallest

businesses), in general the adverse impact of regulations on SSEs can be particularly

harmful. This is because small-scale enterprises are less equipped to deal with problems

arising from regulations since they have less capacity than larger firms to navigate

through the complexities or regulatory and bureaucratic network. Small-Scale Enterprises

XCI

are more likely to be hampered by regulations because their strength stems from their

flexibility. Some regulations designed to prevent entry into the market by dynamic small-

scale businesses are particularly detrimental. Similarly, Whiteman (2011) noted that the

frequent changes, and sometimes conflicting government monetary policies, have also

tended to hurt the SSEs. For example, while the government increased total credit

allocation to SSEs from 16 to 20 per cent, the same government removed excess liquidity

in the banking industry through increase in the minimum rediscount rate (MRR).

Unstable government policy has not been helpful to small scale industries. This has

destabilized and indeed sent many small scale industries to early fold ups. Instability in

government policies had caused some establishments to collapse. This findings also

corroborated the assertions of Patrick etal (2010) when they noted that the frequent

changes in government policies regarding SSEs often undermine its implementation.

They noted that there is no genuine commitment on the part of government, private sector

and labour union in the achievement of the stated objectives. Government regulations on

businesses distort the operation of the free market enterprises system and impede

competition; many of the regulations require the same level of compliance for both small

and large enterprises.

The findings on the summary of t-test analysis of the mean responses of

proprietors and employees on the extent to which government financial regulatory

policies impede the financing of small scale enterprises in Plateau State revealed that all 6

items had probability values greater than 0.05 indicating that there is no significant

difference in the mean responses of proprietors and employees on the extent to which

XCII

government financial regulatory policies impede the financing of small scale enterprises

in Plateau State, therefore the null hypothesis was upheld.

The findings on how poor financial management practice impede the growth and

development of small scale enterprises operating in Plateau State showed that while

increasing the volume of finance is necessary, ensuring that the business environment is

conducive (secured) for profitable investments are equally much important; riots, ethnic

and religious clashes have resulted to the inability of most financial institutions to loan

out funds to business organizations in Plateau State; crises in Plateau State have resulted

to burning of shops, stores, goods etc making many small-scale enterprises windup or

close; concentration and high spending by the State government on the issue of security

has lead to the neglecting of the economic policy; the high rate of insecurity in Plateau

State has created fear and anxiety in operators of SSEs and has reduced the lending

ability of the banks to small-scale businesses; constant attack by boko-haram in Plateau

State could not allow SSEs expand and concentrate on their business because they are

made to pay extra-charges for community security alert; many friends, relations and

associations find it difficult to lend to small businesses due to insecurity of lives and

properties; and State of Emergency and Curfew in Plateau State due to crises has affected

the financial activities of financial institutions in the State. The findings are in line with

Ireghah (2011) who stated that the attitude of some entrepreneurs to loans and that of

their workers to work is counterproductive. Some entrepreneurs when offered credit

facilities believe that it is their share of the “national cake”. These SSEs therefore

mismanage such opportunities. Also, the findings support the statement by Oboh (2004)

XCIII

that SSEs indulged in habit of loan diversion. The author noted that after obtaining loans,

some SSEs utilize the loan for the purpose other than which they were advanced thereby

making loan repayment very difficult if not impossible

The findings on the summary of t-test analysis on the mean responses of

proprietors and employees on the extent to which insecurity of life and property impedes

financing of small scale enterprises in Plateau State revealed that all 8 items had

probability values greater than 0.05 indicating that there is no significant difference in the

mean responses of proprietors and employees on the extent to which insecurity of life and

property impede financing of small scale enterprises in Plateau State, therefore the null

hypothesis of no significant difference was accepted.

Findings on the strategies for ameliorating the financial impediments of small

scale enterprises operating in Plateau State revealed that small-scale enterprises should be

recognized as a special group of SMEs that are critical for industrialization in Plateau

State and should require specific policies and incentives; one of the most effective ways

of building sustainable small business enterprises is by creating a linkage between the

SSEs and Microfinance Institutions (MFIs) in Plateau State; the operators of SSEs should

evolve new sources of raising funds from both internal and external agencies to

ameliorate their financial impediments; Small-scale enterprises should be duly and

legally registered with the appropriate government regulatory agencies in the State;

Operators of Small-scale enterprises should be mandated to register as private

organization or limited liability companies in the State; operators of Small-scale

enterprises in Plateau State should improve on their record-keeping and auditing

XCIV

strategies; the government of Plateau State should make proactive policies and

programmes on financing of small-scale enterprises; the government has to set the

institutional framework for business, the rules of the game, and to ensure that enterprises

receive appropriate incentives to facilitate efficient performance; the government should

establish a window within the commercial court for handling SSEs; the government

should establish a window within the commercial court for handling SSEs and the

procedures laid by the current Small and Medium Industries Equity Investment Scheme

(SMIEIS) in financing potential investments in small and medium scale industries should

be made known and accessible were found out to be the strategies for ameliorating the

financial impediments of small scale enterprises operating in Plateau State. The finding is

in agreement with the World Bank, which characterized the different types of actions

needed to eliminate these various barriers affecting SSEs as ‘three-pillars’ (World Bank

2000). The first pillar involves inputs of finance through SSE credit lines, development of

micro-finance banks, or setting up equity capital funds. The second pillar involves actions

designed to establish “fair and transparent” tax systems and improvements to the

regulatory framework The third pillar involves the creation of supportive institutions and

support networks. For example, the PHARE programme of technical assistance has been

active in setting up enterprise agencies

Findings on the summary of t-test analysis on the mean responses of proprietors

and employees on the strategies for ameliorating the financial impediments of small scale

enterprises operating in Plateau State revealed that items 30 and 31 had probability values

of 0.01and 0.01 respectively, which are less than the significant value of 0.05 at 204

XCV

degree of freedom; meaning that the null hypothesis of no significant difference was

rejected on items 30 and 31. On the other hand, hypothesis of no significant difference

for items 26-29 and 32 - 37 was accepted since the probability values ranging from 0.70

to 0.88 are greater than the significant level of 0.05. Therefore, the null hypothesis of no

significant difference in the mean responses of proprietors and employees on the

strategies for ameliorating the financial impediments of small scale enterprises operating

in Plateau State was accepted for items 26-29 and 32 - 37.

XCVI

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

This chapter presents a summary of the problem statement, the procedures used in

the study and draw conclusions based on the findings of the study, as well as presents the

implication of the study and recommendations.

Re-statement of the Problem

Small scale enterprises (SSEs) and medium enterprises (MEs) form the core of

majority of the world’s economies. SMEs contribute to improved living standards, bring

about substantial local capital formation and achieve high level of productivity and

capability. The sector has also been identified as vehicles for employment generation and

providing opportunities for entrepreneurial sourcing, training, development and

empowerment. The Federal Office of Statistics of Nigeria stated that small-scale

enterprises make up 87% of the economy. As part of the proactive strategies, the federal

government of Nigeria through the Ministry of Industry, Trade and Investment has

flagged off the University Entrepreneurship Development Programme (UNEDEP) to

promote self-employment among youths from institutions of higher learning. Similarly,

the federal government established the Youth Enterprise With Innovation in Nigeria

(YouWiN) as a way of encouraging young entrepreneurs, to stem youth restiveness and

their involvement in social vices as well as to engage them in productive economic

activities. Furthermore, the Central Bank of Nigeria (CBN) recently launched a N220

billion Micro Small and Medium Enterprises (MSME) Development fund. The aim was

XCVII

to provide funds at a cheap cost and longer terms compared to what is obtain at

commercial banks.

Despite the increasing importance attached to small-scale enterprises, a lot of

SSEs still find it very difficult to effectively play their role because of the high mortality

rate of these small firms especially in Plateau State. According to the Small and Medium

Enterprises Development Agency of Nigeria (SMEDAN, 2013), 80% of small businesses

die before their 5th anniversary. Some of these constraints have been identified to

include high interest rate, banks’ apathy to financing SMEs because of the perceived risks

in the system, multiple taxation, poor accounting system, weak management system,

marketing, economic, planning and finance. It is often conceived that faster economic

growth will not be possible without finance. Realizing that finance is the propeller that

key the engine for the running of any business organization; therefore, the general

purpose of this study was to determine the financial impediments to sustainable growth

and development of Small-Scale Enterprises operating in Plateau State. Specifically, the

study will seek to:

• determine the extent to which level of accessibility of credit facility impede the

growth and development of small scale enterprises in Plateau State.

• determine the extent to which government financial regulatory policies impede the

growth and development of small scale enterprises in Plateau State.

• determine the extent to which poor financial management practices impede the

growth and development of small scale enterprises in Plateau State.

XCVIII

• determine strategies for ameliorating the financial impediments to sustainable

growth and development of Small-Scale Enterprises operating in Plateau State.

Summary of Procedures Used

The study employed a descriptive survey design and was carried out in Plateau

State. The study covered only the central senatorial zone in the state with six local

governments namely; Pankshin, Mangu, Bokkos, Kanke, and Kanam local government.

The population for the study was 206 made up of 57 and 149 registered entrepreneurs and

employees of small-scale enterprises in the six local governments in central senatorial

zone of Plateau State. Since the total population of the proprietors and the employees are

small and manageable no sampling was carried out.

The instrument for data collection was a structured questionnaire titled ‘Financial

Impediments to Small-Scale Enterprises Questionnaire’, (FISSEQ). The questionnaire

items were developed based on the information gathered from the literature reviewed.

The questionnaire was subjected to face-validation by three experts. Two of the validates

came from the Department of Vocational Teacher Education, University of Nigeria,

Nsukka and one of them is from Vocational Teacher Education, Ahmadu Bello

University, Zaria, in Kaduna State. The reliability of the instrument was done using

Cronbach Alpha (α) method. The coefficient result yielded 0.86 which was used to

establish the internal consistency of the instrument. The researcher with the help of three

research assistants administered the questionnaire to the respondents.

The data collected for the study was analyzed using mean to answer the research

questions and standard deviation to determine the closeness or otherwise of the responses

XCIX

from the mean, while t -test statistic was used to test the null hypothesis of no significant

difference at the probability of 0.05 level of significance at relevant degree of freedom

with the use of Statistical Package for Social Sciences (SPSS). Findings were drawn from

the analysis and based on the findings, conclusion and recommendations were made.

Principal Findings of the Study

The major findings of the study includes the following

• The findings on how inaccessibility of credit facility impedes the growth and

development of small scale enterprises operating in Plateau State revealed that

financial institutions consider small-scale enterprises as risky and small in size,

therefore, show little interest on them; reluctance of financial institutions to grant

loans to small-scale enterprises because of their high rate of bankruptcy in Plateau

State; banks are ill-equipped to supervise small-scale enterprises loan-portfolio

which impedes their credit accessibility in Plateau State; the value or quantity of

trade-credit to enterprises of small-scale businesses depends solely on the

supplier’s willingness and not the customer’s demand or request; and low credit is

associated to banks’ inability to appraise the loan applications of small-scale

enterprises due to poor application and feasibility study. The findings further

revealed that the wrong attitude of some entrepreneur to loans and that of their

workers is counterproductive because some entrepreneurs when offered credit

facilities; believe that it’s their share of the national cake; financial institutions,

individuals and groups in Plateau State find it difficult to give loan to small-scale

enterprises due to high insecurity of lives and properties; due to low level of

C

income in Plateau State, banks and individuals are not able to raise adequate credit

facilities to small-scale enterprises; inability of small-scale enterprises to provide

sufficient collateral impedes their financial growth in Plateau State; ignorance of

how and where to obtain credit facilities impedes small-scale enterprises financial

strength; and mismanagement and low financial planning of small-scale

enterprises impedes the growth and development of small scale enterprises

operating in Plateau State

• The findings on the summary of t-test analysis on the responses of proprietors

and employees on the extent to which inaccessibility of credit facility impede the

financing of small scale enterprises in Plateau State revealed that all 11 items had

probability values greater than 0.05 indicating that there is no significant

difference in the mean responses of proprietors and employees on the extent to

which inaccessibility of credit facility impede the financing of small scale

enterprises in Plateau State.

• The findings on how government financial regulatory policies impede the growth

and development of small scale enterprises operating in Plateau State revealed that

Nigeria Governments’ policies have constituted a serious problem to the growth of

SSEs, in Plateau State; Government’s policies instability regarding business

organizations in Plateau State has not been helpful especially to small scale

enterprises; developmental policies are in favour of large firms and sometimes

foreign –owned firms leaving SSEs in a distressed and vulnerable position; the

incidence of multiplicity of regulatory agencies and taxes has always resulted in

CI

high cost of doing business and poor management practices for small-scale

enterprises in Plateau State; no genuine commitment on the part of government,

private sector and labour union in the achievement of the stated objectives of

small-scale enterprises; and regular complains regarding tedious registration and

certification processes in Plateau State are the government financial regulatory

policies that impede the growth and development of small scale enterprises

operating in Plateau State.

• The findings on the summary of t-test analysis of the mean responses of

proprietors and employees on the extent to which government financial regulatory

policies impede the financing of small scale enterprises in Plateau State revealed

that all 6 items had probability values greater than 0.05 indicating that there is no

significant difference in the mean responses of proprietors and employees on the

extent to which government financial regulatory policies impede the financing of

small scale enterprises in Plateau State, therefore the null hypothesis was upheld.

• The findings on how poor financial management practice impede the growth and

development of small scale enterprises operating in Plateau State showed that

while increasing the volume of finance is necessary, ensuring that the business

environment is conducive (secured) for profitable investments are equally much

important; riots, ethnic and religious clashes have resulted to the inability of most

financial institutions to loan out funds to business organizations in Plateau State;

crises in Plateau State have resulted to burning of shops, stores, goods etc making

many small-scale enterprises windup or close; concentration and high spending by

CII

the State government on the issue of security has lead to the neglecting of the

economic policy; the high rate of insecurity in Plateau State has created fear and

anxiety in operators of SSEs and has reduced the lending ability of the banks to

small-scale businesses; constant attack by boko-haram in Plateau State could not

allow SSEs expand and concentrate on their business because they are made to

pay extra-charges for community security alert; many friends, relations and

associations find it difficult to lend to small businesses due to insecurity of lives

and properties; and State of Emergency and Curfew in Plateau State due to crises

has affected the financial activities of financial institutions in the State.

• The findings on the summary of t-test analysis on the mean responses of

proprietors and employees on the extent to which insecurity of life and property

impedes financing of small scale enterprises in Plateau State. The data revealed

that all 8 items had probability values greater than 0.05 indicating that there is no

significant difference in the mean responses of proprietors and employees on the

extent to which insecurity of life and property impede financing of small scale

enterprises in Plateau State, therefore the null hypothesis of no significant

difference was accepted.

• Findings on the strategies for ameliorating the financial impediments of small

scale enterprises operating in Plateau State revealed that small-scale enterprises

should be recognized as a special group of SMEs that are critical for

industrialization in Plateau State and should require specific policies and

incentives; one of the most effective ways of building sustainable small business

CIII

enterprises is by creating a linkage between the SSEs and Microfinance

Institutions (MFIs) in Plateau State; the operators of SSEs should evolve new

sources of raising funds from both internal and external agencies to ameliorate

their financial impediments; Small-scale enterprises should be duly and legally

registered with the appropriate government regulatory agencies in the State;

Operators of Small-scale enterprises should be mandated to register as private

organization or limited liability companies in the State; Operators of Small-scale

enterprises in Plateau State should improve on their record-keeping and auditing

strategies; the government of Plateau State should make proactive policies and

programmes on financing of small-scale enterprises; the government has to set the

institutional framework for business, the rules of the game, and to ensure that

enterprises receive appropriate incentives to facilitate efficient performance; the

government should establish a window within the commercial court for handling

SSEs; the government should establish a window within the commercial court for

handling SSEs and the procedures laid by the current Small and Medium

Industries Equity Investment Scheme (SMIEIS) in financing potential investments

in small and medium scale industries should be made known and accessible were

found out to be the strategies for ameliorating the financial impediments of small

scale enterprises operating in Plateau State.

• Findings on the summary of t-test analysis on the mean responses of proprietors

and employees on the strategies for ameliorating the financial impediments of

small scale enterprises operating in Plateau State. The data revealed that items 30

CIV

and 31 had probability values of 0.01and 0.01 respectively, which are less than the

significant value of 0.05 at 204 degree of freedom; meaning that the null

hypothesis of no significant difference was rejected on items 30 and 31. On the

other hand, hypothesis of no significant difference for items 26-29 and 32 - 37 was

accepted since the probability values ranging from 0.70 to 0.88 are greater than the

significant level of 0.05. Therefore, the null hypothesis of no significant difference

in the mean responses of proprietors and employees on the strategies for

ameliorating the financial impediments of small scale enterprises operating in

Plateau State was accepted for items 26-29 and 32 - 37

Implications of the Findings

The finding of the study has far reaching implications to the growth of small scale

enterprises in Plateau state as follows:

Findings on how inaccessibility of credit facility impedes the growth and

development of small scale enterprises operating in Plateau State have a far reaching

implications in that financial institutions consider small-scale enterprises as risky and

small in size, therefore, show little interest on them; reluctance of financial institutions to

grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau

State; banks are ill-equipped to supervise small-scale enterprises loan-portfolio which

impedes their credit accessibility in Plateau State; the value or quantity of trade-credit to

enterprises of small-scale businesses depends solely on the supplier’s willingness and not

the customer’s demand or request; and low credit is associated to banks’ inability to

appraise the loan applications of small-scale enterprises due to poor application and

CV

feasibility study. The findings further revealed that the wrong attitude of some

entrepreneur to loans and that of their workers is counterproductive because some

entrepreneurs when offered credit facilities; believe that it’s their share of the national

cake; financial institutions, individuals and groups in Plateau State find it difficult to give

loan to small-scale enterprises due to high insecurity of lives and properties; due to low

level of income in Plateau State, banks and individuals are not able to raise adequate

credit facilities to small-scale enterprises; inability of small-scale enterprises to provide

sufficient collateral impedes their financial growth in Plateau State; ignorance of how and

where to obtain credit facilities impedes small-scale enterprises financial strength; and

mismanagement and low financial planning of small-scale enterprises impedes the

growth and development of small scale enterprises operating in Plateau State. Until these

issues are addressed, the inaccessibility of credit facility will continue to impede the

growth and development of small scale enterprises operating in Plateau State.

The implication of the findings on government financial regulatory policies has a

far reaching effects on business growth in that some regulations may deliberately favour

SSEs (many regulations exclude the smallest businesses), in general the adverse impact

of regulations on SSEs can be particularly harmful. This is because small-scale

enterprises are less equipped to deal with problems arising from regulations since they

have less capacity than larger firms to navigate through the complexities or regulatory

and bureaucratic network. Small-Scale Enterprises are more likely to be hampered by

regulations because their strength stems from their flexibility. Some regulations designed

to prevent entry into the market by dynamic small-scale businesses are particularly

CVI

detrimental. Similarly, the frequent changes, and sometimes conflicting government

monetary policies, have also tended to hurt the SSEs. For example, while the government

increased total credit allocation to SSEs from 16 to 20 per cent, the same government

removed excess liquidity in the banking industry through increase in the minimum

rediscount rate (MRR). Unstable government policy has not been helpful to small scale

industries. This has destabilized and indeed sent many small scale industries to early fold

ups.

In order to ameliorate the financial impediments of small scale enterprises

operating in Plateau State revealed that small-scale enterprises should be recognized as a

special group of SMEs that are critical for industrialization in Plateau State and should

require specific policies and incentives; one of the most effective ways of building

sustainable small business enterprises is by creating a linkage between the SSEs and

Microfinance Institutions (MFIs) in Plateau State; the operators of SSEs should evolve

new sources of raising funds from both internal and external agencies to ameliorate their

financial impediments; Small-scale enterprises should be duly and legally registered with

the appropriate government regulatory agencies in the State; Operators of Small-scale

enterprises should be mandated to register as private organization or limited liability

companies in the State; operators of Small-scale enterprises in Plateau State should

improve on their record-keeping and auditing strategies; the government of Plateau State

should make proactive policies and programmes on financing of small-scale enterprises;

the government has to set the institutional framework for business, the rules of the game,

and to ensure that enterprises receive appropriate incentives to facilitate efficient

CVII

performance; the government should establish a window within the commercial court for

handling SSEs; the government should establish a window within the commercial court

for handling SSEs and the procedures laid by the current Small and Medium Industries

Equity Investment Scheme (SMIEIS) in financing potential investments in small and

medium scale industries should be made known and accessible were found out to be the

strategies for ameliorating the financial impediments of small scale enterprises operating

in Plateau State.

Conclusion

The purpose of this study is to determine the financial impediment to sustainable

growth of Small Scale Enterprises operating in Plateau State. From the study Data were

collected, analyzed and interpreted. Therefore based on the finding of the study, it was

concluded that the level of accessibility of the credit facilities, government financial

regulatory policies and the poor financial management practice by management of SSEs

to a moderate extend impede the growth and development of Small Scale Enterprises in

Plateau State. It was also concluded among others financial strategies that small scale

enterprises should be recognized as a special group of SMEs that are critical for

industrialization in Plateau State and should require specific policies and incentive that

will create a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau

State. Furthermore, government is meant to act as a business regulator with the overall

aim of helping to maintain a climate of confidence and stimulate the activities of the

enterprises, so that they can have the respect for the rule of competition.

CVIII

Recommendations

On the basis of the findings, discussions and conclusions of the study, the following

recommendations are made:

• Government and other financial institutions operating in Plateau State should

make credit facilities available to all categories of small scale enterprise and

should ensure adequate monitoring of how the small scale enterprise utilized the

funds

• Government policies should be made to favour and protect small scale enterprises

in order to weird off competitions from larger businesses.

• Registration and certification processes should be made easier for small scale

enterprises in Plateau State in order to encourage more business development in

the State.

• Owners of small scale enterprises should ensure they possessed management

abilities before venturing into such a business to avoid untimely collapse of the

business.

• Small-scale enterprises should be duly and legally registered with the appropriate

government regulatory agencies in the State

• Operators of Small-scale enterprises should be mandated to register as private

organization or limited liability companies in the State; Operators of Small-scale

CIX

enterprises in Plateau State should improve on their record-keeping and auditing

strategies;

• The government of Plateau State should make proactive policies and programmes

on financing of small-scale enterprises; the government has to set the institutional

framework for business, the rules of the game, and to ensure that enterprises

receive appropriate incentives to facilitate efficient performance.

Suggestions for Further Studies

The following suggestions are made for future studies:

• Research should be conducted on the financial management competencies

possessed by managers of small scale enterprises in Nigeria

• Research should be carried out on the challenges and ways of overcoming those financial

challenges confronting small scale enterprises in Nigeria

• Similar study should be conducted in other parts of Nigeria.

CX

References

Abor, J. (2008). Determinants of the capital structure of Ghanaian firms. Research papers on African economic research consortium. Accra. Agbasi, O. (2010). The role of cooperative in entrepreneurial development in

A.D.Nkamnebe and F. Nwankwo (Eds.) Capacity building in management and entrepreneurship for sustainable development. Nimo: Rex Charles.

Ahmed, S. A. (2006). The role of SMEs in developing economy. Abuja: Omotayo and

Co. Ltd. Ahmed, M. U. (2001). Globalisation and competitiveness of Bangladesh’s small scale industries (SSIs): An analysis of the prospects and challenges. Dhaka: Dialogue and University Press Limited. Ajayi, G. O. (2000). Entrepreneurship development in Nigeria. Enugu: Ajayi, O.A. (2002). Development of small-scale industries in Nigeria. Being Paper

Presented at workshop on grassroots advocacy and economic development. September 11-13.

Akpokerere, O.E. (2009). Small and medium scale business enterprise:

Vehicle for economic development in Nigeria. International Journal of Business and Common Market Studies 1(2), 7-10.

Alade, J. (2004). A paper presented during NASME workshop on technical business incubaotor,11th – 13th May. Alasan, M. and Yakubu, G (2011). Facilitate simplification of procedures of financial

Institutions: Mobilise resources and promote establishment of new financial institutions for SME development. Plateau State: Tawe Ltd.

Ana, I. (2008). Nigerians and micro financing. A paper presented at the 5th Nigeria German business group conference in Dusseldorf, Germany on the 6th September, 2008. Andreas, M. (2005). Informal finance: A theory of money lenders retrieved on http://www.olin.westl.edu/firs/con/shanghai/PDF/042.pdf Aremu, M.A. and Adeyemi, S. L. (2010). Small and medium scale enterprises as a

survival strategy for employment generation in Nigeria. Journal of Sustainable Development 4(5), 9-11.

CXI

Ayozie, D. O. (2008). The role of small scale industry in national development in Nigeria. ICAN Students' Journal 5(2),10-17.

Ayyagari, M.; Asli, D. and Vojislav, M. (2006). How important are financing

constraints? The role of finance in the business environment. Washington D.C: World Bank Policy Research Working Paper 3820.

Bello, A. (2007). Effective customs procedure as measures of facilitating trade among SMEs: SME success digest. Abuja: SMEDAN.

Basil, A.N.O. (2005). Small and medium enterprises (SMES) in Nigeria: Problems and prospects. Lagos: St. Clements University. Central Bank of Nigeria (CBN, 2008). Annual reports and statement of account for the year ended 1998”. Lagos: Central Bank of Nigeria. Clarke, G.R. G. (2005). Bank lending to small businesses in Latin America: Does bank origin matter? Journal of Money, Credit and Banking 3(2), 83-118. Eboh, E.C (1999). Problem definition, theoretical and conceptual framework, statement of objectives, research question and hypothesis formulation in technology policy research. An invited Paper derived at the methodology workshop to strengthen the capacity for technology policy research held at the University of Nigeria, Nsukka. Beck, T. and Demirgüç-Kunt, A. (2011). Bank financing for SMEs: Evidence across

countries and bank ownership types. Journal of Financial Services Research 39(4), 35–54.

Bigsten, A. and Gebreeyesus, M. (2007). The small, the young, and the productive:

Determinants of manufacturing firm growth in Ethiopia. Economic Development Cultural Change,813-840. Daniya, S. H. (2012). The prospects for an outward-looking industrialization strategy under adjustment in Sub-Saharan Africa". A paper presented at the

World Bank Africa Economic Issues Conference, held in Nairobi, 4-7 June. Fabayo, J.A. (2009). Small and medium enterprises development strategy: A critical option for sustainable long –term economic development in Nigeria. Abraham Adesanya Polytechnic, Ijebu-Ode held from 25-27 August.

CXII

Fatoki, O. and Odeyemi, A. (2010). Which new small and medium enterprises in South Africa have access to bank credit? International Journal of Business Management 5(10), 5-7.

Garnsey, E. (1998). A theory of early growth of firm; industrial and corporate change. Oxford: Oxford University Press. Hanks, S.H.; Watson, C.J.; Jansen, E. and Chandler, G. (1993). Tightening the life- cycle construct: A taxonomic study of growth stage configurations in hightechnology organizations in entrepreneurship theory and practice. Denmark: Haralambo, M. and Holborn, M. (2008). Sociology: Themes and perspectives. UK: CollinsEducational Publication.

Hermes, L.; Niels, U. and Lensink, R. (2011). Outreach and efficiency of microfinance institutions, world development, Elsevier, 938-948.

Huyghebaert, N. and Van, G.L.M. (2007). The determinants of financial structure: New insights from business start-ups. European Financial Management. 101–

133.

IADB (2005). Access to financing for small and medium enterprises,” Unlocking credit: The quest for deep and stable bank lending. Washington: IPES.

IFAC (2010). Annual report 2009, international federation of accountants. Washington: IPES. ILO (2000). Micro and Small enterprises development and poverty alleviation. Thailand: Final Report and Recommendation. Ireghah, M.M (2011). Entrepreneurship studies: Concepts and practice.

The requirement for starting a business enterprise. Benin: Gompia Press.

Izedomi, F. (2006). Sourcing finance for start-up and existing business in Nigeria: Prospects and Challenges. ICAN Student Journal 2(3), 10-12. Jennings, P & Beaver, G (2009) The Performance and Competitive Advantage of

Small Firms: A Management Perspective. International Small Business Journal 3(2),63-28.

Kasseeah, H. (2012). Financial constraints and leverage decisions in small and medium-sized firms. Journal of Economics and Behavioural Studies 3(2), 55- 65.

CXIII

Kauffman, C. (2005). Financing SMEs in Africa. Paris: OECD Development Centre Policy Insights. Levine, R.I (2007). Small business finance: What the books don’t say. Harvard Business Review 65(6), 30-32. Marr, A. (2012). Does transformation enhance or hinder financial relationships in

microfinance? The struggle between financial and social goals in Peru. Enterprise Development and Microfinance 23(3), 201-216.

Marr, A. and Tubaro, P. (2013). The microfinance wholesale lending market: A comparative study of India, Peru and Tanzania. International Journal of Economics and Business Research 4(5), 33-54.

Makhbul, Z.M. (2011). Entrepreneurial Success: Ann exploratory study among

entrepreneurs. International Journal of Business Management 1(2),1-10. Mueller, D. (1972). Life theory of firm. Journal of Industrial Economics 4(2),199- 219. Muhammed, M. (2010). A paper presented by the honourable minister of industry on the problems and prospects of industrialization in Nigeria. Institute of Development Research. ABU, Zaria:

Nnanna, G. (2005). SEDAN on the imperatives of SME development of the Sub-sector. Small Business Journal. Lagos: Business Day Media Ltd. Nnanna, G. (2001). SEDAN explains underdevelopment of the SME sub-sector. Small Business Journal. Lagos: Business Day Media Ltd. Nichter, S. and Goldmark, L. (2009). Small firm growth in developing countries. World Development 37(9), 1453–1464. Nigeria Investment Promotion Commission, (2004). Overview of small and medium- scale enterprises in Nigeria. An Information Booklet. 1-33. Nnanna, O.J. (2001). Financing small business under the new CBN directive and its likely impact on industrial growth of the Nigerian economy. CBN Bulletin. Nwoke, O.O. (1998). Financing management in small scale in Nigeria. Unpublished

Masters Project, University of Nigeria, Enugu Campus. Obitayo, O. (2001). Creating an enabling environment for small scale

CXIV

Industries. Bullion- Central Bank Nigeria. Oboh, G.A (2004). Contemporary approaches for financing Micro, small and

medium enterprises. A paper presented at the international conference of world association of small and medium enterprises, July, 2004, Abuja.

OECD (2004). Promoting SMEs for development. Paper presented at the 2nd OECD

conference of ministers responsible for small and medium-sized enterprises (SMEs), promoting entrepreneurship and innovative SMEs in a global economy.

OECD (2005). African economic outlook 2004/05, jointly produced with the African development bank. Paris: www.oecd.org/dev/aeo. Ojo, O. (2009). Impact of micro finance on entrepreneurial development: A case of Nigeria. A paper presented at the international conference on economic and administration, organized by the faculty of administration and business, University of Bucharest, Romania, 14th -15th November, 2009. Ogboru, P. L. (2007). An evaluation of funding arrangements for small and medium scale enterprises (SMEs) in Nigeria. Ph.D Dissertation Project, Department of Business and Management Studies, St Clements University. Olusoga, M. (2005). Equipment leasing: A viable opinion for small and medium- scale enterprises. Business Day, 19 May. Osuala, E.C. (2004). Principles and practices of small business management in Nigeria, Enugu: Cheston Agency Ltd. Publishers. Ovia, J. (2005). Financing small-scale industries (A banker’s perspective). A paper

presented at the Nigerian-British chamber of commerce on enhancing the managerial skills of small and medium enterprises operators. Lagos: Ebani House Nigeria.

Patrick, I.; Aremu, M.A. and Adeyemi, S.L. (2010). Small and medium scale enterprises as a Survival Strategy for Employment Generation in Nigeria, Journal of Sustainable Development 4(3), 27-30. Rungani, E. and Fatoki, O. (2010). African determinants of capital structure of small and medium enterprises in the buffalo city municipality, eastern cape province, South Africa. Journal of Business Management 12(8), 3968-3977.

CXV

Sanda, A.U.; Dogon-Daji, S.D and Abdullah, A.S. (2006). SMEs and employment generation in Nigeria: Evidence from Kano State. Paper submitted for presentation at NES Conference. Schmitz, H. (1982). Growth constraints on small-scale manufacturing in

developing countries: A Critical Review, world development 45-66. Small and Medium Industries Equity Scheme (SMIEIS, 2004). Guidelines for the small and medium industries equity scheme bankers committee. Small AND Medium Enterprises Agency of Nigeria (2007).National policy on micro, small and medium enterprises of Nigeria. Enugu: Small and medium enterprises agency of Nigeria (2008). SME success diges. July-

December, 2007. Smyth, K. L. (2004). Exploring the usefulness of a conceptual framework as research

tool. Macon: Smyth and Helwys. Tawe, R.S. (2009). On attitudinal response of small and medium scale business owners

to Microfinance Banking in Nigeria. Journal of Financial Services Research 30(20), 141-145.

Ullah, F.T.P. (2007). Are UK technology-based small firms still finance constrained. Int Entrepreneur Manag. pp189–203. UNCTAD (2008). ICT as an enabler for growth, development and competitiveness”

http://www.unctadxi.org. UNDP (2007). Sharing in development: A programme of employment, equity

and growth for the Philippines, report of an inter-agency team financed by the UNDP and organized by the ILO, Geneva.

Wattanapruttipaisan, T. (2002a). SMEs subcontracting as bridgehead to competitiveness:

Framework for an assessment of supply-side capabilities and demand-side requirements. Asia-Pacific Development Journal, 5(6), 8-10.

Wattanapruttipaisan, T. (2002b). “Promoting SME development: Some issues and

suggestions for policy consideration.” in UNESCAP, Bulletin on Asia-pacific perspectives 2002/03. New York: United Nations.

CXVI

Wahab, L and Ijaiya, M.A. (2006). Small and medium scale enterprise access to commercial banks credit and their contribution to GDP in Nigeria. CIBN Journal of Banking 3(4), 40-45. Whitman, E. (2011). Long Overlooked, cooperatives get their due at united nations. IPS Story underneath [internet]. http://www.thenews.coop/article/united- nations-what-cooperative. World Bank and UNDP (1989). Africa's adjustment and growth in the 1980s.

Washington, DC: World Bank. World Bank (2005). World bank development report. Washington D.C: World Bank. Zima, P.V. (2007). What is theory? Cultural theory as discourse and dialogue. London: Continuum Ltd.

Appendix A

Department of Vocational Teacher Education,

Business Education Section,

University of Nigeria,

Nsukka.

23rd April, 2013.

Dear Respondent,

I am a post graduate student of the above department, currently conducting a

research on the “Financial Impediments to Sustainable Growth and Development of

Small-Scale Enterprises Operating in Plateau State, Nigeria.”.

CXVII

You have been identified as one who could furnish the researcher with the relevant

information to effectively carry out the study. The writer therefore humbly requests your

sincere-opinion in completing the attached questionnaire.

You are assured that the information given by you will be treated in strict

confidentiality and used for the purpose of this study.

Thank you for your anticipated cooperation.

Yours faithfully,

Tawal, Dauda Sale.

QUESTIONNAIRE

Financial Impediments to Sustainable Growth and Development of Small-Scale

Enterprises (FISGDSSE)

SECTION A: GENERAL INFORMATION

Please complete the following questionnaire items by checking (√) in the brackets

as appropriate.

Name of Industry: …………………………………………………………………

Position Occupied: (a) Proprietor ( ) (b) Employee ( )

Academic Level of Respondent:

CXVIII

• First School Leaving Certificate ( )

• WAEC / NECO ( )

• Ordinary National Diploma ( )

• National Certificate in Education ( )

• HND / B.A / B.SC ( )

• Others (Please specify) ……………………………………………………….

SECTION B

To what extent does level of accessibility to credit facilities impede the financing

of small-scale enterprises in Plateau State? Please check (√) to indicate your level of

opinion on the items:

Key: Very High Extent (VHE) - 5

High Extent (HE) - 4

Moderate Extent (ME) - 3

CXIX

Low Extent (LE) - 2

Very Low Extent (SD) - 1

Item Statements VHE 5

HE 4

ME 3

LE 2

VLE 1

1.

Financial institutions consider small-scale enterprises as risky and small in size, therefore, show little interest on them.

2.

Reluctance of financial institutions to grant loans to small-scale enterprises because of their high rate of bankruptcy in Plateau State.

3.

Banks are ill-equipped to supervise small-scale enterprises loan-portfolio which impedes their credit accessibility in Plateau State.

4.

The value or quantity of trade-credit to enterprises of small-scale businesses depends solely on the supplier’s willingness and not the customer’s demand or request.

5.

Low credit is associated to banks’ inability to appraise the loan applications of small-scale enterprises due to poor application and feasibility study.

6.

The wrong attitude of some entrepreneur to loans and that of their workers is counterproductive because some entrepreneurs when offered credit facilities; believe that it’s their share of the national cake.

7.

Due to high insecurity of lives and properties, financial institutions, individuals and groups in Plateau State find it difficult to give loan to small-scale enterprises.

8.

Due to low level of income in Plateau State, banks and individuals are not able to raise adequate credit facilities to small-scale enterprises.

9.

Inability of small-scale enterprises to provide sufficient collateral impedes their financial growth in Plateau State.

10.

Ignorance of how and where to obtain credit facilities impedes small-scale enterprises

CXX

financial strength.

11.

Mismanagement and low financial planning of small-scale enterprises impedes their success in accessing credit facilities.

SECTION C: To what extent do government financial regulatory policies impede the financing of small scale enterprises in Plateau State? Please check (√) to indicate your level of opinion on the items: Item Statements VHE

5

HE 4

ME 3

LE 2

VLE 1

12.

Nigeria Governments’ policies have constituted a serious problem to the growth of SSEs, in Plateau State.

13.

Government’s policies instability regarding business organizations in Plateau State has not been helpful especially to small scale enterprises.

14.

Developmental policies are in favour of large firms and sometimes foreign –owned firms leaving SSEs in a distressed and vulnerable position.

15.

The incidence of multiplicity of regulatory agencies and taxes has always resulted in high cost of doing business and poor management practices for small-scale enterprises in Plateau State.

16.

There is no genuine commitment on the part of government, private sector and labour union in the achievement of the stated objectives of small-scale enterprises.

17.

There has been complains regarding tedious registration and certification processes in Plateau State i.e various bodies have their requirements and require money and time.

CXXI

Section D: To what extent do insecurity of lives and properties impedes affect the growth of small-scale enterprises operating in Plateau State? Please (√) to indicate your level of opinion on the items: Item of Statements VHE

5

HE 4

ME 3

LE 2

VLE 1

18. While increasing the volume of finance is necessary, ensuring that the business environment is conducive (secured) for profitable investments are equally much important.

19. Riots, ethnic and religious clashes have resulted to the inability of most financial institutions to loan out funds to business organizations in Plateau State.

20.

Crises in Plateau State have resulted to burning of shops, stores, goods etc making many small-scale enterprises windup or close.

21. The concentration and high spending by the State government on the issue of security has lead to the neglecting of the economic policy.

CXXII

22. The high rate of insecurity in Plateau State has created fear and anxiety in operators of SSEs and has reduced the lending ability of the banks to small-scale businesses.

23. Constant attack by boko-haram in Plateau State could not allow SSEs expand and concentrate on their business because they are made to pay extra-charges for community security alert.

24.

Many friends, relations and associations find it difficult to lend to small businesses due to insecurity of lives and properties.

25. State of Emergency and Curfew in Plateau State due to crises has affected the financial activities of financial institutions in the State.

Section E: What are the possible strategies for ameliorating the financial impediments of small-scale enterprises operating in Plateau State? Please check (√) to indicate your level of agreement or disagreement on the items: Item of Statements SA

5

A 4

U 3

D 2

SD 1

26.

Small-scale enterprises should be recognized as a special group of SMEs that are critical for industrialization in Plateau State and should require specific policies and incentives.

27.

One of the most effective ways of building sustainable small

CXXIII

business enterprises is by creating a linkage between the SSEs and Microfinance Institutions (MFIs) in Plateau State.

28.

The operators of SSEs should evolve new sources of raising funds from both internal and external agencies to ameliorate their financial impediments.

29.

Small-scale enterprises should be duly and legally registered with the appropriate government regulatory agencies in the State.

30.

Tax holiday should be extended to small-scale enterprises in Plateau State by the State government.

31.

Operators of Small-scale enterprises should be mandated to register as private organization or limited liability companies in the State.

32.

Operators of Small-scale enterprises in Plateau State should improve on their record-keeping and auditing strategies.

33.

The government of Plateau State should make proactive policies and programmes on financing of small-scale enterprises.

34.

The government has to set the institutional framework for business, the rules of the game, and to ensure that enterprises receive appropriate incentives to facilitate efficient performance.

35.

The government should establish a window within the commercial court for

CXXIV

handling SSEs.

36.

The government should establish a window within the commercial court for handling SSEs.

37.

The procedures laid by the current Small and Medium Industries Equity Investment Scheme (SMIEIS) in financing potential investments in small and medium scale industries should be made known and accessible.

CXXV

Appendix B Analyses of Mean and T- Test Statistic

Research Question One

DESCRIPTIVES VARIABLES=Item1 Item2 Item3 Item4 Item5 Item6 Item7 Item8 Item9 Item10 Item11 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives [DataSet2]

Descriptive Statistics

N Minimum Maximum Mean Std.

Deviation

Item1 206 1.00 4.00 3.2524 .80509

Item2 206 1.00 4.00 3.1505 .76616

Item3 206 1.00 4.00 3.1117 .79766

Item4 206 1.00 4.00 3.0874 .90102

Item5 206 1.00 4.00 3.0874 .90102

Item6 206 1.00 4.00 3.0049 .72917

Item7 206 1.00 4.00 2.9417 .78802

Item8 206 1.00 4.00 2.9612 .85451

Item9 206 1.00 4.00 3.0243 .78671

Item10 206 1.00 4.00 2.9369 .81504

Item11 206 1.00 4.00 2.9709 .77089

Valid N

(listwise) 206

CXXVI

Research Question Two One

DESCRIPTIVES VARIABLES=Item12 Item13 Item14 Item15 Item16 Item17 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives

[DataSet2]

Descriptive Statistics

N Minimum Maximum Mean Std.

Deviation

Item12 206 1.00 4.00 3.0097 .79627

Item13 206 1.00 4.00 3.0728 .77115

Item14 206 1.00 4.00 3.1019 .76783

Item15 206 1.00 4.00 3.0485 .75713

Item16 206 1.00 4.00 3.0631 .76566

Item17 206 1.00 4.00 2.9029 .77163

Valid N

(listwise) 206

CXXVII

Research Question Three

DESCRIPTIVES VARIABLES=Item18 Item19 Item20 Item21 Item22 Item23 Item24 Item25 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives

[DataSet2]

Descriptive Statistics

N Minimum Maximum Mean Std.

Deviation

Item18 206 1.00 4.00 2.9175 .83109

Item19 206 1.00 4.00 2.8786 .89977

Item20 206 1.00 4.00 2.8252 .88816

Item21 206 1.00 4.00 3.0049 .81149

Item22 206 1.000 4.000 3.03398 .816782

Item23 206 1.00 4.00 3.0874 .86229

Item24 206 1.00 4.00 3.1650 .69278

Item25 206 1.00 4.00 3.1456 .77658

Valid N

(listwise) 206

Research Question Four

DESCRIPTIVES VARIABLES=Item26 Item27 Item28 Item29 Item30 Item31 Item32 Item33 Item34 Item35 Item36 Item37 /STATISTICS=MEAN STDDEV MIN MAX. Descriptives

CXXVIII

[DataSet2]

Descriptive Statistics

N Minimum Maximum Mean Std.

Deviation

Item26 206 1.00 4.00 3.1262 .79853

Item27 206 1.00 4.00 3.3010 .78193

Item28 206 1.00 4.00 3.0534 .77903

Item29 206 1.00 4.00 3.0922 .76906

Item30 206 1.00 4.00 3.2524 .73542

Item31 206 1.00 4.00 3.2621 .71173

Item32 206 1.00 4.00 3.0728 .66225

Item33 206 1.00 4.00 3.0388 .72479

Item34 206 1.00 4.00 3.0000 .77144

Item35 206 1.00 4.00 3.0534 .76641

Item36 206 1.00 4.00 3.1456 .71783

Item37 206 1.00 4.00 3.0922 .74979

Valid N

(listwise) 206

Hypothesis One T-TEST GROUPS=smallscale enterprise(1 2) /MISSING=ANALYSIS

CXXIX

/VARIABLES=Item1 Item2 Item3 Item4 Item5 Item6 Item7 Item8 Item9 Item10 Item11 /CRITERIA=CI(.95). T-Test [DataSet2]

Group Statistics

smallscaleenterprise N Mean Std.

Deviation

Std. Error

Mean

Item1

Proprietors 57 3.1930 .81149 .10748

Employees 149 3.2752 .80420 .06588

Item2

Proprietors 57 3.0877 .76253 .10100

Employees 149 3.1745 .76874 .06298

Item3

Proprietors 57 3.0351 .80100 .10610

Employees 149 3.1409 .79712 .06530

Item4

Proprietors 57 2.9825 .89625 .11871

Employees 149 3.1275 .90261 .07394

Item5

Proprietors 57 2.9825 .89625 .11871

Employees 149 3.1275 .90261 .07394

Item6

Proprietors 57 2.9123 .76253 .10100

Employees 149 3.0403 .71546 .05861

Item7

Proprietors 57 2.9123 .76253 .10100

Employees 149 2.9530 .79979 .06552

Item8

Proprietors 57 2.9825 .81265 .10764

Employees 149 2.9530 .87252 .07148

Item9

Proprietors 57 3.0175 .83434 .11051

Employees 149 3.0268 .77063 .06313

Item10

Proprietors 57 2.9474 .87466 .11585

Employees 149 2.9329 .79410 .06506

Item11

Proprietors 57 2.9474 .83283 .11031

Employees 149 2.9799 .74860 .06133

CXXX

Independent Samples Test

Levene's

Test for

Equality

of

Variances

t-test for Equality of Means

F Sig. t df Sig.

(2-

tailed

)

Mean

Differenc

e

Std.

Error

Differenc

e

95%

Confidence

Interval of

the

Difference

Lowe

r

Upper

Item1

Equal

variance

s

assumed

.082

.77

5

-

.655

204 .513 -.08219 .12556

-

.3297

5

.1653

8

Equal

variance

s not

assumed

-

.652

100.61

0

.516 -.08219 .12607

-

.3322

9

.1679

1

Item2

Equal

variance

s

assumed

.496

.48

2

-

.726

204 .468 -.08678 .11946

-

.3223

1

.1487

6

Equal

variance

s not

-

.729

102.16

8

.468 -.08678 .11903

-

.3228

6

.1493

1

CXXXI

assumed

Item3

Equal

variance

s

assumed

.350

.55

5

-

.852

204 .395 -.10585 .12431

-

.3509

5

.1392

5

Equal

variance

s not

assumed

-

.850

100.98

5

.398 -.10585 .12458

-

.3529

9

.1412

9

Item4

Equal

variance

s

assumed

1.03

0

.31

1

-

1.03

4

204 .302 -.14506 .14030

-

.4216

9

.1315

7

Equal

variance

s not

assumed

-

1.03

7

102.07

3

.302 -.14506 .13986

-

.4224

6

.1323

4

Item5

Equal

variance

s

assumed

1.03

0

.31

1

-

1.03

4

204 .302 -.14506 .14030

-

.4216

9

.1315

7

Equal

variance

s not

assumed

-

1.03

7

102.07

3

.302 -.14506 .13986

-

.4224

6

.1323

4

Item6

Equal

variance

s

assumed

.460

.49

9

-

1.12

8

204 .261 -.12799 .11349

-

.3517

4

.0957

7

Equal

variance

s not

-

1.09

6

95.953 .276 -.12799 .11677

-

.3597

9

.1038

1

CXXXII

assumed

Item7

Equal

variance

s

assumed

.145

.70

3

-

.331

204 .741 -.04074 .12299

-

.2832

4

.2017

6

Equal

variance

s not

assumed

-

.338

105.95

3

.736 -.04074 .12039

-

.2794

3

.1979

5

Item8

Equal

variance

s

assumed

.751

.38

7

.221 204 .826 .02944 .13339

-

.2335

7

.2924

4

Equal

variance

s not

assumed

.228

108.31

2

.820 .02944 .12921

-

.2266

7

.2855

5

Item9

Equal

variance

s

assumed

.332

.56

5

-

.076

204 .940 -.00930 .12282

-

.2514

7

.2328

6

Equal

variance

s not

assumed

-

.073

94.700 .942 -.00930 .12727

-

.2619

8

.2433

8

Item1

0

Equal

variance

s

assumed

.612

.43

5

.114 204 .909 .01448 .12724

-

.2364

0

.2653

6

Equal

variance

s not

.109 93.372 .913 .01448 .13287

-

.2493

5

.2783

2

CXXXIII

assumed

Item1

1

Equal

variance

s

assumed

1.19

4

.27

6

-

.270

204 .787 -.03250 .12033

-

.2697

5

.2047

6

Equal

variance

s not

assumed

-

.257

92.619 .797 -.03250 .12621

-

.2831

4

.2181

5

Hypothesis Two

T-TEST GROUPS=smallscaleenterprise(1 2) /MISSING=ANALYSIS /VARIABLES=Item12 Item13 Item14 Item15 Item16 Item17 /CRITERIA=CI(.95). T-Test [DataSet2]

Group Statistics

smallscaleenterprise N Mean Std.

Deviation

Std. Error

Mean

Item12

Proprietors 57 2.9825 .85547 .11331

Employees 149 3.0201 .77521 .06351

Item13

Proprietors 57 3.1053 .77192 .10224

Employees 149 3.0604 .77310 .06333

Item14

Proprietors 57 3.0526 .74213 .09830

Employees 149 3.1208 .77906 .06382

CXXXIV

Item15

Proprietors 57 2.9649 .73107 .09683

Employees 149 3.0805 .76685 .06282

Item16

Proprietors 57 2.9649 .73107 .09683

Employees 149 3.1007 .77760 .06370

Item17

Proprietors 57 2.8596 .76622 .10149

Employees 149 2.9195 .77561 .06354

Independent Samples Test

Levene's

Test for

Equality

of

Variances

t-test for Equality of Means

F Sig. t df Sig.

(2-

tailed

)

Mean

Differenc

e

Std.

Error

Differenc

e

95%

Confidence

Interval of

the

Difference

Lowe

r

Upper

Item1

2

Equal

variance

s

assumed

.701

.40

3

-

.303

204 .762 -.03768 .12429

-

.2827

3

.2073

8

Equal

variance

s not

assumed

-

.290

93.228 .772 -.03768 .12989

-

.2956

1

.2202

6

Item1 Equal .015 .90 .373 204 .710 .04486 .12035 - .2821

CXXXV

3 variance

s

assumed

2 .1924

3

6

Equal

variance

s not

assumed

.373

101.56

3

.710 .04486 .12027

-

.1937

1

.2834

3

Item1

4

Equal

variance

s

assumed

1.28

8

.25

8

-

.569

204 .570 -.06817 .11978

-

.3043

4

.1679

9

Equal

variance

s not

assumed

-

.582

106.03

8

.562 -.06817 .11720

-

.3005

3

.1641

8

Item1

5

Equal

variance

s

assumed

.902

.34

3

-

.980

204 .328 -.11562 .11793

-

.3481

4

.1168

9

Equal

variance

s not

assumed

-

1.00

2

105.96

1

.319 -.11562 .11543

-

.3444

7

.1132

2

Item1

6

Equal

variance

s

assumed

1.58

0

.21

0

-

1.13

9

204 .256 -.13576 .11916

-

.3707

0

.0991

8

Equal

variance

s not

assumed

-

1.17

1

107.35

4

.244 -.13576 .11591

-

.3655

2

.0940

1

CXXXVI

Item1

7

Equal

variance

s

assumed

.015

.90

2

-

.497

204 .620 -.05981 .12040

-

.2971

9

.1775

6

Equal

variance

s not

assumed

-

.500

102.54

5

.618 -.05981 .11974

-

.2973

0

.1776

7

HypothesisThree T-TEST GROUPS=smallscaleenterprise(1 2) /MISSING=ANALYSIS /VARIABLES=Item18 Item19 Item20 Item21 Item22 Item23 Item24 Item25 /CRITERIA=CI(.95). T-Test [DataSet2]

Group Statistics

smallscaleenterprise N Mean Std.

Deviation

Std. Error

Mean

Item18

Proprietors 57 2.8772 .80335 .10641

Employees 149 2.9329 .84361 .06911

Item19

Proprietors 57 2.8596 .87502 .11590

Employees 149 2.8859 .91186 .07470

Item20

Proprietors 57 2.8246 .88888 .11773

Employees 149 2.8255 .89088 .07298

CXXXVII

Item21

Proprietors 57 3.0000 .86603 .11471

Employees 149 3.0067 .79267 .06494

Item22

Proprietors 57 3.07018 .842184 .111550

Employees 149 3.02013 .809319 .066302

Item23

Proprietors 57 3.1404 .87502 .11590

Employees 149 3.0671 .85948 .07041

Item24

Proprietors 57 3.1930 .76622 .10149

Employees 149 3.1544 .66500 .05448

Item25

Proprietors 57 3.2281 .82413 .10916

Employees 149 3.1141 .75811 .06211

Independent Samples Test

Levene's

Test for

Equality

of

Variances

t-test for Equality of Means

F Sig

.

t df Sig.

(2-

tailed

)

Mean

Differenc

e

Std.

Error

Differenc

e

95%

Confidence

Interval of the

Difference

Lower Upper

Item1

8

Equal

variance

s

assume

d

.103

.74

8

-

.42

9

204 .668 -.05569 .12969 -

.31140 .20002

Equal

variance

-

.43

106.07

2

.662 -.05569 .12688 -

.30724 .19586

CXXXVIII

s not

assume

d

9

Item1

9

Equal

variance

s

assume

d

.162

.68

8

-

.18

7

204 .852 -.02626 .14046 -

.30320 .25069

Equal

variance

s not

assume

d

-

.19

0

105.31

7

.849 -.02626 .13789 -

.29965 .24714

Item2

0

Equal

variance

s

assume

d

.017

.89

7

-

.00

7

204 .995 -.00094 .13866 -

.27433 .27245

Equal

variance

s not

assume

d

-

.00

7

101.63

0

.995 -.00094 .13852 -

.27571 .27383

Item2

1

Equal

variance

s

assume

d

.674

.41

3

-

.05

3

204 .958 -.00671 .12669 -

.25650 .24308

Equal

variance

s not

assume

-

.05

1

93.994 .960 -.00671 .13181 -

.26843 .25501

CXXXIX

d

Item2

2

Equal

variance

s

assume

d

.088

.76

7

.39

3

204 .695 .050041 .127470

-

.20128

6

.30136

8

Equal

variance

s not

assume

d

.38

6

97.931 .701 .050041 .129766

-

.20747

8

.30756

1

Item2

3

Equal

variance

s

assume

d

.006

.93

6

.54

4

204 .587 .07324 .13453 -

.19200 .33848

Equal

variance

s not

assume

d

.54

0

99.821 .590 .07324 .13561 -

.19582 .34229

Item2

4

Equal

variance

s

assume

d

1.79

4

.18

2

.35

7

204 .721 .03862 .10812 -

.17456 .25180

Equal

variance

s not

assume

d

.33

5

90.093 .738 .03862 .11519 -

.19021 .26745

Item2 Equal 1.33 .25 .94 204 .347 .11398 .12098 - .35251

CXL

5 variance

s

assume

d

2 0 2 .12455

Equal

variance

s not

assume

d

.90

8

94.382 .366 .11398 .12559 -

.13537 .36333

Hypothesis Four

T-TEST GROUPS=smallscaleenterprise(1 2) /MISSING=ANALYSIS /VARIABLES=Item26 Item27 Item28 Item29 Item30 Item31 Item32 Item33 Item34 Item35 Item36 Item37 /CRITERIA=CI(.95). T-Test [DataSet2]

Group Statistics

smallscaleenterprise N Mean Std.

Deviation

Std. Error

Mean

Item26

Proprietors 57 3.2281 .82413 .10916

Employees 149 3.0872 .78785 .06454

Item27

Proprietors 57 3.3158 .80529 .10666

Employees 149 3.2953 .77550 .06353

Item28

Proprietors 57 3.1053 .79472 .10526

Employees 149 3.0336 .77474 .06347

Item29 Proprietors 57 3.1053 .77192 .10224

CXLI

Employees 149 3.0872 .77051 .06312

Item30

Proprietors 57 3.0351 .77839 .10310

Employees 149 3.3356 .70338 .05762

Item31

Proprietors 57 3.0526 .78878 .10448

Employees 149 3.3423 .66548 .05452

Item32

Proprietors 57 2.9298 .79865 .10578

Employees 149 3.1275 .59603 .04883

Item33

Proprietors 57 2.9298 .84218 .11155

Employees 149 3.0805 .67300 .05513

Item34

Proprietors 57 2.9123 .87179 .11547

Employees 149 3.0336 .72983 .05979

Item35

Proprietors 57 2.8947 .90008 .11922

Employees 149 3.1141 .70260 .05756

Item36

Proprietors 57 3.0702 .82071 .10871

Employees 149 3.1745 .67515 .05531

Item37

Proprietors 57 3.1930 .74255 .09835

Employees 149 3.0537 .75144 .06156

Independent Samples Test

Levene's

Test for

Equality

of

Variances

t-test for Equality of Means

F Sig. t df Sig.

(2-

tailed

)

Mean

Differenc

e

Std.

Error

Differenc

e

95%

Confidence

Interval of

the

Difference

CXLII

Lowe

r

Upper

Item2

6

Equal

variance

s

assumed

.595

.44

1

1.13

3

204 .258 .14082 .12428

-

.1042

1

.3858

6

Equal

variance

s not

assumed

1.11

0

97.492 .270 .14082 .12681

-

.1108

5

.3925

0

Item2

7

Equal

variance

s

assumed

.005

.94

2

.168 204 .867 .02049 .12207

-

.2201

9

.2611

6

Equal

variance

s not

assumed

.165 98.110 .869 .02049 .12415

-

.2258

8

.2668

6

Item2

8

Equal

variance

s

assumed

.100

.75

2

.590 204 .556 .07171 .12152

-

.1678

9

.3113

0

Equal

variance

s not

assumed

.583 99.161 .561 .07171 .12292

-

.1721

8

.3156

0

Item2

9

Equal

variance

s

assumed

.086

.76

9

.150 204 .881 .01801 .12006

-

.2187

0

.2547

3

Equal .150 101.25 .881 .01801 .12016 - .2563

CXLIII

variance

s not

assumed

8 .2203

4

7

Item3

0

Equal

variance

s

assumed

.704

.40

2

-

2.66

2

204 .008 -.30048 .11287

-

.5230

3

-

.0779

4

Equal

variance

s not

assumed

-

2.54

4

93.016 .013 -.30048 .11811

-

.5350

3

-

.0659

4

Item3

1

Equal

variance

s

assumed

.019

.88

9

-

2.65

1

204 .009 -.28965 .10925

-

.5050

6

-

.0742

5

Equal

variance

s not

assumed

-

2.45

8

88.175 .016 -.28965 .11785

-

.5238

4

-

.0554

6

Item3

2

Equal

variance

s

assumed

5.85

1

.01

6

-

1.92

9

204 .055 -.19769 .10246

-

.3997

1

.0043

3

Equal

variance

s not

assumed

-

1.69

7

81.014 .094 -.19769 .11651

-

.4295

1

.0341

2

Item3

3

Equal

variance

s

assumed

1.47

8

.22

6

-

1.33

8

204 .182 -.15071 .11266

-

.3728

4

.0714

2

Equal - 84.788 .229 -.15071 .12443 - .0967

CXLIV

variance

s not

assumed

1.21

1

.3981

2

0

Item3

4

Equal

variance

s

assumed

2.10

0

.14

9

-

1.00

9

204 .314 -.12128 .12014

-

.3581

5

.1156

0

Equal

variance

s not

assumed

-

.933

87.668 .354 -.12128 .13003

-

.3797

0

.1371

5

Item3

5

Equal

variance

s

assumed

3.28

9

.07

1

-

1.84

9

204 .066 -.21936 .11866

-

.4533

2

.0146

1

Equal

variance

s not

assumed

-

1.65

7

83.435 .101 -.21936 .13239

-

.4826

5

.0439

3

Item3

6

Equal

variance

s

assumed

.725

.39

6

-

.933

204 .352 -.10432 .11183

-

.3248

1

.1161

7

Equal

variance

s not

assumed

-

.855

86.554 .395 -.10432 .12197

-

.3467

6

.1381

2

Item3

7

Equal

variance

s

assumed

.009

.92

3

1.19

4

204 .234 .13929 .11665

-

.0907

1

.3692

9

CXLV

Equal

variance

s not

assumed

1.20

0

102.51

9

.233 .13929 .11603

-

.0908

4

.3694

2