Full Project – The role of capital in the growth of small business in Nigeria

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CHAPTER ONE

INTRODUCTION

1.1 GENERAL OVER VIEW OF THE STUDY

The establishment of small business is profitable and can lead to industrialization if effectively and efficiently managed. This depends on how one has perceive, planned for an operated the small scale business that will make for existence survival and possible growth of the businesses.

In third world countries including Nigeria and indeed in Owerri Imo state, economy and industrial development depends not only on large industries but also on small business that are found in every nook and cranny of the state. They role of capital in the growth and success of small business is vital.

Small business have been part and parcel of the daily activities of this country, therefore, it is pertinent to say that a greater percentage of the population engage in small scale businesses ranging from hawking to the establishment of manufacturing or servicing firms.

It is almost a culture of the people and it signifies the importance of small scale business in the economic socio-cultural and political life of Owerri in Imo state general.

For the past years, both civilians and military administrations have stressed and emphasized on the need and role of capital in the growth of growth of small businesses in Nigeria economy. As far back as 1974 till date, the importance of capital has been emphasized by small scale industries credit scheme (ssics) and Nigeria Bank for commerce and industry (NBCI) in the country and state in particular.

The federal government on the other hand engaged small business by advancing policies necessary to enhance effective operation of small scale businesses, schemes like National economic Reconstruction fund, peoples bank o Nigeria etc were all in attempt to solve the problems of lack of capital and mismanagement of capital.

Small businesses have been associated with problems of inadequate capital, mismanagement of capital, lack of managerial skills and inadequate of modern machinery/equipment among others.

1.2 STATEMENT OF PROBLEM

When the establishment of second tier foreign exchange market (SFEM), business found it very difficulty to obtain capital to import machinery and equipment to boost their product efficiency

The elements of an organization environment include, Technology, culture political and economic under which is categorized.

However, despite government efforts to support small business operations, the problems of lack and inadequate capital persist.

Mismanagement of capital and unreliable source of capital persist.

Against this background this study focuses on the role of capital in the growth of small business in Nigeria.

1.3 OBJECTIVE OF THE STUDY

It has been opined by professor (FUBARA) that objective of any particular issue assort.

The objective of this work is as follows:

i To identify the prospects of financing small business in Owerri Imo state.

ii To identify the problems that militates against the source of capital in Owerri, Imo state.

iii To know whether effective financing of small scale can enhance Business growth.

RESEARCH QUESTIONS

The following research questions have been drawn to guide this research work.

i What is the effect of adequate capital on the operation of small business?

ii How does interest rate effect small business owners access to capital?

iii What are the various forms of capital available to small business owners and the related cost?

iv How does effective accounting system influence capital management in small business?

1.5 SCOPE OF STUDY

The coverage of this study is limited to small scale manufacturing firm in Owerri, Imo state, particular attention is paid to major problems of small business in Owerri metropolis.

1.6 SIGNIFICANCE OF STUDY/RESEARCH

The relevant of this research will not be limited as an academic prerequisite for the researcher to obtain her Higher National Diploma certificate, prospective small investors, the students and the selected business within Owerri city to know the role of capital in the growth of small business in Nigeria.

i To the students, it will be academically important to many students who may want to carryout further research on the role of capital in the growth of small business in Nigeria.

ii To the government, it will serve as a guide for advancing better polices towards improving and encouraging small scale business in the state and nation at large.

1.7 LIMITATIONS OF THE STUDY

Based on the topic of the study, the following are assumed:

i That small businesses are faced with the problems of raising fund.

ii That high interest rate is one of the major financing problems faced by small business

iii That small business are aware of its prospects.

1.8 DEFINISTION OF TERMS

According to the central bank of Nigeria, small scale enterprises (for commercial and merchant banks loan) are one whose capital investment (including land and working capital) does not exceed N5m or whose turnover does not exceed N25m annually.

CAPITAL

Capital could be seen as a wealth set aside for further production or money.

PROFIT

Money gained in business, especially difference between amount earned and the amount spent.

GROWTH

The process of growing developing etc.

OBJECTIVES

A thing aimed at or wished for; a purpose, sometimes having existence outside the mind.

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