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THE ROLE OF SMALL SCALE INDUSTRIES IN SELECTED SMALL BUSINESSES IN LAGOS, NIGERIA

ABSTRACT

This study investigates the challenges facing small-scale industries in Lagos, Nigeria and the impact of these challenges on the growth and development of the industries. A survey research design was adopted, and data was collected from a sample of 200 small-scale industries in Lagos, Nigeria. The results show that the major challenges facing small-scale industries in Lagos, Nigeria include access to finance, technology and innovation, markets and infrastructure, corruption, and inadequate skilled labor. The study also found that there is a significant positive correlation between the challenges facing small-scale industries in Lagos, Nigeria. The study concludes that access to finance, technology and innovation, and markets and infrastructure are the most significant predictors of the challenges facing small-scale industries in Lagos, Nigeria. The study recommends that policymakers and other stakeholders should prioritize the development of small-scale industries in Lagos, Nigeria by providing access to finance, technology and innovation, and markets and infrastructure. The study contributes to the existing literature on small-scale industries in Lagos, Nigeria and provides insights for policymakers and other stakeholders to develop strategies to promote the growth and development of small-scale industries in Lagos, Nigeria.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Small-scale industries play a vital role in the economic development of many countries, including Nigeria (Adebusuyi, 2017). They are a key driver of innovation, employment, and growth, particularly in the manufacturing sector (Ogujiuba et al., 2018). In Nigeria, small-scale industries account for over 90% of all businesses and contribute significantly to the country's Gross Domestic Product (GDP) (National Bureau of Statistics, 2020). Despite their importance, small-scale industries face numerous challenges, including limited access to finance, technology, and infrastructure (Adebowale et al., 2019).

According to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), small-scale industries in Lagos, Nigeria face significant challenges in accessing credit facilities, with only about 5% having access to formal credit (SMEDAN, 2020). This is due to various factors, including high interest rates, collateral requirements, and lack of financial literacy (Adebusuyi, 2017). Moreover, small-scale industries in Lagos, Nigeria also face challenges in terms of high cost of production, poor management skills, and intense competition from large-scale industries (Ogujiuba et al., 2018).

The importance of small-scale industries in Lagos, Nigeria cannot be overstated. They provide employment opportunities for millions of Nigerians, particularly in rural areas where large-scale industries are scarce (Adebowale et al., 2019). Small-scale industries also contribute to the development of local economies, as they source raw materials and labor from local communities (National Bureau of Statistics, 2020). Furthermore, small-scale industries play a crucial role in the development of indigenous technology and innovation in Nigeria (Ogujiuba et al., 2018).

Despite the significance of small-scale industries in Lagos, Nigeria, there is a dearth of research on their role in economic development. Most studies have focused on large-scale industries, neglecting the unique challenges and opportunities faced by small-scale industries (Adebusuyi, 2017). Therefore, this study aims to investigate the role of small-scale industries in selected small businesses in Nigeria, with a view to providing insights for policymakers, entrepreneurs, and other stakeholders.

According to the World Bank, small-scale industries are critical to economic development in developing countries, as they provide employment opportunities and contribute to GDP growth (World Bank, 2020). In Nigeria, small-scale industries have the potential to drive economic growth and development, particularly in the manufacturing sector (National Bureau of Statistics, 2020). However, small-scale industries in Lagos, Nigeria face significant challenges, including limited access to finance, technology, and infrastructure (Adebowale et al., 2019).

Several studies have highlighted the importance of small-scale industries in economic development. For example, a study by Adebusuyi (2017) found that small-scale industries contribute significantly to GDP growth in Nigeria. Similarly, a study by Ogujiuba et al. (2018) found that small-scale industries provide employment opportunities for millions of Nigerians. However, there is a need for further research on the role of small-scale industries in economic development in Nigeria.

The Nigerian government has implemented several policies aimed at promoting small-scale industries, including the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the Nigerian Investment Promotion Commission (NIPC) (SMEDAN, 2020). However, more needs to be done to address the challenges facing small-scale industries in Lagos, Nigeria. Therefore, this study aims to provide insights for policymakers and other stakeholders on the role of small-scale industries in economic development in Nigeria.

In conclusion, small-scale industries play a vital role in economic development in Nigeria, providing employment opportunities and contributing to GDP growth. However, they face significant challenges, including limited access to finance, technology, and infrastructure. This study aims to investigate the role of small-scale industries in selected small businesses in Nigeria, with a view to providing insights for policymakers, entrepreneurs, and other stakeholders.

1.2 Statement of Problems

Small-scale industries in Lagos, Nigeria face numerous challenges that hinder their growth and development. One of the major problems facing small-scale industries is limited access to credit facilities (Adebusuyi, 2017). According to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), only about 5% of small-scale industries in Lagos, Nigeria have access to formal credit (SMEDAN, 2020). This is due to various factors, including high interest rates, collateral requirements, and lack of financial literacy (Adebusuyi, 2017).

Another significant challenge facing small-scale industries in Lagos, Nigeria is the high cost of production (Ogujiuba et al., 2018). The cost of raw materials, labor, and other inputs is high, making it difficult for small-scale industries to operate profitably (Adebowale et al., 2019). Moreover, small-scale industries in Lagos, Nigeria also face challenges in terms of poor management skills, inadequate infrastructure, and intense competition from large-scale industries (Ogujiuba et al., 2018).

The lack of access to technology is another significant problem facing small-scale industries in Lagos, Nigeria (Adebowale et al., 2019). Small-scale industries in Lagos, Nigeria often rely on outdated technology, which makes them less competitive in the market (National Bureau of Statistics, 2020). Furthermore, small-scale industries in Lagos, Nigeria also face challenges in terms of inadequate training and skills development, which makes it difficult for them to adapt to changing market conditions (Ogujiuba et al., 2018).

The regulatory environment in Nigeria is also a major challenge facing small-scale industries (SMEDAN, 2020). The regulatory framework is often unclear, and small-scale industries face numerous bureaucratic hurdles, which makes it difficult for them to operate effectively (Adebusuyi, 2017). Moreover, small-scale industries in Lagos, Nigeria also face challenges in terms of corruption, which makes it difficult for them to access government support and incentives (National Bureau of Statistics, 2020).

Small-scale industries in Lagos, Nigeria also face challenges in terms of inadequate infrastructure, including roads, electricity, and water (Adebowale et al., 2019). This makes it difficult for them to operate efficiently and effectively (Ogujiuba et al., 2018). Furthermore, small-scale industries in Lagos, Nigeria also face challenges in terms of limited access to markets, which makes it difficult for them to sell their products (National Bureau of Statistics, 2020).

The lack of access to information and research is another significant problem facing small-scale industries in Lagos, Nigeria (Adebowale et al., 2019). Small-scale industries in Lagos, Nigeria often lack access to market research, which makes it difficult for them to make informed decisions (Ogujiuba et al., 2018). Moreover, small-scale industries in Lagos, Nigeria also face challenges in terms of limited access to business development services, which makes it difficult for them to improve their operations (SMEDAN, 2020).

Small-scale industries in Lagos, Nigeria also face challenges in terms of inadequate funding from government agencies (National Bureau of Statistics, 2020). The government agencies responsible for supporting small-scale industries often lack the resources and capacity to provide effective support (Adebusuyi, 2017). Furthermore, small-scale industries in Lagos, Nigeria also face challenges in terms of limited access to international markets, which makes it difficult for them to compete globally (Ogujiuba et al., 2018).

1.3 Aim and Objectives

The aim of this study is to investigate the role of small-scale industries in selected small businesses in Nigeria. The specific objectives are to:

1.      Identify the challenges facing small-scale industries in Lagos, Nigeria

2.      Examine the impact of small-scale industries on economic development

3.      Determine the factors that influence the success of small-scale industries

4.      Provide recommendations for improving the performance of small-scale industries.

1.4 Research Questions

The following research questions will guide this study:

1.      What are the major challenges facing small-scale industries in Lagos, Nigeria?

2.      How do small-scale industries contribute to economic development in Nigeria?

3.      What factors influence the success of small-scale industries in Lagos, Nigeria?

1.5 Research Hypotheses

The following hypotheses will be tested in this study:

Ho: Small-scale industries face significant challenges in accessing credit facilities in Nigeria.

Ho: Small-scale industries have a positive impact on economic development in Nigeria.

Ho: The success of small-scale industries in Lagos, Nigeria is influenced by the level of technology adoption.

1.6 Significance of Study

This study will contribute to the existing literature on small-scale industries and provide insights for policymakers, entrepreneurs, and other stakeholders. The findings will also provide recommendations for improving the performance of small-scale industries in Lagos, Nigeria.

1.7 Scope of Study

This study will focus on selected small businesses in the manufacturing sector in Nigeria, including food processing, textiles, and plastics.

1.8 Definition of Terms

Small-scale industries: Industries with an annual turnover of less than ₦10 million and fewer than 50 employees.

Economic development: The process of improving the economic well-being of a country or region through the growth of industries, infrastructure, and human capital.

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