THE EFFECT OF FINANCE, INFRASTRUCTURE AND TRAINING ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES A CASE STUDY OF AKWA IBOM STATE

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

In Africa, the SMEs sector accounts for almost ninety percent of all the enterprises or firms, located in both the rural and urban areas, whereby there provide more equitable distributions of income in all spheres of the countries. Nigeria, been the focus continent of discussion, SMEs account for about 70% of industrial employment (Adebusuyi, 2011). Odeyemi (2010) describes Nigeria SMEs as a very heterogeneous group of businesses that operate in different sectors of the economy. This means that the SMEs are the major source of providing job opportunities to the people, and also stimulate the development of the countries by promoting business skills and entrepreneurship amongst communities and strengthening the local or domestic production sector as well as the industrial base. Therefore, SMEs in Africa have been recognized to be an essential engine for obtaining national development goals, which include economic growth and poverty alleviation (Mokaddem, 2006). Despite such, SMEs in Nigeria have not been performing creditably well and hence have not played or shows the expected role in the economic growth and development of the nation. The issue has been of high concern to the government, citizenry, practitioners, operators, and the organized private sector groups. Governments at Federal, State and even local levels through budgetary allocations, pronouncements and policies have signified interest and acknowledgement of the important roles of the SMEs sector of the economy and hence made policies for energizing the sector. There have also been supports and aids from fiscal incentives, grants, bilateral and multilateral agencies as well as specialized institutions, which are all geared towards making the SMEs sector vibrant, and also it is a great concern to all, and sundry to promote development and performance of SMEs. With this, it has been a great concern for all the fact that the vital sector has fall shorts of expectations.

The situation is more worrying and disturbing when compared with what other developed and developing countries have been able to achieve with their SMEs sectors, and it has been shown that there are high correlation and relationship between the degree of poverty, hunger, unemployment, economic well-being of the citizens of the countries and the degree of vibrancy of the respective SMEs (Onugu, 2012). Onugu (2012) posits that if Nigeria was to achieve an appreciable success towards the attaining the Millennium Development Goals (MDGs) for 20:2020, one of the possible ways is to pursue the growth and development of its SMEs performance vigorously. Some of the key MDGs, like reducing child mortality, reducing extreme hunger and poverty, improving maternal health and the rest, may indeed be a mirage unless there is a turnaround of the SMEs fortunes sooner than later in order to achieve efficient result. It is now time to do something surgical to the situation of the SMEs in order to achieve performance, given the aggravating level of poverty in Nigeria and the need to meet up with the MDGs. One of the major drawbacks in Nigeria’s quest for industrial growth and development over the past years has been the absence of a vibrant, strong and performing SMEs sector. Given a population of well over one hundred and twenty million people, rich variety of mineral deposits, vast productive and arable land, and also enormous human and other natural resources, Nigeria should have been a haven for SMEs with maximum returns, as it also has the location advantage as a marketing hub for the West and even East African Countries (Onugu, 2012). A number of facts have been adduced as to why the expectations of SMEs have not been achieved