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PROJECT TOPIC- OBSTACLES OF ENTREPRENEURIAL DEVELOPMENT IN EBONYI USING THE SMALL AND MEDIUM ENTERPRISE DEVELOPMENT AGENCY OF NIGERIA, (SMEDAN) EBONYI STATE

PROJECT TOPIC- OBSTACLES OF ENTREPRENEURIAL DEVELOPMENT IN EBONYI USING THE SMALL AND MEDIUM ENTERPRISE DEVELOPMENT AGENCY OF NIGERIA, (SMEDAN) EBONYI STATE

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Individuals engage in different types of business ventures for profit making. This business ranges from small scale to medium and large scale entrepreneurial ventures which are sometimes referred to as family owned business. They are the most common form of business and are taken to be a major cradle of industrialization. In Nigeria today, thousands of businesses spring up every year and majority of these businesses are noted by their very high mortality rate, a situation that has limited their growth only to the life time of their promoters.

Such businesses that could not live longer than their founders cover various sectors of the manufacturing and service industries. Prominent among the factor traceable to the fizzling nature of the entrepreneurial venture include starting such venture without a clear defined mission or focus, limited access to credit, ineffective management, misplaced confidence in the members of staff, leading to misappropriation and breech of trust with business secret and technical know-how.

An entrepreneur is one who organizes managers, and assumes the risk of business enterprise. Jean Baptist (1980) defined ”entrepreneur as one who shifts economic resources out of an area of lower to an area of higher productivity for greater yield”. He supported Cantillion (18th century) when Cantillion introduced the term entrepreneurship when he added that an entrepreneur is one who brings other people’s together in order to build a single productive organization.

Entrepreneurial sector have contributed in a large measure to global industrial stimulation. Indeed, not less then 80% of conglomerate, especially in developed economies started as small entrepreneur business venture (Anyanwu 1999). Entrepreneurial development are those training programmes aimed at the development of personal qualities such as creativity, risk taking, responsibility, and to provide the technical and business skills that are needed in order to start a new business venture.

Such skills include:- the ability to inspire, the expectation of the higher achiever, creativity, Innovation, ability to take risk, ability to identify opportunities, ability to have a vision for growth, business plan, marketing skills, financial skills, operational skills and human resources skills. Entrepreneurial development could be traced to the early period in the development of human race when individual became conscious of the fact that they  could not satisfy themselves by producing all items individually (Subsistence living).

This period would vary according to nations and tribes. The realization of this fact encouraged division of labour and specialization and hence surplus of goods. The surpluses of individuals had to be exchanged between nations. Within this period, there were people who employed others to work for them in return for food and this was the entrepreneurial class. There were also people who earn their living, by working on farms, hunting and making crafts etc.

The world over, the emergence of entrepreneurial development is traced to France from the people who organize and manage military and exploration expedition which were called “enterpredre” which means to undertake (Onwe O. and Ukeje O. 2010). In Nigeria, the history and development of entrepreneurship started in 1960’s (Ekanen, (2005) in Odia, (2013). Since 1970’s, Nigerian government and institutions have been engaging in different aspect though short lived and varied successes.

There has been series of entrepreneurial development programmes like, Entrepreneurship Development Centre (EDC), Centre of Management Development (CMD), National Directorate of Employment (NDE), Nigerian Bank for Commerce and Industry (NBCI), National Empowerment and Development Strategy (NEEDS), National Open Apprentiship Scheme (NOAS) and Small and Medium Enterprise Development Association of Nigeria. All these programmes were established for entrepreneurial development in Nigeria.

The small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is an Agency established by an act of parliament “SMIDA ACT 2003” as amended in 2004 and are charged with the responsibility of nurturing, promoting and facilitating the Development programmes and project of Micro Small and Medium Enterprises of the Nigerian Economy. It is established globally that, the MSMEs contributes over 80% of industrial and human development particularly in developing economics such as that of India, Pakistan  and Nigeria  in  the  sub  Saharan African  and  are  therefore necessary mechanism and serves as the engine room for economic growth and development. The main mission of SMEDAN was to:

  • To establish a structured and efficient Micro Small Medium Enterprises sector

that will enhance sustainable economic development in Nigeria.

  • To facilitate the access of MSMEs resources required for their development such as Business information services, Business support services, Access to finance and Improvement of economic environment for MSMEs Operations.

The mandate of SMEDAN as contained in the enabling Act includes the following: Stimulating, monitoring and co-ordinating the development of MSMEs sub sector, Initiating and articulating policy Ideas for small & median Enterprise growth and development, Promoting and facilitating development programmes, instruments and support services to accelerate the development and modernization of MSMES operations, Serving as vanguard for rural industrialization, poverty reduction, job creation and enhanced livelihoods, Linking MSMEs to internal and external sources of finance appropriate technology and technical skills as well as large enterprises, Promoting and providing access to industrial infrastructures such as layouts, incubators, industrial parks etc., Intermediating between MSMES and Government as the voice of the micro small and medium enterprises, Working in contact with other institutions in both public and private sectors to create a good enabling environment for business in general and MSMEs in particular.

Inspite of their achievement, SMEDAN in Ebonyi State has been challenged by a lot of obstacles. This is because, most small scale industries in Ebonyi State crumble within their first few years of existence because of a good number of obstacles it faces. Many factors have been identified as to the possible causes as a contributing factors to the premature death. These factors includes: Insufficient capital, lack of focus, inadequate market, over-concentration on one or two markets for finished products, lack of succession plan, lack of adequate and proper records, lack of requisite skill and experience especially on the part of the managers/proprietors, inability to separate business and family, lack of business strategy, inability to distinguish between revenue and profit, inability to employ qualified/skilled personnel’s/staff, inability to pave a proper business plan, the problem of cut throat competition, lack of official patronage of locally produced goods and services, existence of credit facility customers, infrastructure inadequacies, unfavourable fiscal policies, multiple taxes, levies and rates, fuel crises policy inconsistencies, uneasy access to funding, poor policy implementation and finally problem of raw material sourcing.

Moreso, other obstacles include: lack of preservation, processing, storage technology and facilities and also lack of entrepreneurial spirit as well as poor management of finance, time, human and other resources. In view of the litany of impediments to the realization of the objectives of SMEDAN and its effect on the development of Entrepreneurial sector, the researcher therefore will restrict herself to the financial problems besetting the development of entrepreneurial in Ebonyi State with the view to explore the possible ways of averting this problem. Hence, the need for this study.

PROJECT TOPIC- OBSTACLES OF ENTREPRENEURIAL DEVELOPMENT IN EBONYI USING THE SMALL AND MEDIUM ENTERPRISE DEVELOPMENT AGENCY OF NIGERIA, (SMEDAN) EBONYI STATE

1.2       Statement of the Problem

Nigerian government has over the years placed much emphasis on the development of entrepreneurial sector as a means of encouraging self employment, reduce the rate of poverty, and accelerate sustainable economic growth by establishing small and medium enterprises development agency (SMEDAN) by the act of parliament “SMIDA ACT of 2003 as amended in 2004 with numerous mandate of establishing a structured and efficient small and medium enterprises sectors that will enhance economic growth and development in Nigeria as its objective and also to facilitate the accessibility of small and medium enterprises to all recourses required for their development which Ebonyi State SMEDAN is deeply involved. Ebonyi state SMEDAN provides business information services such as provision of information on raw materials, product standard and registration requirements by NAFDAC, Government economic policies, legislation and regulations, including existing incentives. It has also provided business support services organizing basic training in business management, book-keeping and accounts, marketing and preparation of business plan to the would be entrepreneurs. Even on the area of financial assistance, the agency has helped the State entrepreneurs to prepare bankable business plan appraisal and recommendation of project proposals for small and medium enterprises to partner with financial institutions for micro scheme loans.

In line with the above, Adelaya (2003) argued that access to institutional finance has always constituted a pandemic problem for the entrepreneurial development in the country. He however recalls that in the past, a number of schemes have been put in place to provide special credit line for small and medium enterprises but these achieved a very little impact. Despite some of the achievement recorded by Ebonyi State SMEDAN to the young entrepreneurs to improve, and help in the development of entrepreneurial sectors in the State, there seems to be a rapid decline in the quality and effectiveness of small scale business development (Gama (2010) identified these finding challenges as low level of government spending on small scale skill acquisition, high cost of taxation and grossly lack of tax holidays on business out puts. Shortage of fund, inaccessibility of fund and diversion of fund by the entrepreneurs in the state appears to constitute a challenge to small and medium scale enterprise development in the state.

More worrisome is the inability of Government that established this agency (SMEDAN) to fund it appropriately which invariably has negative effect on the entrepreneurs who are on the receiving end, since some who are ready and willing to startup a business cannot do so because of lack of fund after receiving training from the Agency.

Inaccessibility of fund also appears to have crippled the nature of the state entrepreneurial development since the entrepreneurs shall pass stringent procedure before receiving micro scheme loan. So, selective payment and the release of fund to the entrepreneurs poses a serious problem.

Again, diversion of fund seems to be another obstacle to entrepreneurial development in the state, as some of the would be entrepreneurs after accessing the loan, may even gear it towards another purpose, instead of committing it into the actual thing it is released for.

Be that as it may, inadequate funding, inaccessibility of fund coupled with diversion or mismanagement of available finances have continued to cause the obstacles of entrepreneurial development in the state and these forms the basis upon which this study is premised.

However, the researcher posed the following questions to guide the study.

1.3     Research Questions

  1. To what  extent  has  shortage  of fund   led  to  the  poor  entrepreneurial
    development of small and medium scale enterprises in the state?
  2. How has inaccessibility of fund and stringent procedure for receiving micro scheme loan   threatened   the   entrepreneurial   development   of small   and medium scale enterprise in Ebonyi State.
  3. To what extent has diversion of fund by the entrepreneurs for other purposes
    retarded the entrepreneurial development of small and   medium   scale
    enterprises in the state.

1.4      Objectives of the Study

The broad objective of this study is to identify the obstacles of entrepreneurial development in Ebonyi using the small and medium Enterprise Development Agency of Nigeria, (SMEDAN) Ebonyi State Chapter. Specifically, the study seeks to:

  1. To ascertain the extent shortage of fund has led to poor entrepreneurial
    development of small and medium enterprises in the state.
  2. To determine the effect of inaccessibility of fund by the entrepreneurs the
    entrepreneurial development of small and medium scale enterprises in Ebonyi
  3. To ascertain the extent how diversion of fund to other purposes by the entrepreneurs ha constituted a problem to the entrepreneurial development of small and medium scale enterprise in the state.

1.5     Hypotheses:

The following research hypotheses shall be formulated to guide the study:

  1. Shortage of fund has led to poor entrepreneurial development of small and
    medium scale enterprises in the state.
  2. Inaccessibility of fund by the entrepreneurs the entrepreneurial development
    of small and medium scale enterprises in Ebonyi State.
  3. Diversion of fund to other purposes by the entrepreneurs ha constituted a
    problem to the entrepreneurial development of small and medium scale
    enterprise in the state.

1.6     Significance of the Study:

This study has both Empirical and theoretical (Significance). Empirically, it will help potential entrepreneurs in the state with the necessary information on factors that challenge entrepreneurial development and also uncover to them the major obstacles that they may likely face in their entrepreneurial ventures.

It will also benefit policy makers in formulating policies that will promote Entrepreneurial development in the state. Theoretically, the study will be of immense benefit to future researchers.

1.7     Scope of the Study

This work is on the obstacles of entrepreneurial development in Ebonyi State, with a particular reference to SMEDAN from 2013-2016. It tends to investigate extensively   inadequate   finance   as   the   major   challenge   that   hitches   on   the entrepreneurial development in Ebonyi State.

1.8 Limitations of the Study:

The searchers is not unaware of certain obstacles that she shall encounter in the field in an effort to gather relevant data for the research. Uncooperative attitudes form the respondent, difficulty in accessing the data base of SMEDAN, time constraint like combining office work with research etc. constitute a problem to this study.

However, the researcher shall use academic wisdom to tackle these issue so that her academic pursuit shall be achieved.

PROJECT TOPIC- OBSTACLES OF ENTREPRENEURIAL DEVELOPMENT IN EBONYI USING THE SMALL AND MEDIUM ENTERPRISE DEVELOPMENT AGENCY OF NIGERIA, (SMEDAN) EBONYI STATE

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