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Background to the Study

Students are the most essential asset for any educational institute. The social and economic development of the country is directly linked with students’ academic performance. The students’ performance plays an important role in producing the best quality graduates who will become great leaders and manpower for the country thus responsible for the country’s economic and social development (Ali, Norhidayah, Jusoff, and Kamaruzaman, 2009).

Students’ academic performance measurement has received considerable attention in previous research. Students’ academic performance is affected due to social, psychological, economic, environmental and personal factors. These factors strongly influence the students’ performance, but these factors vary from person to person and country to country.  This research work critically looks at the problems of small scale industries and its effects on students’ performance in economics in Abakaliki Urban Area.

Each country tends to derive its own definition of small scale industry based on the role they play. Small-scale industries are expected to play an important role in the economy together with the programme of assistance designed to achieve that goal. Varying definitions among countries may arise from differences in industrial organization at different levels of economic development in parts of the same country (Anamekwe, 2001).

For  instance, Sule (1986), suggested that a firm that can be regarded as micro or small in an economically advanced country like United States of America, Great Britain or Japan, given their high level of capital intensity and advanced technology. It may be classified as medium or even large in a developing country like Nigeria. Definitions also change over time, owing to changes in price levels, advances in technology or other considerations. Small scale industries are the infant industries (firms) that are coming up in the system.

They are coming up because they are still young compare to the long existing ones that has competitive advantage.  The definition of small-scale enterprises (SSEs) in Nigeria has changed over the years not only in consonance with the changing fortune of the country but also in accordance with the diversity of the Small and Medium Enterprises (SMEs) supporting institutions in the country. Prior to 1992, different institutions in Nigeria adopted varying definitions of small enterprises. The institutions include the Central Bank of Nigeria (CBN), Nigerian Bank of Commerce and Industry (NBCI), Centre for Industrial Research and Development (CIRD), Nigerian Association of Small-Scale Industrialists (NASSI), Federal Ministry of Industry (FMI) and the National Economic Reconstruction and Fund (NERFUND).

These small scale industries are important to the socio-economic life of the people of a country. It is important because through these industries, the people’s standard of living is upgraded and could afford to pay subsequently for their wards education thus leaving an effect on the students’ performance.  The challenges of education which include majorly finance; which invariably causes inadequate facilities, low use of instructional materials continues has a long lasting effect on students’ performance.

Improving the educational sector will produce well educated, competitive and skilled persons in the society. It has been studied and known that educational development of any society is as a result of economic development. Small scale industries are path of these economic variables. Hence, small scale industries are capable of improving the educational sector which could be vividly seen through: quality laboratory equipments, conducive learning environment, provision of pipe borne water, infrastructural facilities.

Previously most research studies had carried out studies on students’ academic performance on the basis of issues like gender difference, teacher’s education and teaching style, class environment, and family education background; that is why this work is highly unique. Conventionally, we measure the students’ academic performance through several ways like Cumulative Grade Point Average (CGPA), Grade Point Average (GPA) and their test result.

Most of the researchers around the word used the Grade Point Average (GPA) to measure the students’ performance (Galiher, 2006; Broh, 2000; Stephen and Schaban, 2002). They used Grade Point Average (GPA) to measure students’ performance in a particular term. Some other researchers, measure students’ performance through the result of particular subject or the previous year result (Hijazi and Naqvi, 2006; Hake, 1988; and Tho, 1994).

There exist lots and lots of business ventures that are being engaged by individuals, group of people or association, firms, industries and government with the main aim of maximizing profits. They range from small scale to medium and large scale. In the Nigerian economy, the small scale enterprises are the most common form of business. The aim of any economy (either industrialized or non industrialized) depends largely on how well organized the small industries are.

For instance if we look at the standard of practice of small scale industries in economically developed countries, we will discover that their education sector ranging from nursery to higher institutions of learning have backup from the business sector (small scale businesses).   The small scale enterprise in Nigeria seems too stagnant, less adventurous than developed countries.

Meanwhile in economically developed countries small scale businesses are better organized and coordinated than in the developing countries because the governments appreciate their significance to the national socio-economy, education inclusive. Firstly, most of the small businesses are essentially one persons operation which makes such companies sole proprietorship business ventures.

The profit of the business is reaped solely by the owner; this includes people or an individual who wants to invest in that type of business. It is also the easiest form of business ownership to organize because there is relatively small capital to use for its establishment. The owner also has managerial freedom and this will help the owner employ his incentive to the maximum.

Entrepreneurs are risk avoiders, not necessarily risk takers; they appear to be risk takers because they see market differently than the other forms of businesses. They can be referred to as risk eliminators because they seem to methodically eliminate all the factors that might prevent them from getting into a particular market (Thomas and Norman, 2001). In Nigeria, small-scale businesses represent about 90% of the industrial sector in terms of the number of enterprises.

They also account for 70% of national industrial employment if the threshold is set at 10-50 employees, contribute 10% of manufacturing output and a meager 1% of gross domestic product (GDP) in 2001 (Ajayi, 2002). Similarly, they have also contributed significantly to economic development through employment, job creation and sustainable livelihood (Nigeria Investment Promotion Commission, 2003).

In spite of the major role, the significance and contributions of the small-scale enterprises to the national economy; these set of businesses are still battling with many problems and certain constraints that exist in promoting their development and growth.  For instance, (International Labor Organization, 1994) study shows that inadequate entrepreneurial talent to start up a small scale business affects the development of small-scale manufacturing and processing industries.

While large-scale industries are established with expatriate capital, small-scale industries need to have a domestic entrepreneurial and industrial base. Other problems that hinder the advancement of small-scale enterprises are the persistent low level of technology, the shortage and inadequate entrepreneurial skills of operators and the absence of an effective management technique.

Discussion of a change in the level of technology and its impact on the Nigerian industries has focused on large firms (capital-intensive, high technology sectors). Focus on this change in the small-scale firms is relatively little. Small-scale enterprises tend to concentrate on traditional industries where low entry barriers, low minimum production scales, and relatively large labor force are the potential advantages.

However, the traditional industries have not been immune to the recent technological revolution taking place in the field (Adubifa, 1990). Hanshom (1992) and McCormick (1998) stated that African small enterprises are found to be unorganized in production activities. Low capital investment on capital goods and lack of division of labor in production makes these enterprises remained weak.

It is a clear fact that many micro, small and medium-scale enterprises are dying out owing to lack of financial support from the government and other citizens. Mills (1990) stated that the major pre-occupation of all developing countries these days is simply how to improve social, economic and political status of the people. It involves the improvement of the living standards of the mass of the low income population and making the process self-sustaining.

Improving the living standard of the people involves the setting of priorities in the mobilization and the use of resources available. In some rural areas, the working and living conditions of women for instance, have not been able to be ameliorated by many recent programmes designed to improve their economic status. Many of these entrepreneurs are left out in the provisions of the government toward the advancement of their enterprises.

The present economic crisis in Nigeria has brought about an ironic change – an increased demand for locally produced goods. For example, aso oke (a type of traditional dress woven in the cottage industry) is now popular at social gatherings and in the fashion houses; of which the price is not affordable. Refrigerators have become unaffordable, because of the foreign exchange rate; thus rural dwellers are stuck with locally produced “water pots” which are noted for their cooling effects on drinking.

Also, the usage of locally produced soap (ose dudu, i.e black soap) is another area. All these point to the fact that the Government is building and encouraging small scale industries in Nigeria. Yet, the people producing these goods are constrained by their lack of access to critical resources (capital, labour, land, infrastructures, and improved technology). Students’ learning can be evaluated in many different ways, but in a developing country like Nigeria where about 40 percent of the adult population is illiterate, parents use the performance of their children in public examinations to pass judgment on the schools and teachers.

To them, the logic is a simple one. The schools are supposed to be staffed by good teachers and supplied adequate facilities and instrumental materials. It is the responsibility of government to ensure through such provisions and regular inspection or supervision that effective teaching and learning go on in the schools. The task of parents is to send children to school and pay whatever fees and levies are charged by the institutions.

Though many parents acknowledge shortages of funds, teachers and infrastructures in the schools and their own inability to buy all the required books and other learning materials for their wards, yet they strongly believe that if the students perform badly in their examinations, the teachers and administrators have not done their job well and should take most of the blame.

Unfortunately, there are many factors that help to determine the academic performance of students. However, the level of education and awareness of many parents does not enable them to participate in such complex theoretical arguments or discussions. For such parents and the general public, the students’ performances in recent times give cause for alarm and school authorities more than the students themselves are being accused of lack of dedication, declining productivity and even mindlessness.

We shall use some illustrations from students’ performance in the Secondary School Certificate Examination (SSCE) and the Joint Admission and Matriculation Examination to show the basis for the public concern. In the SSCE, English Language and Mathematics are compulsory subjects for all candidates; hence much time attentions are devoted to the teaching of these two subjects in both the primary and secondary schools.

Nevertheless, the students have not been doing well, and the situation is not improving. For example, May/June 2014 WASSCE results when released recorded mass failure in mathematics and English language. The failure rates for the two subjects were “seventy-five per cent for May/June WAEC 2010 examinations and thus failed to meet the minimum entry requirement into tertiary institutions.  Results in other subjects were equally poor with students doing much worse in subjects with practical work.

Students’ performances in the University Matriculation Examinations (UME) have also been very disappointing. Anumnu (1997), citing the Registrar of the Joint Admissions and Matriculation Board, Dr. Abdulraham, blamed “the mass failure on the falling standards in secondary education”. Although the UME is not strictly a pass or fail examination but a selection one, yet students must score 200 marks out of the maximum of 400 to qualify for consideration in the highly competitive admission process.

Since from previous records not more than 16% of the applicants may be offered admission into the Universities in any year, the pressure to cheat in the face of unsure or unreliable academic performance becomes great. In effect, many students aspire to continue their education in a tertiary institution, but weak educational backgrounds lead to poor performance in the two decisive examinations: the Secondary School Certificate Examination and the University Matriculation Examination.

The situation has indeed reached a crisis that cannot be ignored hence, the need for interrelationship between the Country’s Educational sector and the Industrial sector to commemorate for the overall academic performance of students. Previous research work had looked on gender issues and other issues that mar academic performance of students; but this work intend to assess the problems of small scale industries and how it affects students’ performance in economics in Abakaliki Urban Area.


Statement of the Problem

The main problem of small-scale businesses is finance and because of the importance of finance to the sustainability of small and medium scale industries, the survival of small businesses towards the nation’s economy can no longer be waived. So the banks moved from the subsidiary level of pre-indetermination to pre-determination state. With an attempt to help in the motorization of any small industry to be able to go into operation, and to ensure a smooth establishment and running of companies needing a reasonable capital and this brings us to the various avenue opened to small firms to get or raise funds for the commencement of their operation.

The small and medium enterprises are expected to raise funds through two main sources; equity and debt. The first source is sometimes called internal funds which include the owners’ savings and ploughed back profits. Most times, companies make use of debt, which is called external funds for expansion. These mentioned funds can be obtained from informal sources (friends/relatives, co-operative societies and credit associations) and also from formal sources (like banks and governmental agencies).

However, because the level of savings is low due to poor income level, business owners cannot save enough or borrow enough from the informal sources. Similarly, the accessibility to formal financial system, especially by SMEs, is very limited. On the supply side, banks are not expanding SMEs loans due to imperfect information, high transaction cost of dealing with small loans, geographical dispersion of the SMEs and large number of borrowers and low returns from investments.

But on the demand side, SMEs are reluctant to se-cure loans because of the collateral security, untimely delivery of credits and high interest rate. Small and Medium scale enterprises play an important economic role in many countries including Nigeria. However, it appears that considering the enormous potentials of the SMEs sector, and despite the acknowledgement of its immense contribution to sustainable economic development which in turn brings educational implications on students academic performance because of it contributions to the country its performance still falls below expectation in many developing countries.

This is because the sector in these developing countries has been bedeviled by several factors militating against its performance, and leading to an increase in the rate of SMEs failure. SMEs are faced with the threat of failure with past statistics indicating that most SMEs die within their first five years of existence. Another smaller percentage goes into extinction between the sixth and tenth year thus only about five to ten percent of young companies survive, thrive and grow to maturity.

A 2004 survey conducted by the Manufacturers Association of Nigeria (MAN) revealed that only about ten percent (10%) of industries run by its members are fully operational. Essentially, this means that 90 percent of the industries are either ailing or have closed down. This situation has been of great concern to the government, citizenry, operators, practitioners and the organized private sector groups. Also it will seek to determine the key factors militating against the survival and effective performance of SME in Nigeria especially the manufacturing sub- sector. It also intends to explore and investigate the reasons why programmes designed by the government to boost manufacturing SMEs performance do not effectively achieve its role.

Purpose of Study

The specific objective of this research is:

  1. To examine the group of business that is under small-scale industries
  2. To examine the importance of small scale industries in Abakaliki Urban Area
  3. To find out the challenges of small-scale industries as related to educational challenges.
  4. To find out the challenges of small-scale industries as it relates to educational challenges.

Significance of the Study

The study of Small scale business problems and prospects is of relevance and great concern to the various governments (federal, state and local), Small scale promoters and operators, Banks as well as the civil society. It is said that a clear and precise definition of a problem represents half the solution hence, identifying and crystallizing the key problems of the small scale would lay a solid foundation for mitigating if not solving them out rightly.

Thus, the study would be relevant in the following areas: The Educators who are the conveners of knowledge stand to gain more knowledge of the need for practical acquisition of small scale business start up; the how it work, its’ relevant to the education sector and invariably to the students’ performance. Not just the theoretical aspect of small scale enterprise knowledge based. This knowledge could be instrumental to the development of students who are the main targets in the school system.

The study of the problems and prospects of Small scale industries which this work is all about would serve as a yardstick to the Government of Ebonyi State in measuring its development capacity in building small scale industries that would guarantee employment creation among the teeming population and thereby, provide means of income for the parents of these young stars who are sponsoring their wards in different school levels.

 Scope of the Study

The study focused itself on the problems and prospects of small scale industries and their effect on students’ academic performance in Abakaliki Urban Region. Its concentrates on the role that small scale industries play in promoting education sector which invariably will enhance the students’ academic performances. The study also focuses on the profitability of these small scale industries. Due to budget and time constraints, the study was restricted to small scale business operating in Ebonyi State of Nigeria. The study traces the small scale programme from which has affected the small scale in manufacturing sectors with particular focus on the period of 2004 to 2011.

Research Questions

The research questions to guide this work are as follows:

  1. What group of business is under small-scale industries?
  2. What is the importance of small-scale industries to students’ performance?
  3. What are the challenges of small-scale industries?

4. In what ways do challenges of small-scale industries relate to educational challenges?


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