CHALLENGES, PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN NIGERIA

Abstract

Small and Medium scale Enterprises have been accepted worldwide as instrument of economic growth and development. No wonder that government, particularly in the developing countries has made tremendous efforts and establish policies to enhance the capacity of micro and small scale enterprises (MSEs). However, despite government institutional and policies support to enhancing the capacity of small and medium scale enterprises, small and medium scale enterprises has fallen short of expectations. This, then, generated serious concern and skepticism on whether SMEs can bring about economic growth and national developments in Nigeria. SMEs are faced with significant challenges that compromise their ability to function and to contribute optimally to the economy. This study examines the challenges and prospects of small and medium scale enterprises in Nigeria.  This study carried out extensive research on the subject from secondary sources and presented them in the researchers understanding on the subject.The phenomenal growth of small and medium enterprise in Nigeria is mainly due to the people’s quest to be self employed and not because it is easy to establish or manage. Financial constraints and Lack of management skill hamper the efficient performance of micro and small scale enterprises in Nigeria. In view of this, the researcher recommended that

government and other non-governmental organization should regularly organize seminars for potential and actual small and medium enterprise operators and create awareness of various schemes set in place by the government for the promotion and performance of SMEs in order to enhance wider coverage and patronage from all SMEs operators.


Table of Content

1.0          

Introduction

1.1         

Definitions of SME by Nigerian Institutions

1.2         

Types and classification of SMEs

1.3         

Importance of SMEs in Nigeria

1.4         

Problems and challenges facing SMEs in Nigeria

1.5         

Prospects of SMEs in Nigeria

1.6         

Government support agencies for SMEs

1.7         

Contribution of SMEs to Economic and Social development

2.1     Conclusion

2.2     Suggested

Recommendation

References

PROBLEMS


AND CHALLENGES FACING SMALL AND MEDIUM ENTERPRISES IN NIGERIA

Inadequate Basic


Infrastructure:
Government has not done enough to


create the best conducive environment for the striving of SMEs, the problem of


infrastructures ranges from shortage of water supply, inadequate transport


systems, lack of electricity to improper solid waste management. Nigeria’s


underdeveloped physical and social infrastructures create a binding constraint


to SMEs growth, since; they heavily rely on the inefficiently provided state


infrastructures and cannot afford the cost of developing alternatives].

Socio-Cultural Problems:


Most Nigerian Entrepreneurs do not have the investment culture of ploughing


back profits. It was observed that the attitude of a typical Nigerian


entrepreneur is to invest today and reap tomorrow. Also, the socio-political


ambitions of some entrepreneurs may lead to the diversion of valuable funds and


energy from business to social waste. The problem of bias against made in


Nigeria goods is significant. Most Nigerians have developed a high propensity


for the consumption of foreign goods as against their locally made substitutes.


Strategic Planning


Problems:
SMEs often do not carry out proper


strategic planning in their operations. One problem of SMEs is lack of


strategic planning. Sound planning is a necessary input to a sound


decision-making.

Location/Economic


Problems:
Market stores are dominated by absentee


landlords who charge exorbitant rates. The ownership of market stores by


politicians is crowding real small-scale operators out of the market. The high


rents charged by store owners on good locations have forced real small-scale


operators into the streets or at best into accessible places. Also, domestic


economic problems of deregulation and removal of protection as well as the


global financial crisis have been detrimental to SMEs.

Poor Accounting System:


The accounting system of most SMEs lack standards hence, no proper assessment


of their performances. This creates opportunity for mismanagement and


eventually leads to the downfall of the establishment.

Multiple Taxation:


This has become a major problem especially given the role of tax consultants


and agents hired by local governments. They are often crude in their operation,


excessive in their assessment and destructive in their relationship with the


production process. They tax everything in their bid to generate revenue


without considering the net effect to household incomes and employment..............

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APA

Abia-Bassey, W. (2018). CHALLENGES, PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN NIGERIA. Afribary. Retrieved from https://afribary.com/works/challenges-problems-and-prospects-of-small-and-medium-scale-enterprises-smes-in-nigeria-1648

MLA 8th

Abia-Bassey, Walter "CHALLENGES, PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN NIGERIA" Afribary. Afribary, 29 Jan. 2018, https://afribary.com/works/challenges-problems-and-prospects-of-small-and-medium-scale-enterprises-smes-in-nigeria-1648. Accessed 13 Jul. 2024.

MLA7

Abia-Bassey, Walter . "CHALLENGES, PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN NIGERIA". Afribary, Afribary, 29 Jan. 2018. Web. 13 Jul. 2024. < https://afribary.com/works/challenges-problems-and-prospects-of-small-and-medium-scale-enterprises-smes-in-nigeria-1648 >.

Chicago

Abia-Bassey, Walter . "CHALLENGES, PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN NIGERIA" Afribary (2018). Accessed July 13, 2024. https://afribary.com/works/challenges-problems-and-prospects-of-small-and-medium-scale-enterprises-smes-in-nigeria-1648