Role of Small and Medium Scale Industry: A Case Study of Sumaila Local Government in Kano State (A Case Study of Tailoring Services)

CHAPTER ONE

GENERAL INRODUCTION

INTRODUCTION

This study of research work attempt to evaluate the role of small and medium scale enterprises in rural poverty reduction of Kano state, using tailoring services in sumaila local government as a case study it is well known that sumaila area in which the predominant economic activities have been tailoring for several decades. Majority of the people living in the area both old and young are engaged in this activity. It went to the extent that eight out of ten people especially youths, are engaged in the activity. sumaila as a local government was made up with eleven ward in which its metropolitan alone covered three wards out of eleven and the people living at the sumaila metropolitan are mostly tailor. The main work of this study is to conduct research as to what extent the tailoring service contributes to the poverty reduction of  Kano state. It has been noted that no economy that can developed without the contribution of the small and medium scale it is however the whole economy depends upon the sector to develop, because it is the backbone of every meaningful economy and the most populace relied upon.

A part from that, experience over the year have shown the small and medium scale enterprises are very essential and fundamental towards to the development of any nation and is regarded as one of the most important process of attaining self-reliance economy independence, provision of goods and services, employment, income redistribution and many other factors for the overall improvement of welfare of the populace. It has been also agreed by both developed and developing countries that small and medium scale enterprises are significant instrument for generating economic growth, capable of promoting not only stable industrial structure but also a satisfactory balanced spatial distribution of industries. Today not only the European but also the Africans witness the economic growth and development of china due to their capability of investing vehemently on the small and medium scale enterprises.

The Nigerian government present interest on small and medium scale enterprises could be attributed from their vital importance, as mechanism of achievement of socio economic objectives such as opportunities for employment generation, stimulation of indigenous industrialist, checking rural-urban migration etc. The empirical evidence indicate that small and medium scale enterprises can be an important vehicle for meeting the growth and equity objectives of the Nigerian government. A part from that, the young Nigerian economist advocated that, the question of what happening or increase in G.N.P, G.D.P, and per-capital income could be explained by the economic growth which is answerable to the small and medium scale enterprises. 

Therefore improved policies and carefully designed projects can really play an important role. This is for ensuring that the potential contribution to the economy from scale and medium scale enterprises (especially the tailoring industry) to poverty reduction and ultimate search for self-reliance, which contribute to Nigeria as a developing country in which industrialization can be achieved in the long run. However SMES can be regarded as any activities with the following characteristics; Ease entry, reliance of indigenous resources, family ownership, small scale operations labour intensive and adaptive technology, skills outsides of the formal sector, unregulated and competitive markets.

The National Economic Reconstruction Fund (NERFUND) defines Small and Medium Scale Enterprises (SMEs) as enterprises with assets excluding land, plus cost of project not exceeding N40 million (CBN, 2001). Under the Central Bank of Nigeria (CBN) Monetary and Credit Policy Guidelines of 2006, SMEs are defined as an enterprise with fixed assets excluding land but including working capital not exceeding N40million. The Centre for Industrial Research and Development (CIRD) at Obafemi Awolowo University Ile-Ife also defines SMEs as enterprises with total assets in capital not exceeding N250, 000,000 and employing not more than 50 full-time workers (Obitayo, 1991).

The history of industrial growth in developed and developing countries has shown that SMEs are the driving force of industrial development due to their small initial capital requirement and their contributions to output, employment and growth (Diejomaoh, 1980). The role of SMEs is dynamic, accelerating increase in per-capita income, output, employment opportunities, and enhancing regional economic balance through industrial dispersal, effective resource utilization, and development of local technology, diffusion of management skill and stimulation of indigenous entrepreneurship (Adenuga, Ohuche and Ogujuba 2004).

STATEMENT OF THE PROBLEM 

Small and medium scale enterprises formed the backbone of any meaningful economic development of any country. They are the basic pillars in the process of industrialization of any country as also pointed out in the traditional definition of development. Despite the importance of small and medium scale enterprises, they face a lot of problems which hinders their growth and efficiency, especially in the developing countries. Fashion design and tailoring services is not an exception, small scale business form the main economic activities in sumaila local government i.e. the study area in Kano local government; Small businesses conducted in sumaila local government include, Farming, poultry, motorcycle operation, mechanization, food processing, tailoring, provision store and so on. The nature of these economic activities are characterized by low productivity low income earned, low investment, low savings and slow growth of the economy of the area. This however, confines the poverty level of the area due to low productive base. Despite the slow growth of the area, these small scale businesses are vital catalyst for societal growth well on coping strategy of the poor living in the rural areas. The enermous role played by these SMEs in the rural areas as a survival strategy prompted this study to be carried out in order to examine the contribution of the SMEs poverty reduction in rural area (sumaila local government) in Kano statement particular reference tailoring services.

AIMS AND OBJECTIVES OF THE STUDY

The main aim of the research work is to examine the role of SMEs in rural poverty reduction in sumaila local government in. Kano state a case study of tailoring services.meanwhile,the specific are .

To determine the impact of small and medium scale enterprises in rural poverty  reduction in sumaila L.G.A

To examine the income and employment generation capacity of tailoring enterprise in sumaila L.G.A

To identity the problems facing the tailoring services in the study area.

RESEARCH QUESTIONS

What role do small and medium scale enterprises play in poverty reduction in sumaila local government especially tailoring services?

What are the impacts of the tailoring enterprises on income and employment generation in sumaila L.G.A

What are the major  problem facing the enterprises (tailoring) in sumaila local government 

    SIGNIFICANCE OF THE STUDY

The significance of this study is to establish an extent of rural poverty reduction and to expose the immense benefit derivable from small and medium scale enterprises.Also the study will help to redress the benefit of the society that small and medium enterprises can bring about economic and development in Kano state.

The small and Medium Scale enterprises if strategically positioned have a great potential to generate employment, create wealth, reduce the prevalence of poverty and sustain economic growth and development in the state. The sector is also capable of improving per capital income, increase value addition to raw materials supply and improve export earning and step up capacity utilization in key industries and as such contribute significantly to the country’s GDP.

A research of this kind is therefore very important in providing useful information that can be used to ensure their continued contribution to the economy.

Thus, this is  required to enhance knowledge acquisition amo