Importance of Small and Medium Scale Industries in Poverty Alleviation in Calabar Metropolis Cross River State

CHAPTER ONE:

INTRODUCTION

Background of the study

Small and Medium Scale Enterprises (SME) are often regarded as the engine of contemporary economic development, since they offer more employment to a significant section of the people in a given country than major corporations, and hence help to alleviate poverty. According to Fatai (2011), the capacity of SMEs has harmed Nigeria’s current problems of hunger, poverty, and unemployment. He went on to say that the unfortunate development is SMEs’ inability to provide the mechanism that drives economic growth and development, which is the foundation for poverty alleviation. The development of Small and Medium-Sized Enterprises (SMEs) has become extremely important in the development of most third-world countries. No country ever advances without a significant contribution from the economy’s Small and Medium Scale Enterprises component. The performance and effectiveness of SMEs as instruments for economic growth and development, with the goal of reducing poverty rates among the population, is being studied. In Nigeria, SMEs have had a particularly bad performance (Ihua, 2009). Their poor performance has exacerbated the county’s poverty, unemployment, and low quality of life. SMEs employ 70% of the workforce in the industrial sector and 60% of the workforce in the agricultural sector, but they only produce 10% to 15% of overall industrial output and have a capacity utilization of just over 30%. The lack of cash has made it even more difficult for many businesses to get off the ground.

Poverty is a state of being impoverished on all levels: economic, social, political, cultural, and environmental. It is a condition of involuntary deprivation experienced by an individual, family, community, or country. Poverty and poor economic performance are the biggest obstacles to Nigeria’s change and growth right now. Gone are the days when Nigerian graduates could readily find work at all levels. Graduates have a wide range of career opportunities to select from, based on their credentials. This pattern began to shift in the early 1980s and 1990s, when a large number of tertiary institution graduates were looking for white-collar employment that were no longer accessible. Due to the tough economic circumstances brought on by the weak global economy, several firms elected to reduce or right-size their personnel. This had a negative impact on Nigeria’s economic and commercial activity.

Nigeria has been defined by the World Bank as a contradiction in that the country’s huge riches contradicts its poverty rate (Obadan, 2001). According to statistics on poverty records from various countries, around 1.1 billion individuals earn less than one dollar ($1.00 $2.00) each day, with everyday risks and sufferings determining their survival and even life. Barnes (2010), Omadjohwoefe (2011), and the United States Agency for International Development (USAID) (2011) The recognition of SMEs’ roles in combating unemployment and thus poverty reduction has been a long-standing phenomenon in Nigeria, but the right policies and incentives, combined with the right business environment, have continued to thwart SMEs’ crucial roles in addressing Nigeria’s economic problems. This is supported by Oni (2012), who examined the historical issues of SMEs in Nigeria, which have been on the front burner since the country’s independence in 1960 in terms of focusing attention on the sector through seminars, studies, researches, and workshops to assess its importance and the need to institutionalize it. Since the introduction of SAP in 1986, he continued, the focus has turned away from government-led industrialisation and toward SMEs as a possible agent for building domestic connections for successful growth and development. In a similar vein, Oni and Daniya (2012) stated that governments have formulated several policies aimed at developing SMEs in Nigeria over the years because they have been recognized as organs for achieving self-independence, job creation, import substitution, effective and efficient utilization of local raw materials, and contribution to the country’s economic development have shown evidence on how poverty pervades Nigerian society.

 Statement of the problem

All nations are interested in the performance of small and medium companies (SMEs). Enterprises have a considerable potential to contribute to social and economic development through creating jobs, increasing income, reducing poverty, and accelerating growth in both urban and rural regions. Hallowell (1999). According to Shultz, SMEs account for more than 98 percent of all industrial companies in several recently industrialized countries, and they employ the majority of the workforce (1997). According to Karlan (2001), SMEs employ 22% of the adult population in developing nations and offer more jobs per unit of capital investment than large-scale businesses. According to Aderibigbe (2000), SMEs in Nigeria account for over 70% of industrial employment and well over half of the country’s GDP (2008). The Importance of Small and Medium Scale Industries in Poverty Alleviation is written in this context. Cross River State’s capital, Calabar.

Objective of the study

The primary objective of the study is as follows

1.        To evaluate the importance of Small And Medium Scale Industries In poverty  alleviation.

2.        To examine how small and medium enterprise have created employment in Calabar metropolis.

3.        To find if government have contributed to poverty alleviation in Calabar metropolis.

4.        To find out how small and medium industries can be helped in other to alleviate poverty.

 Research Questions

The following questions have been prepared for the study

1)        What is the importance of Small And Medium Scale Industries In poverty  alleviation?

2)        how have small and medium enterprise created employment in Calabar metropolis?

3)        In what way have government contributed to poverty alleviation in Calabar metropolis?

4)        how can small and medium industries can be helped in other to alleviate poverty?

Significance of the study

This study is significant as it will shed light on the  importance of Small And Medium Scale Industries in poverty  alleviation and how to improve SMEs in other for them to contribute to the economic growth of Nigeria.

The study will be of benefit to the academic community as it will contribute to existing literature.

Scope of the study

This study evaluate the importance of Small And Medium Scale Industries In poverty  alleviation. Furthermore, the study examine how small and medium enterprise have created employment in Calabar metropolis. More so, the study will find if government have contributed to poverty alleviation in Calabar metropolis. Lastly, the study will To find out how small and medium industries can be helped in other to alleviate poverty. Hence the study will be delimited to selected SMEs in Calabar metropolis , Cross Rivers state.

Limitation of the study

This study was constrained by a number of factors which are as follows:

Just like any other research, ranging from unavailability of needed accurate materials on the topic under study, inability to get data.

Financial constraint , was faced by  the researcher ,in getting relevant materials  and  in printing and collation of questionnaires.

Time factor: time factor pose another constraint since having to shuttle between writing of the research and also engaging in other academic work making it uneasy for the researcher.

Definition of terms

SMEs:  small and medium enterprise

Poverty alleviation: the ability of human beings to lead lives they have reason to value and to enhance the substantive choices they have.