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TOPIC : SMALL AND MEDIUM SCALE ENTERPRISES DEVELOPMENT IN NIGERIA (A Case Study
of Cassava Processing Industry)
BACKGROUND TO THE STUDY
Interest in the development of small and medium-sized
enterprises (SMEs) and their contribution in the development
process continue to be in the forefront of policy debates
in developing countries. The advantages claimed for
SMEs are various, including: the encouragement of entrepreneurship;
the greater likelihood that SMEs will utilise labour
intensive technologies and thus have an immediate impact
on employment generation; they can usually be established
rapidly and put into operation to produce quick returns.
SME development can encourage the process of both inter-
and intra-regional decentralisation; and, they may well
become a countervailing force against the economic power
of larger enterprises. More generally the development
of SMEs is seen as accelerating the achievement of wider
economic and socio-economic objectives, including poverty
Staley and Morse (1965) identify a ‘developmental
approach’ to SME promotion which has as its objective
the creation of ‘economically viable enterprises
which can stand on their own feet without perpetual
subsidy and can make a positive contribution to the
growth of real income and therefore to better living
levels’. This approach emphasises the importance
of efficiency in new SMEs. Small producers must be encouraged
to adopt new methods, move into new lines of production
and in the long-run, wherever feasible, they should
be encouraged to become medium- or even large-scale
Initiative on Cassava Production and Export has increased
the awareness amongst Nigerians of the industrial crop,
popularly referred to as the ‘new black gold’.
Started in July 2004, the initiative seeks to generate
$5 billion in export revenue. Fortunately, Nigeria,
according to the Food and Agricultural Organisation,
FAO, in its 2004 report, is currently the largest producer
of cassava in the world at 34 million tons yearly, but
with a poor yield of an average of 10 tons per hectare
over an estimated cultivated land size of three million
hectares. Nigeria is closely followed by Brazil and
Thailand, which have a capacity to produce 24 million
tons and 20 million tons and a yield of 13.6 tons per
hectare and 19.4 tons per hectare respectively. Unfortunately,
experts at the International Institute for Tropical
Agriculture, IITA, Ibadan, Oyo State, believe that up
to half of the harvested cassava is wasted by production
and post-harvest inefficiencies while the rest is consumed
as food. Brazil and Thailand, which rarely consume the
cassava products directly, have fully developed the
cassava industry for the export market.
not focus on the exportation of cassava but develop
the enormous local and regional markets for cassava
that exist in the country, West African sub-region and
Africa as a whole rather than start exporting the industrial
raw material to Europe. Nigerians should be encouraged
to add value and process them for industrial application.
The main thrust of this research work shall focus on
the development of small and medium scale enterprises
in the cassava processing industry justifying the need
for agro-processing industries that convert cassava
fresh tubers into primary cassava-based commodities
that are tradable in domestic and international markets.
OF THE RESEARCH PROBLEM
The Small Scale Industry is acknowledged to have huge
potential for employment generation and wealth creation
in any economy. Yet in Nigeria, the sector has stagnated
and remains relatively small in terms of its contribution
to GDP or to gainful employment. Activity mix in the
sector is also quite limited – dominated by import
dependent processes and factors. Although there is no
reliable data, imprecise indicators show that capacity
utilization in the sector has improved perceptibly in
the period since 1999, but the sector is still faced
with a number of constraints with lack of credit availability
as the principal constraint. Credit is the largest element
of risk in the books of most banks and failures in the
management of credit risk have led to the weakening
individual banks and in some cases the banking system
as a whole, have contributed, to many episodes of financial
OF THE STUDY
The main purpose of this study is to identify and consequently
analyze the most effective and efficient way through
which small scale enterprises could be financed and
promoted, thereby taking into consideration various
conditions such as economic, political, social, psychological
e.t.c under which small-scale enterprises are encouraged
to operate with particular reference to the cassava
processing industry in Nigeria. In so doing, the researcher
intends giving an in-depth information and analysis
on the various strategies through which small-scale
enterprises can be developed and encouraged.
In view of the above, the researcher intends to find
out the following:
(i) The role played by government towards promotion
and development of small-scale enterprises in Nigeria.
(ii) To identify the economic potential of small-scale
enterprises in the cassava processing industry.
(iii) To identify the constraints confronting the development
of small-scale enterprises in the cassava processing
industry in Nigeria.
(iv) To examine the financial support given to SMEs
The study would examine the following questions:
1. What role does the government play in the promotion
and development of small-scale enterprises in the cassava
processing industry in Nigeria?
2. What impact do small and medium scale enterprises
make to Nigeria’s economic growth?
3. What are the constraints confronting the development
of small-scale enterprises in the cassava processing
industry in Nigeria?
4. What is the trend of the financial support given
to SMEs in Nigeria?
METHODOLOGY AND SOURCES OF DATA
The two main research methods to be used are survey
research and content analysis. Survey research method
is used to study variables and their relationship as
related to human observation and opinions about their
experience as it concerns the subject matter of study.
Interview schedules shall be applied to some operators
while the questionnaire schedule shall be applied to
some small-scale entrepreneurs.
The data, which would be collected from the questionnaire,
will be analysed using the simple percentage method
and chi-square, goodness of fit. This will make the
analysis of the data more concise and simple.
AND LIMITATIONS OF STUDY
This research covers the area of promoting small and
medium scale enterprises in the cassava processing industry,
paying attention to the role of the government and other
external factors that can affect positively the development
of small and medium scale enterprises in Nigeria.
The research intends to study the essential problems
encountered by small and medium scale operators in the
cassava processing industry and suggest ways by which
they can be adequately and efficiently financed and
OF THE STUDY
Small and medium scale enterprises in Africa rely largely
on own savings, not only to grow but also to innovate.
Firms often need real services support and formal finance
assistance, failing which under-investment in long term
capabilities (training and R & D) may result, (Oyelaran,
Besides finance, there are critical elements (including:
knowledge, skills and experience of staff; capacity
and quality of internal facilities; information and
knowledge of market; intellectual and managerial leadership;
external infrastructure and the incentive system at
the micro and macro levels) that are lacking within
technology support institutions themselves. These undermine
the effectiveness of their support to SMEs.
This study is significant because it would help to evaluate
the operations of a vital segment of the industrial
sector – small and medium scale industries, which
have been identified as having very high potential in
promoting economic growth and development. The evaluation
shall be done with special focus on the small and medium
operators in the cassava processing industry in Nigeria
thereby adding to the existing literature on the subject
In Chapter one, which is the introductory part; the
background of the study, the statement of the research
problem, the objectives of the study and the methodology
to be adopted shall be discussed. Chapter two will deal
with the literature review.
The methodology analysis and theoretical framework shall
be examined in chapter three. Data presentation, analysis
and interpretation will be covered in chapter four while
the concluding part of the research work will be chapter
five where in a nutshell the summary, the conclusion
and the recommendations would be discussed.
Staley E. and Morse R. (1965) Modern Small-Scale Industry
for Developing Countries. London: McGraw-Hill Publishing.
Oyelaran O. (2003)
Financing and Development of Small-sale industries in
Nigeria. Central Bank of Nigeria Economic and Financial
Review. 24(4), December.
Regression Data and Results are included
and medium scale enterprises, cassava processing industry