The Nigerian Government
made has made substantial effort on the development of small scale industries, nevertheless,
part of the huge SMEs problems could be traced to the government. This is
mostly in the area of improper implementation of its policies towards SMEs and
a serious neglect in the area of incentive and infrastructural development to
facilitate business activities of SMEs. Government policies seem to have
constituted a serious problem area for SMEs. The beginning of harsh government
policies toward SMEs can be traced back to 1982 with the introduction of
“stabilization measures” which resulted in import controls and drastic budget
cuts. These, in turn, adversely affected the subvention to the financial
institutions established to provide financial assistance to the SMEs. For
example, in 1983, out of a total of 8,380 applications for loans received from
the SMEs for a total of 46.66 million naira was disbursed (Alasan & Yakubu,
2011).
made has made substantial effort on the development of small scale industries, nevertheless,
part of the huge SMEs problems could be traced to the government. This is
mostly in the area of improper implementation of its policies towards SMEs and
a serious neglect in the area of incentive and infrastructural development to
facilitate business activities of SMEs. Government policies seem to have
constituted a serious problem area for SMEs. The beginning of harsh government
policies toward SMEs can be traced back to 1982 with the introduction of
“stabilization measures” which resulted in import controls and drastic budget
cuts. These, in turn, adversely affected the subvention to the financial
institutions established to provide financial assistance to the SMEs. For
example, in 1983, out of a total of 8,380 applications for loans received from
the SMEs for a total of 46.66 million naira was disbursed (Alasan & Yakubu,
2011).
As the economic situation
deteriorated, the government introduced the Structural Adjustment Programme
(SAP) in 1986. Since the strategy of liberalization and deregulation of
interest rates was implemented, interest rates have continued to increase. The
SMEs, which prior to the SAP had been granted concessionary rates of interest
(particularly for agricultural and housing loans), experienced great
difficulties obtaining credit of a Stabilization Securities Account (SSA)
whereby the banks were debited with liquidity in their accounts with the
Central Bank.
deteriorated, the government introduced the Structural Adjustment Programme
(SAP) in 1986. Since the strategy of liberalization and deregulation of
interest rates was implemented, interest rates have continued to increase. The
SMEs, which prior to the SAP had been granted concessionary rates of interest
(particularly for agricultural and housing loans), experienced great
difficulties obtaining credit of a Stabilization Securities Account (SSA)
whereby the banks were debited with liquidity in their accounts with the
Central Bank.
Another shortfall of
government is the misappropriation of funds and wrong allocation of credit facilities.
Obi (2011) pointed out was that the plan to provide, modest loan to small scale
business operations was a flop, because loans were granted in most cases on
political rather than on commercial or project viability considerations. What
was supposed to be revolving fund designed to benefit so many SMEs owners ended
up as a bonanza for a few and it become virtually impossible to recover most of
the loans. Another factor is the government improper implementation of its
policies. Its inability to recruit trained manpower and adequate equipments to
aid the extension services it put in place to support the SMEs.
government is the misappropriation of funds and wrong allocation of credit facilities.
Obi (2011) pointed out was that the plan to provide, modest loan to small scale
business operations was a flop, because loans were granted in most cases on
political rather than on commercial or project viability considerations. What
was supposed to be revolving fund designed to benefit so many SMEs owners ended
up as a bonanza for a few and it become virtually impossible to recover most of
the loans. Another factor is the government improper implementation of its
policies. Its inability to recruit trained manpower and adequate equipments to
aid the extension services it put in place to support the SMEs.
According to Obi (2011), the
development centers were not endowed with adequate manpower to carry out
technical appraisal of applications for loans from surging applicants. In the
same vein, an empirical study on the analysis of the impact of government
policies on SMEs (entrepreneurial development) noted that government policy
programs on SMEs are concentrated in the cities where there is strict
competition between the SMEs products and large scale business. While rural
areas where their activities will impact on the macro economy environment
through provision of in employment rate, reduction in rural-urban migration and
overall contribution to the GDP where neglected (Ireghan, 2009).
development centers were not endowed with adequate manpower to carry out
technical appraisal of applications for loans from surging applicants. In the
same vein, an empirical study on the analysis of the impact of government
policies on SMEs (entrepreneurial development) noted that government policy
programs on SMEs are concentrated in the cities where there is strict
competition between the SMEs products and large scale business. While rural
areas where their activities will impact on the macro economy environment
through provision of in employment rate, reduction in rural-urban migration and
overall contribution to the GDP where neglected (Ireghan, 2009).
In spite of these
identified enormous challenges confronting SMEs in Nigeria, they still
continued to strive at their very best and their existence is the key to
national economic development. With evidence from countries like Indian,
Indonesia, Malaysia etc where SMEs constitute more than 40% of the Gross
Domestic Product, it is clear that SMEs in a developing country like Nigeria,
if policies implementation is enhanced through efficient monitoring, periodic
review and infrastructural facilities provided, the SMEs will be empowered
thereby facilitating growth and development of the nation’s economy.
identified enormous challenges confronting SMEs in Nigeria, they still
continued to strive at their very best and their existence is the key to
national economic development. With evidence from countries like Indian,
Indonesia, Malaysia etc where SMEs constitute more than 40% of the Gross
Domestic Product, it is clear that SMEs in a developing country like Nigeria,
if policies implementation is enhanced through efficient monitoring, periodic
review and infrastructural facilities provided, the SMEs will be empowered
thereby facilitating growth and development of the nation’s economy.
