1.1 Introduction
The role of Small and Medium-Scale Enterprise (SMEs) in the national economy cannot be underestimated. These enterprises are being given increasing policy attention in recent years, particularly in third world countries partly because of growing disappointment with results of development strategies focusing on large scale capital intensive and high import dependent industrial plants. Small firms marketing practices have been assessed in the context of existing models based on large firm practices. However, given that the marketing discipline is undergoing a transformation in some part of African countries with new paradigms emerging as relationship marketing, it is now appropriate to assess small firm practices in a broader and more contemporary perspective.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Small and Medium Scale Enterprises (SMEs) have been acknowledged the world over as the driver of economic development and growth. This is because these enterprises have great potential for employment generation, economic empowerment, poverty alleviation, improvement of standard of living, substantial local capital formation, achievement of high levels of productivity and capacity, means of achieving equitable and sustainable industrial diversification and dispersal, appreciable contribution to gross domestic product, increase harnessing of local raw materials and technological and export diversification (Ekpo, 2000; Essien, 2006; Butt, Hunjra and Rehman, 2010; Akpakpan, 2012). Not only do they provide employment and income for the bulk of the population, they have been recognized as critical breeding and nurturing ground for domestic entrepreneurial capacities, technical skills, technological innovativeness and managerial competencies for private sector development (Derinola, 2008; Ojo, 2010; Olorunshola; 2014).
Generally, therefore, SME’s are the pivot for achieving economic development of any nation. This is because, they create employment opportunities for teeming youths and self reliance for owner managers, contribute to gross domestic product (GDP) through their outputs (production of goods and services), development and inculcating entrepreneurial spirit, as well as better living standard of the populace through poverty alleviation.
The role of SMEs in the developing economies has also assumed a major significance in recent years. Studies have indicated that developing countries including Nigeria, show increased interest in the promotion of SMEs due to three main reasons: the failure of past industrial policies to generate efficient self- sustaining growth; increased emphasis on self-reliant approach to development and the recognition that dynamic and growing SMEs sector can contribute substantially to a wide range of development objectives (Sanni, 2009; Uwonda, 2013).
According to Onuoha, (2008), Etim, (2010); Kishore (2010), SMEs form the great majority of businesses in almost all countries in the world and hold the promise for the development and transformation of our economic in terms of domestic capital formation and industrialization. In many developed countries, more than ninety-eight percent of all enterprises belong to the SMEs sector (Uwonda et al, 2013); eighty percent of the total industrial labour force in Japan, fifty percent in Germany and forty six percent in USA are employed in smaller firms (Udechukwu, 2014). In the USA, SMEs employed about 25 million people in 2004, and contributes nearly thirty nine percent to the national income (Whah, 2006).
In Akwa Ibom State, the government has also embarked on programmes and policies geared towards the development of this sub-sector. These programmes include micro credit scheme, Akwa Ibom State Economic Empowerment and Development Strategy (AK-SEED), co-operative development Credit Scheme among others aimed at developing and enhancing the viability of the SMEs. This study is aimed at evaluating the extent the SMEs roles in Akwa Ibom State given the lofty support they enjoy from government and donor agencies.
The State is primary civil service driven, but currently the highest oil and gas producing State in Nigeria with heavy reliance on statutory allocation from the Federal Government. Ekpo (2007) opined that the State has a weak small and medium industrial base as revealed by the near absence of a private sector. The traditional occupation of Akwa Ibom people are farming, fishing, trading, hunting, word-carving, raffia works, pottery, crafts, creation among others.
Therefore, in Akwa Ibom State where the research was carried out, the activities that was conducted is to know the small and medium scale enterprise activities and socio-economic development in Akwa Ibom State.
1.3 Statement of Problems
Investigation revealed that small and medium scale enterprises in Nigeria have been seen as the bridge for the rapid economic development of every nation. However, it is be observed that inadequate capital and lack of accurate feasibility studies have hindered the operation, initiative and development of small/medium scale enterprise. Despite the efforts of government to give financial assistance to the business owners, delays and dishonesty in paying back the loans hinder the recycling procedures.
The central bank of Nigeria (CBN) survey in 2005 provides some evidence that apart from the acute shortage of technology, management skills, poor management, adverse operational environment, the sub-sector has had its own fair share of neglect with concomitant unsavory impacts on the economy. The growth and competitiveness of the sub-sector are poor and lagging behind other sectors of the economy (Ojo 2010), with high mortality rate before their fifth (5th) anniversary (SMEDAN 2008).
Akwa Ibom State is not an exception in this respect. Despite the generally acknowledged crucial role of SMEs in economic development, the sub-sector in the state appears weak. The mortality rate of enterprises is high and the sector represents an insignificant proportion of the economy (AK-SEED 2004; Ekpo, 2005; Akpakpan, 2012; Udoh, 2012). The sector’s contribution to GDP is put at only 4.7 per cent, although it accounts for high percentage of low wage employment (AK-SEED, 2004).
1.4 Aim and Objectives of Study
The aim of the study is to investigate the small and medium scale enterprise activities and socio-economic development in Akwa Ibom State. In achieving this aim, the following specific objectives were laid out as follows:
- To examine the relationship between the increase in SMEs and level of unemployment.
- To Evaluate the relationship between SMEs and capital formation
- To evaluate the relationship between the SMEs and economic growth.
- To examine the overall contributions of the SMEs to the economic development of the State.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Do SMEs create employment opportunities?
- To what extent do the SMEs assist in capital formation?
- What is the relationship between the SMEs and Economic growth?
- What is the extent of overall contributions of SMEs to the economic development of the State?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: SMEs do not significantly affect economic growth and development in Akwa Ibom State.
- H1: SMEs significantly affect economic growth and development in Akwa Ibom State.
Hypothesis Two
- H0: There is no significant relationship between the operations of SMEs and employment creation in Akwa Ibom State.
- H1: There is a significant relationship between the operations of SMEs and employment creation in Akwa Ibom State.
1.7 Significance of Study
The results of the study would provide an insight into the kind of marketing practices adopted by small-scale in accordance with the traditional expository tendencies of marketing concept, which focuses in satisfying the need and wants of target market profitably.
This knowledge would no doubt help entrepreneurs, academics, scholars and marketing practitioners alike to keep abreast of current marketing practices of small-scale business. Essentially, the study would contribute immensely to the expansion of and improvement of theoretical base of marketing teachers in terms of practices common in small-scale businesses.
Consequently, the marketing graduates would through the help of this study be able to understand the marketing implications in small-scale businesses and also be aware of attracting, maintaining, building customers’ relationship and also efficiently and effectively handling customers’ complaint. Most especially translate theories into practices especially should he/she decides to run a small business outfit.
1.8 Scope of Study
The study focuses on the small and medium scale enterprise activities and socio-economic development in Akwa Ibom State.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Business: A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
Marketing: Marketing is the process of teaching consumers why they should choose your product or service over those of your competitors, and is a form of persuasive communication.
Promotion Channels: In marketing, promotion refers to any type of marketing communication used to inform or persuade target audiences of the relative merits of a product, service, brand or issue.
