Impact of Small-Scale Business on Growth of Nigerian Economy

The impact of small-scale business on the growth of any economy cannot be overlooked in any part of the world. Its role in the development of nations, including developed and developing nations, is insurmountable.
In spite of their role in economic growth and development, developing nations like Nigeria have overlooked them for a long. This neglect has made small-scale businesses in Nigeria suffer and contribute little to the Nigerian economy.
However, in recent times, the government has developed an interest in the growth of the small-scale business. This they have done through different forms of education and financial channels. Yet, their efforts are not enough to develop and position the sector for a sustainable growth path.
This study buttresses the importance of small-scale businesses on the growth of the Nigerian economy. It looked at what is small-scale business, is and its characteristics.
It went further to use the linear regression model to evaluate the impact of small-scale enterprises on GDP. Using data from the CBN statistical bulletin, it specifically analyzed the following:
• The impact of small-scale business financing on productivity
• The impact of growth in small-scale industries on the country’s export
• The relationship between growth in small-scale business manufacturing and growth in Gross Domestic Product (GDP).

This research project has five (5) chapters: Introduction, Literature review, Methodology, Data Analysis, and Conclusion.

Below is the background of the study for a clearer overview of the research work.

Impact of Small-scale business on Growth: Background of the study

The relative importance of small and medium-scale businesses in developed and developing countries cannot be over-emphasized. It has led and would continue to lead to a reconsideration of the role of Small-Scale businesses in the economy of nations. The economic development of many countries is often measured by such indices as:

• the level of industrialization,
• modernization & urbanization,
• gainful and meaningful employment for all those who are able and willing to work,
• the income per capital,
• equitable distribution of income, and
• the welfare and quality of life enjoyed by the citizenry.
There is no doubt that small-scale businesses exist in most economic environments. The historical background of small and medium-scale businesses in Nigeria can be traced back to 1946. During which the essential paper No. 24 of 1945 on “A Ten-year plan of development and welfare of Nigeria 1946” was presented (Aremu and Adeyemi, 2011).
Since then, small-scale businesses have gained prominence and will increase their importance till tomorrow. This is simply dictated by the developmental needs of Nigerian society.
The depth and breadth of the consequences of small-scale businesses in alleviating poverty and national development have been recognized. There has been a deep-self interest in recent years in the development of Nigerian small-scale businesses, particularly since the adoption of the economic reform in 1986. The small and medium-scale industry is seen as a key to Nigeria’s growth and alleviation of poverty and unemployment in the country.
Therefore, the promotion of such enterprises in developing economies like Nigeria is of paramount importance since it brings about a great distribution of income and wealth, economic self-dependence, entrepreneurial development employment, and a host of other positive, economic uplifting factors (Aremu 2004).
Moreover, in a country like Nigeria with an adverse Balance of Payment situation, the growing contribution of the Small Scale Industries sector in Nigeria’s export portfolio goes a long way in generating foreign exchange and smoothening out the adverse Balance of payment situation.

Aremu (2004) posited that Small-Scale businesses play an important role in the economics of any country following their relative levels of development. He further emphasized that Poverty is a worldwide phenomenon and its incidence in Nigeria had been high and on the increase since 1980.
This position is in line with (Adeyemi and Badmus 2001 and Schmitz 1982), who also argued that adequate financing of small and medium-scale businesses will reduce the unemployment level in Nigeria.
There is a general belief that desired employment generation in this country can be achieved through the development of small and medium-scale enterprises (Awosika 1997, Schmitz 1995).
Gunu (2004)5 and Aremu (2010)6 posited that Small-Scale businesses provide income, savings, and employment generation. They are seen as veritable engines for the development of entrepreneurial capabilities and indigenous technology which will generate employment in the country.
Small-scale businesses constitute the basis for industry and the natural economy in many countries. It has been estimated that SMEs employ 22% of the adult population in developing countries (Fisseha 1991). Small and medium-scale businesses can be regarded as one the important elements of a country’s development and this play a crucial role in the economy of this nation. Small and medium-scale enterprises speed up the rate of social-economic development of many countries, particularly developing countries, Nigeria is not an exception.

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