Paper 2

Small Scale Enterprises can be described as enterprise employing between 1-35 people. They utilize by-products or immediate products from larger farms. They also utilize local raw materials. Some defined small/medium Scale Enterprises as those employing less than 100 people in the business. The definitions and figures for medium scale enterprises are as also varied and changing.

While some organizations define small scale enterprises or industries in relations to value of assets, others define it in terms of turnover and number of staff employed. The National Council of Industries defines small scale enterprises as follows:
· Cottage industry costs excluding land not more than N=1million.
· Small Scale costs excluding land but including working capital not more than N=10million.
· Medium total costs excluding land but including working capital above N=40million.

Despite their differences, all these definitions share common ideas that Small Scale Business are generally low in terms of number of persons employed and in the amount of investment and annual business turnover. The main criteria used through out the world to describe SSB include number of employees, sales value, financial strength, relative size, initial capital outlay, comparison with its past standards, independent ownership and type of industry.

Private enterprises especially indigenous small scale firms have a vital role to play in promoting the social and economic well being of the nation, hence indigenous entrepreneurship is likely to be much more important in small scale business than in giant firms.

Development economists are of the opinion that labour intensive industries can enhance employment generation as well as advance wide variety of developmental goals like improved income distribution, generation and diffusion of technology, industrial skills, increased utilization of local resources, improved spatial distribution of industrial activities and reduction of rural-urban population movement.

In view of the impact of small scale industries in improving the socio-economic condition of a nation, most developed and developing countries have made initiatives to promote indigenous entrepreneurship in small scale business.

Small Scale Business is the back bone of successful economies like USA where over 23 million small businesses employ more than 50% of the private workforce and generate more than half of the nation’s Gross Domestic Product.

In European Union, small scale businesses are seen as essential for European employment. Each year 1 million new small scale businesses are set up in the EU. Small Scale Industries account for 99.8% of all companies and 65% of business turn over in the EU.

In Taiwan, 70% of jobs are generated by production activities that employ less than 20 workers each.

It is undoubtedly accepted that, small scale business form the bedrock of any nation’s industrial take off especially in a typical developing country like Nigeria. Some of the importances are:

EMPLOYMENT GENERATIONS
Small Scale Business provides more employment per unit of capital invested because they are generally more labour intensive. They have done wonderfully well by reducing the rate of unemployment in Nigeria by creation of jobs for unemployed youth thereby reducing the rate of crime.

AID TO LARGER INDUSTRIES
Small Scale Business would aid larger industries by manufacturing raw materials input and generally act as catalyst to larger industries thereby generating the desired forward and back forward linkages required to build a healthy vibrant industrial base.




DEVELOPMENT OF MANPOWER TECHNIQUES
They encourage indigenous entrepreneurship which will help to develop manpower techniques. They will also help develop our non-oil sector especially agro allied industries which may offset rural migration.

INDIGENOUS TECHNOLOGY DEVELOPMENT
Small Scale Business will help form the technological base where such industries would start from small units operating technology to suit our particular needs and utilizing local value of resources products, equipment and manpower.

LOCAL SOURCE OF RAW MATERIALS
They generally source their materials locally while a good number of larger units rely on imported raw materials. In this era of scarce foreign exchange, industries that source their raw materials locally stand a better chance of becoming more prosperous.

REGIONAL ECONOMIC BALANCE
By establishing small scale industries in every nook and cranny of the country has brought about equal and even economic balance and distribution of wealth. Small Scale firms create for widely dispersion of industries in the society and therefore enhance regional economic balance. There is no part of the region that is left without developing.

REDUCTION OF RURAL-URBAN MIGRATION
With the establishment of small scale industries in local areas, most people that migrate to the urban areas in search of greener pastures are remain in the local areas to get jobs and this has resulted in the development of rural areas as well.
An overall look at the SSB sector would reveal macro-economic facts pointing to development that would enhance more income parity, raise capacity utilization of industries, lower inflation by producing more and creating competition.

Further development of SSB would also increase Gross Domestic Product and will overall raise the standard of living of all Nigerians.