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Financial Problems Facing Small Scale Industries

One of the prominent features of the economic structure of most developing countries is the small side contribution to government development plan made by industrial sector. Consequently, many of those countries are presently faced with problem of formulating and implementing a well conceived programmed a industrial development plan that will reverse the unfortunate trend ensuring that this dream of a perfect, integrate and consistent patter of industrialization is achieved, such storage must be appropriate to these countries condition and levels of development. It is in this line that small scale industry has been recommended to fill the gap.


Title page




Table of contents



1.2Importance of the study

1.3Scope of the study

1.4Statement of the problem

1.5Aims and objective of the study

1.6Limitations of the study

1.7Historical background of the case study

1.8Definition of terms and concepts

Chapter two: Literature review

2.1Theoretical concepts and its characteristics

2.2Background information

2.3Government roles in development of small scale industries

2.4Location analysis of small scale industries

2.5Sources of finance

2.6Eligibility of small scale industries to government loan

2.7Process involved in obtaining financial assistance


3.1Research methodology

3.2Questionnaires techniques (primary data)

3.3Secondary data

3.4Testing the hypothesis



4.2Problems of small scale industries







The theme of this study is financial problem facing small scale industries is Kwara state. The study aims at throwing more light on the basic problem facing small scale industries which is relevant to the Nigeria economy and by viewing the available source of finance in some small scale industries in Kwara state.

Moreover, the present economic situation in the country calls for serious attention to be paid to diversification. A situation where a country depends mainly on a single product for the foreign exchange earning is dangerous. Hence, any effort to develop the impact substituting industries should be encouraged small industries present an opportunity for the country to provide locally and therefore limit to a considerable extent the drain on our foreign exchange.

Lastly, any measure for developing the rural urban migration should pay a greater attention to the public and development of the small scale industries.


It could be right to also why the research the study important.

The importance of the study originated from the single fact that finance is the life wire of any business. It can be looked at as the ability to purchase things. Finance is sued by a business in its operation just as much as labour and materials purchasing power can transfer from one person to another by lending of money and can thus, be supplied to business of a price just as physical goods and services of labour. Like market and labour finance should be bought in the favourable market and used in the most effective and economical ways


Also the important of small scale industries is better evaluated  against the background of the objective laid up for it in peculiar circumstances prevailing in various countries of the world especially it’s contribution towards removal of bottlenecks and other inhibition of industrial growth). Among its very grant importance is its contribution toward removal of indigenous entrepreneur initiative for modern industrial development as emerging industrialist build up their potential in the small scale industries for the greater task of industrial management.


The prevalent problems of shortage of funds skilled labour is steamed through the encouragement and establishment of industries requiring affordable capital and skilled labour of small scale industries.


The problem of limited market is involved through localization of production centers is primary market area. The income and therefore effective demand of the people is increased through increased employment for the rural labour force.


Furthermore, the scheme permits special earliest facilities to be given the establishment that have nothing to attract the instructional credit agencies and these facilities the acquisition of machinery raw material factory accommodation as well as encouraging manpower training.


Also, the inform, choice of ambitions industrialist in term of technology industry or product lines plant size equipment product process will be greatly reduced when they have personally experienced small specialize industries with requirements commitment and risk.


Management techniques are also advanced in the small scale industries to facilitate the growth of management and marketing potential of indigenous industrialists as to be able absorb demand change of the growing and complex society.


Small businesses also pre-empty the used lack of knowledge on standard and appealing product designs that are common with small scale industrialists of developing countries.


Lastly, fervently hope that useful ideas would come out for investors on the source of finance and obtaining some when required.


As earlier mentioned the focus of this study was financial problem facing small scale industries in Kwara state the research project examine and studies the related problem and prospects in the investment of small scale industries in Kwara state with particular reference to Global soap and detergent industries Ilorin located in Ilorin the state capital and as a barometer of activities of small scale industries in other divisional head quarter and in Nigeria at larger. This research work has therefore enunciated the back problem setting small scale industries in raising funds to finance its programme.


Moreover, the questionnaires which have been distributed and filled deals with certain questions aimed to prove social background of the respondent as it can affect their business life. Other special questions deal with capitalization staff straight government role in is development, assistance needs and recommendations.


Information have been collected from the ministry or trade and industry, Kwara state investment corporations federal ministry of trade business registration units official sets.


However in view of the fact that only fifty small scale industries have been served questionnaire all of which were located in Ilorin Township it was not possible to make a broad nationwide generalizations of the result obtained.


The small scale industries  are still faced with  many problems which  stand  as  obstacles  to it  rapid  growth  in Kwara state. The factors which constitute the main obstacles to the industries growth may be categorized as management, technical, commercial and financials.


The management problem arises from the one stated ability of the manager/owner of the business or enterprises. The  problem  of finding the right  success or to  him often his retirement  or debt and  the shortage or absence of staff/officer capable of advising  him on management policies, this  limited education  and training  and the rural and sub-urban nature of his functions allocation  further deny him  access  to modern management limited technical  and possibilities make the risk of lending money to small industries  very high, in return the shortages of busies capital further  aggravate  the technical  , commercial  and managerial problems .


The managerial and technical  problem facing the  small  scale industries in the state can be  improved  upon if not totally  stopped  by the  assistance  of small scale  industrial  credit scheme and industrial  development  centre by  organizing  training  and service.


In conclusion with the industrial training find for  various  entrepreneur in the state so as to  improved and  open  them to modern manage and  technical training which  participants  of the services  in their  industries  productivity , also , the  traditional advice offered but the  industrial development  centre will also solve  the managerial technical problems  of the various   in- industry list


The training and seminars can either be twice or thrice in a years. The financial problems can actually be reveals  even now that the federal government  has reduces   the interest  on loan  to small scale industries  in the country  which  will  now encourage  many small  scale industrialist to borrow  for industrial  development  as well as reduce the  bottle rock  problem that usually  discharge  them from  borrowing   either  to expand  or set a new small scale  industry.


Through the trade associations for small  business government  and  government  subsidized  institution   technical , financial  as commercial information   can be made  available to the  small scale  industries.


In addition, banks and various other  external  advisers  can help as much  as possible  to fill the  gap in   the management  function and  contributes  to  the quality  of decision made and the production techniques  adopted  by these industries.

In conclusion, the small  scale industrialist  required a lot of encouragement  from  financial institution  and government  given the necessary of Intensive supervision by a body  interested  with  control supervision of small scale  industries. They can grow up and contribute immensely to the industrial and   economic growth of the state and the whole country.


  1. a) The objectives of this project are primarily to find out the disastrous of financial problem facing small scale industries in our society (a case study of global soap and detergent industries asa-dam road Ilorin).
  1. b) This project will help to discredit the wrong impression that financial problem facing small scale industries is restricted to the pages of textbook, newspaper, business journal and other relevant books. But contrary to general believes its existence is in practical terms on very obvious.
  1. c) Consideration was given to business enterprises or sector, because I have carefully considered the nature of business, its role, relevance and importance in nation building of a country economic.

Generally    speaking in carrying out research on any study, cost must be very important without enough money at one’s disposal it will be very difficult to carry out effective research project. In our economy, education is with terms and average student find it difficult and to receive the sum of N6, 000.00 on project work as a result of this problem financial has limited the efforts of the research from going to various places in order to get some data for his project work.


More textbook and journal and not made available in the library. The journal room is not open at the appropriate time for the student, books, that are in the library are outdated which can not give enough data for the researcher.


Suitable definition has not given to a small scale business but different nations have their ways of defining the concepts. Some countries defined small scale business in terms of manpower while some referred to it as capital investment; also other defined it on the basis of management structure.

According to Osmotic A.O. (1993) state ministry of trade, industries and cooperative, Ibadan stated that any manufacturing serving or processing industry with a capital investment not exceeding N150, 000 on machinery and equipment alone is known as a small scale business. Federal ministry of commerce (1987) and industries also defined small scale business as enterprises that cost not more than N500, 000 including the cost of the land but excluding the working capital.


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