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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

Chapter one: Background of the study

1.1 Introduction

1.2 Importance of the study

1.3 Scope of the study

1.4 Statement of the problem

1.5 Aims and objective of the study

1.6 Limitations of the study

1.7 Historical background of the case study

1.8 Definition of terms and concepts

Chapter two: Literature review

2.1 Theoretical concepts and its characteristics

2.2 Background information

2.3 Government roles in development of small scale industries

2.4 Location analysis of small scale industries

2.5 Sources of finance

2.6 Eligibility of small scale industries to government loan

2.7 Process involved in obtaining financial assistance

Chapter three: Research methodology, data collection and analysis

3.1 Research methodology

3.2 Questionnaires techniques (primary data)

3.3 Secondary data

3.4 Testing the hypothesis

Chapter four: Impact and problems of small scale industries inEconomic development of Kwara state.

4.1 Impact

4.2 Problems of small scale industries

Chapter five: Recommendations and conclusion

5.1 Recommendations

5.2 Conclusions




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 .

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.


In the setting up of small scale industries, the main purpose of the government was to ensure larger flow of assistance to the small scale units. To meets this objective, the immediate thrust of the small scale industries was on the following measures:

  1. Initiating steps for technological up gradation and modernization of existing units.
  2. Expanding the channels for marketing the products of the small scale sector; and

iii. Promotion of employment-oriented industries, especially in semi-urban areas to create more employment opportunities and thereby checking migration of population to urban areas.

Small scale industries provides assistance to the small scale industries sector in the country through the existing banking and other financial institutions, such as, state financial corporations, state industrial development corporations, commercial banks, cooperative banks and RRBs etc. The major functions of small scale industries are given below:

  1. It refinances loans and advances provided by the existing lending institutions to the small-scale units.
  2. It discounts and rediscounts bills arising from sales of machinery to and manufactured by small scale industries units.

iii. It extends seed capital/soft loan assistance under National Equity fund, Mahila Udyam Nidhi and Mahila Vikas Nidhi and seed capital schemes.

  1. It grants direct assistance and refinance loans extended by primary lending institutions for financing exports of products manufactured by small-scale units.
  2. It provides services like factoring, leasing etc. to small units.
  3. It extends financial support to the state small industries corporations for providing scarce raw materials to and marketing the products of the small-scale units.

vii. It provides financial support to National small industries corporation for providing; leasing, hire purchase and marketing help to the small-scale units.

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 the small scale industrial credit scheme and industrial development center 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 center 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 problem 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 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 contribution 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 and not gives enough data for the researcher


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