Problems Of Financing Small Scale Business In A Distressed Economy (A Case Study Of Three Selected Industries In Enugu State)

Abstract

The study is aimed at finding out the problems of financing small scale business in a distressed economy. Aga inst this back ground, the specific objectives of the study are: To identify the problems encountered by small scale business in their bid to provide the required capital and to explore possible solutions to the problems. Being a case study, the problem of financing small sc ale business with respect to some selected industries in Enugu State were studied. A set of questionnaire were self administered to the management, employees Banks and other financial institutions involved. The opinions of these categories of respondent on the problems of financing small scale business were sought and analyzed. The statistical tools were simple percentage and Chi-Square (X 2) . Basically , all the hypothesis we tested and interpreted accordingly. And as a result of this the null hypothesis of the first and second hypothesis were accepted. But in the case of the third hypothesis, it stood rejected. Generally at the end of the study the following observations were made in chapter five based on the empirical evidence from data analysis and the result of the hypothesis testing’s. Small scale industries are virtually involved in the product ion of traditional commodities. That there is relationship between individual personal source of income and establishment of small scale enterprises. That lack of demand for small scale indigenous industries product is not mainly associated with high prices for the products and their low qualities compared to products of larger industries. That small industries have failed to obtain loans from capital market, banks and other financial houses because they do not possess adequate collateral securities which banks always demand. That small scale industries Iack skilled manpower and management expertise to run their affairs. That the majority of the small scale business are concentrated in the urban areas because of lack of infrastructural facilities in the rural areas. Finally, in a bid to remedy the problems and those factors militating against financing small-scale industries, the following recommendations are made, they are: scale The banks on their part should try to enlighten the small scale industries on the various credit facilities available and the requirement or conditions attached to them. The Government should patronise the pro duct of the small scale industries and also assist them in promoting their products. This could be done by organising exhibitions and trade fairs or the use of Government press to advertise the products of the small industries. A consultancy unit should be created in the Ministry of Commerce and Industries w hose function should include the provision of technical and management advice and writing of bankable feasibility reports for interested small-scale industrialists.