CHAPTER TWO LITERATURE REVIEW 2.

0 INTRODUCTION Poverty is a pervasive phenomenon world wide, while the increasing trend in the level of poverty has become a leading public issue in recent times, (oyesiku 2002). Poverty as a concept has been defined and explicated by many scholars from sundry viewpoints and orientations. We understand poverty to be absence or lack of basic entitlements (Okoroafor C.U, Nwadiaro E.C.C 2011). This means that when people within a community or a nation lack or there is the absence of basic and fundamental needs, they are said to be deprived and therefore poor. Their entitlements include economic, political, and socio-cultural. Poverty emerges from the lack of absence of financial human and physical necessities for creating a suitable environment for sustainable living standard and from the disparities and inequalities in access to, control of, and benefits from economic, social and political resources. There are variations in living standards around the globe, as economic growth rates and productivity vary from nation to nation. Some countries are poor, some are fairly well off, and others are rich, just as some individuals are poor, some are fairly well off, and others are considered rich. However, everything is relative; and that is certainly the case with poverty. For instance, although millions of Americans cant make a decent living, what most people in the United States today regard as stark poverty would seem like luxury in parts of Asia and Africa. Similarly, a poor person in Nigeria might not be perceived as such by other Africans in dire economic needs. Thus, poverty is partly a matter of how one persons income stacks up against the other person. If you were to determine how a person is doing economically, you would first look at the persons income. One with a high income could afford lifes necessities and luxuries; but "inadequate income is a strong predisposing condition for an impoverished life" (Sen 1999). And when judging whether the economy of a nation is doing well or poorly, it is common to compare the total income of everyone in the economy with another one or the global economy. The most common economic tool for this is the Gross National Product (GNP =the total income earned by a nations permanent residents [the nationalist] at a given period, Mankiw 2001, p.498). The average income of a citizen of any country is the GNP per capita, calculated by

dividing the GNP with the population. Nevertheless, GNP differs from Gross Domestic Product (GDP =the market value of all final goods and services produced within a country in a given period of time, Ibid. p.496), by including income that a nations citizens earn abroad and excluding income that foreigners earn in the country. For instance, if a Ghanaian citizen works temporarily in Nigeria, his production is part of Nigerias GDP, but it is not part of the GNP (It is part of Ghanas GNP.)

2.1 The concept of poverty In spite of Nigerias oil wealth (the nation is the 6th oil producing nation in the world), the poor constitute about 70% of the Nigerian population. And recent report by the united nations Development Programmes (UNDP) shows Nigeria as the 26th poorest nation in the world (The Guardian, July 26, 2002; also see Dike, October 6, 2002). With the vast mineral, oil, water, land and human resources, many Nigerians live on less than $1.00 (one U.S. dollar) a day. Is this statistics not bad enough to wake the nations political leaders from slumber? Who are the poor in Nigeria? In economic terms Poverty has narrow and broad definitions, partly because it is a physical matter, and partly because poverty is relative. It is physical because one can note its effects on those afflicted by it. And it is relative because a poor person in one country may not be perceived as such in another country. Poverty is a serious issue in Nigeria, because many people are struggling daily for survival without assistance from the State. Worse still, the nation does not have any guideline to measure the construct, which are available in some countries. For

instance, in the US the official federal policy notion of poverty guidelines carry precise dollar amounts of about $15,150 for a family of four. Poverty guidelines, which are issued by The Department of Health and Human Services, determine financial eligibility for federal programs and household incomes for basic necessities. And any family whose income is below the set amount is considered living below the poverty line (journalofpoverty.org). The poverty threshold, which is the statistical version of the poverty guidelines, is used by the Census Bureau to calculate the number of persons in poverty in the United States, States or Regions (UNDP 2002). Thus, a poor person could not afford the life style a rich individual would regard as the minimum for decency and acceptable in a particular community. Poverty has been defined

by developing a poverty line using the minimum wages/income concept like that developed by the Morgan commission in Nigeria. Anybody earning below the minimum wage/income is believed to be living below the poverty line. This concept seem to be the most commonly used one because it reveals the least income anybody in the society needs for decent living. The Websters New Twentieth Century Dictionary depicts poverty as the condition or quality of being poor, need, indigence, and lack of means of substance. It is also deficiency in necessary properties or desirable qualities, or in a specific quality, etc. And the Journal of Poverty notes that poverty means more than being impoverished and more than lacking financial means. It is "an overall condition of inadequacy, lacking and scarcity, and destitution and deficiency of economic, political, and social resources." This is a broader perspective of poverty, which reflects its true dimensions. Therefore, people are living in poverty, if their income and resources (material, cultural and social) are so inadequate as to preclude them from having a standard of living which is regarded as acceptable by their society generally (Ireland: NAPS, 1997). Because of the effects of her underdevelopment and corruption, the poor are found both in rural and urban settings in Nigeria, with different categories of poverty. However, no precise definition is really needed in Nigeria for us to understand what poverty is, as poverty is indelible on those afflicted by it. The poor are those who cannot afford decent food, medical care, recreation, decent shelter and clothe; meet family and community obligations, and other necessities of life. With this, it is not surprising that poverty is regarded as a form of oppression (UNDP 2001).

2.1.1 Categories of Poverty

As mentioned earlier, the life of those afflicted by poverty is comparatively miserable and brief. Modern poverty is classified into two categories, namely: Case Poverty, and Insular Poverty. Case Poverty is the kind of poverty seen in every community - rural and urban. It manifests in poor family with junk-filled yard and dirty children playing in the bare dirt. Other qualities peculiar to the individuals or family afflicted by Case poverty are: mental deficiency, bad health, inability to adapt to the discipline of modern economic life, excessive procreation, alcohol,

insufficient education, or perhaps a combination of several of these handicaps. These conditions hinder these individuals from participating in general wellbeing.

Insular Poverty manifests itself as an Island. In this imaginary island everyone or nearly everyone is poor. It is noted that it is not easy to explain Insular poverty by individual inadequacy, because the environment in which the people found themselves may have made them poor or may have frustrated them. Given the above explanations, its appropriate to note that poverty assumes social, political and economic dimensions. The social dimensions of poverty includes the lack of educational opportunity and the lack of access to health care, while the political dimensions of poverty exists where civil rights are denied and political power rests in the hands of a few people. Although economic dimensions of poverty is broader than lack of finance, it includes a lack of employment opportunities and uneven distribution of resources" (journal of poverty.org). However, some people are poor due to factors beyond their control.

2.1.2 Causes of poverty

The Classical Greek Philosophers, especially Socrates, Plato, and Aristotle believed that anything human beings could experience or think about was worth investigating. Aristole, in particular, noted that all human beings, by nature, 'desire to know' what affects them. Therefore, poverty and squalor are among the social ills that affect human beings, which they should investigate and study. Alfred Marshall (1842-1924), a renowned British economist, known for neo-classical theories in his book, The Study of Poverty, observed at the turn of the 20th century that poverty "is the study of the causes of the degradation of a large part of mankind." He noted that many people "had insufficient food, clothing, and house room. And that they were and are still over-worked and under taught, weary and careworn and without quiet and without leisure" (Marshall 1927). One should remember that this study was conducted at the early 20th century; yet with the advancement in modern technology at the end of the 20th century (and the beginning of the 21st century), many people are still poor all over the globe. Although there are traces of poverty in

every nation, the situation in Africa in general and Nigeria in particular, is dismal, because the poor are struggling without assistance from the state. With the vast mineral, oil, water, land and human resources in Africa, about 240 million live on less than $1.00 (one US dollar) a day. Many people are without access to safe water and lack the ability to read or write. Consequently, Africa is often referred to as a "Paradox of poverty in the midst of plenty" (Ndulo 1999). Why is the region very poor? The causes of poverty are myriad and complex; and they vary according to their settings. In most cases, the poverty of the Africans is caused by those elected to protect them. This is the case with Nigeria where the political leaders with access to the national treasury convert the public funds to their private use. Insular poverty is caused by the nature of the resource endowment or the fertility of the land inhabited by the people, as it has something to do with a place of birth with limited opportunities. For instance, the "homing instinct" (the desire of a large number of people to spend their lives at or near the place of their birth), which operates mostly among the poorly educated, prevents them from leaving the 'island of poverty' in which they were born. If the groups remain in the area, they will be committed to a pattern of agricultural land use or mining, petty industrial, and unproductive, or otherwise "un-remunerative" activities. The poverty of the community also ensures that educational opportunities will be limited, and that health services will be poor. Consequently, subsequent generations will be ill prepared, either for mastering the environment into which they are born, or for migration to areas of higher income outside . Case poverty could be caused by illiteracy, lack of economic opportunities, indulgence in illegal drugs, alcoholism, excessive procreation, polygamous household, bad health, among others. These conditions hinder their active participation in the affairs of the their community. Reports show that HIV/AIDS contribute to the worsening poverty situation at household level in many countries in Africa. For instance, a November 2001 Government of Nigeria sentinel survey reported that Nigeria had "5.8% HIV prevalence rate." And the United Nations ranked Nigeria as the forth-worst affected country in 1999 based on the number of HIV infections. With life expectancy of 55 years, illiteracy rate of 50%, and under-five mortality of 143 per 1, 000 live birth, HIV/AIDS affects over 2.7 million people in Nigeria (USAID, 2002). And with poor economic performance, corruption, the paltry expenditure of $0.03 per capita funding for

HIV/AIDS as of 1996, and the citizens inability to pay for treatment once infected, the number of HIV/AIDS in Nigeria is expected to increase in future (UNAIDS 1999; see Hecht (PSR) UNAIDS 2000). For that a public awareness campaign should be intensified to educate the masses on ways to prevent the spread of the epidemic. One cannot over-emphasize the effects of bad social policy and cultural values and attitudes "as obstacles to or facilitators of progress" of nations. Thus, cultural values, which are fundamental obstacles to progress, help to explain the intractability of the problems of poverty and injustice in parts of the Third World (Harrison 2000; Etounga-Manguelle 2000). For instance, the culture of polygamy (having more than one wife at a time) in Nigeria, Africa and some other Third World Nations is one of the major factors for poverty, corruption, illiteracy and even diseases in this part of the world. Very often, laws designed to protect the civil and human rights of the people witness zero implementation. Therefore, Culture Matters! (Harrison & Huntington, 2000). Factors associated with mismanagement of national resources (depletion of resources by corrupt political officeholders),419 scam and rising crime rate, would discourage investment in the economy, thereby exacerbating the poverty profile of Nigeria (Daily Champion, July 5 2002). At a European Commission (EC) meeting to support Nigerias anti-poverty program, Nicholas Costello stated the obvious: Nigeria has enough money to tackle its poverty challenges. If the government can win this battle against corruption and mismanagement, the money will start to turn into functioning schools, health services and water supply, thus laying the foundation to eradicate poverty (Nov/Dec 2001). Globalization and the World Trade Organization (WTO) liberalization policy have been noted as modern day colonialism causing the poverty of the Third World countries. Some writers have suggested that Nigeria should boycott the WTO agreement, because the treaty leads to goods being dumped in the country, leading to closures of local industries. And some have argued that the quality of Nigerian goods (if Nigeria has anything other than petroleum) would not compete effectively in the global market (Vanguard, July 5, 2002; Guardian, April 2, 2002). Thus, the nations oil and import-dependent economy lead to rising unemployment and the poverty of the people. Discrimination, race and poverty are closely related; they affect peoples ability to secure

employment and earn a living. Entrenched tribal prejudices and nepotism sometimes determines a persons chance to secure employment in Nigeria. The de facto state of the origin prerequisite for securing employment in the state and local government areas in Nigeria is a case in point. Often, those who relocate to states other than their states of origin are being treated as nonindigenes. Consequently, those in places of authority hire their own people. This practice is not, however, peculiar to Nigeria. In the United States race is a factor in employment. Nonwhites are often prevented from reaching certain occupational or managerial levels irrespective of their qualification. There are laws against such practices in the United States; any person can relocate to any state of his or her choice, secure employment, and participate in the affairs of the community. Inept leadership, bad social policies and reliant on traditional methods of productions are impediments to prosperity. Other causes of poverty include government institutions that that are corrupt, unproductive university-private sector relationships and failure to take risk and make tough choices. Many nations that are not creating wealth at a high rate are over-reliant on natural resources, including cheap labor; and they believe in the simple advantages of climate, location, and government favor. One would not fail to mention the unhealthy state of Nigerias educational institutions and hospitals, lack of economic opportunities for the citizens, and lack of skills in computers and information technology for mass production are among the causes of the nations low productivity and the poverty of the society. President Olusegun Obasanjo could make interesting national headlines and history if he would restructure the economy, fight corruption, fix the debilitating infrastructures (maintenance and repair of roads, etc; (State Governors and Local Government Chairmen are equally guilty of neglect of State and Community/Local roads in their care). And special attention should be given to education in the society, as education is the engine that propels the economy of any nation. That is the only way the nation can attract foreign and local investors to Nigeria, instead of his futile attempts flying around the globe to attract businesses to the corruption-infested Nigeria. The Minister for Education must keep an eagle's eye on those implementing educational policies to ensure that corruption and political rhetoric do not cloud reality. School administrators have to be certain that only qualified candidates gain entry into the nations higher institutions. This writer noted with dismay, during his recent visit to Nigeria that individuals in which under normal conditions, would not be admitted into tertiary institutions, are now university students.

This is because any person whose parents/guardians could afford the cost would buy their way in (with the assistance of some unscrupulous school officials). And those with many deficiencies are allowed some time to produce the required entry credentials, failure of which the student would be expelled. This is apparently one of the main causes of the recent spate of dismissal of students from the nations higher institutions. Worse still, prospective students who did not participate in JAMB examination could secure good JAMB scores with the right amount and appropriate connection at the JAMB office. If this trend is allowed to continue only God knows what will become of the already terrible products of Nigerias tertiary institutions in future. However, any individual from a poverty-ridden society is, undoubtedly, familiar with the effects of poverty on the poor and society in general. 2.1.3 Effects of Poverty Perhaps, due to its complexity and its corrosive effects on humanity, many journal articles and books have tackled the issues of poverty (Schiller June 6, 2000; Harrison and Huntington, 2000). Poverty destroys aspirations, hope, and happiness. In Nigeria, as in other poverty-stricken nations, this is the poverty one can feel. Poverty affects tolerance of others, support of civil liberties and openness toward foreigners; it affects positive relationships with subordinates, self-esteem and sense of personal competence; it also affects ones disposition to participate in community affairs, interpersonal trust and self-satisfaction ( Fairbanks 2000, p. 271). It has been noted that deprivation of elementary capabilities can be reflected on premature mortality, significant undernourishment (especially on children), persistent morbidity and illiteracy, among other problems. Life expectancy, literacy are correlated with the productivity and prosperity of a nation (Fairbanks 2000, p.271). As it relates to Nigeria and other povertyridden African and Asian societies, high level poverty could lead to brain drain -the emigration of many of the most highly educated workers to rich countries, where these workers can enjoy a higher standard of living (Mankiw 2001). The poverty of a nation can also lead to human trafficking, prostitution and the spread of HIV/AIDS, child labor and abuse of human and civil rights (Guardian Online, June 24, 2002). In addition, poverty leads to corruption, disruption of family relations and social life, causes rising crime rate, among other vices.

Amartya Sen, In Development as Freedom, argues persuasively that an individuals advantage (or otherwise) in a society should not be judged solely on his or her income. Poverty must also be measured in "terms of substantive freedoms he or she enjoys to lead the kind of life he or she has reason to value." Therefore, poverty a deprivation of basic capabilities (such as undernourishment and illiteracy), rather than merely as lowness of income, which is the standard criterion of identification of poverty." He adds that the "capability-poverty" perspective "does not involve any denial" of the fact that low income is clearly one of the major causes of poverty, since lack of income can be a principal reason for a persons capability deprivation (1999, p.87). He notes that poverty, as "capability inadequacy" and "lowness of income" are related, because "income is such an important means to capabilities." And since "enhanced capabilities" would tend to expand a persons ability to be more productive and earn a higher income," it is also normal for people to "expect a connection going from capability improvement to greater earning power" (Ibid. p.90). As noted earlier, the role of productivity in determining living standards is important for nations as it is for individuals. A nation can enjoy a higher standard of living if it can produce a large quantity of goods and services needed by the people. The productivity of a society is determined by many factors, which include physical capital, human capital, natural resources, and technological knowledge (Mankiw 2001, pp.533-535). With the havoc caused by bad leadership and corruption, good leadership is among the determinants of a nations productivity. These factors complement each other. A country will remain poor, in spite of her resources, if her leaders cannot organize the resources at their disposal for efficient and effective productive purposes. Unfortunately, this is one of the most deep-rooted impediments to higher productivity in Nigeria and the deteriorating poverty profile of the nation. Given the foreground, poverty is degrading to human beings; and the life of the person afflicted by it is comparatively miserable and brief. Thus, grave threat to the future stability of Nigeria lie in the masses beset by absolute poverty. Consequently, poverty, destitution, indigence and scarcity are words that show images of economic disadvantage and lack of financial resources. A World Bank study of Nigeria shows that there are differences between regions in the concentration of the poor and non-poor in the society. This, according to the study, varies from

the north to the south, with more concentration of the poor in the northern agro-climatic zone. But generally people of low-incomes live in the rural agriculture and with them eking out income from barren lands and by raising animals. All the previous poverty alleviation programs in the society have not improved the poverty profile of this group, because they were not religiously been implemented. 2.1.4 Previous Poverty Reduction Programs (PPRP) The problem with Nigeria is lack of consistency and non-implementation of government policies to the letter. Different administrations in Nigeria have adopted their own poverty alleviation program, instead of continuing with, and improving on the previous poverty programs. The first known poverty program in Nigeria was the National Accelerated Food Production Programme and the Nigerian Agricultural and Co-operative Bank set up by General Yakubu Gowon in 1972. Nothing was shown for the huge sum sunk into the program; it only served as a conduit to transfer money to his cronies. In 1976 General Olusegun Obasanjo came in with his Operation Feed the Nation. The program delegated university students to the rural areas to teach the rural farmers how to use modern farming tools that were not available. The civilian administration of Alhaji Shehu Shagari toyed with the Green Revolution Programme of 1979. The objectives of the program were to reduce food importation while boosting local food production. In theory, the program was a noble one, but like others before it, had nothing to show after gulping billions of Naira. The program ended when General M. Buhari chased Shagari out of office in 1983. After that General Buhari introduced the Go Back to Land Programme. But this program was as bad as the previous ones. When the almighty General Babangida took over power with his horde of rogues in 1986, he established the Directorate of Food, Roads and rural Infrastructure (DFRRI). The Peoples Bank of Nigeria and the Community Bank of Nigeria (which were parts of the program) were setup to give out small loans to the rural poor. Even his wife came up with her own poverty reduction program, Better Life Programme, to improve the lives of rural women. But the program ended up

making richer the well-connected and powerful women entrusted with the administration of the program. General Sani Abacha who wrestled power from the interim administration of Chief Shonekan in 1993 set up the Family Support Programme and the Family Economic Advancement Programme. After spending several billions of Naira to reduce poverty, poverty instead blossomed, because Abacha took delight in dismissing civil servants with impunity. When Chief Olusegun Obasanjo came back to power in May 29, 1999, he promised to improve the lots of the masses. He has, however, transformed himself into a roving ambassador without an idea on how to tackle the deteriorating poverty profile of Nigeria. It has been reported that more than N10 billion (ten billion Naira) has already gone into the poverty alleviation programs of his administration (in fiscal year 2000), but Nigeria is still the 26th poorest country in the world. Given the resources at her disposal, Nigeria should not have such a dismal poverty profile. But the corrupt political leaders are only chasing the shadow of money, with the people wallowing in abject poverty in the face of plenty. Can the leaders ever find any remedies to the poverty problem in Nigeria?

2.2 SMALL AND MEDIUM SCALE ENTERPRISE IN NIGERIA

The findings have shown that most SMEs particularly Nigeria die within their first five years of existence. It was also revealed that smaller percentages goes into extinction between the sixth and tenth year while about five to ten percent of young companies survive, thrive and grow to maturity/ Many factors have been identified as likely contributing factors to the premature death. Key among this include insufficient capital, lack of focus, inadequate market research, over-concentrating on one or two markets for finished products, lack of succession plan, inexperience, lack of proper book keeping, irregular power supply, infrastructural inadequacies (water, roads etc), lack of proper records or lack of any records at all, inability to separate business and family or personal finances, lack of business strategy, inability to distinguish between revenue and profit, inability to procure the right plant and machinery, inability to engage or employ the right caliber staff, cut-throat competition (Basil 2005)

Countries do not use the same definition for classifying their SME sector, Nor does a universal definition appear to be necessary. The definition in use depend on the purposes those definition are required to serve and the policies which govern the SME sector. However, the three parameters generally applied by most countries, singly or in combination are: capital investment on plant and machinery; number of workers employed; and volume of production or turnover of business. Despite that there are no universal quantitative norms, the SMEs as a class are clearly distinguishable in many countries, be it developed or developing. The factors that set them apart are essentially quantitative or comparative. On the quantitative side are their internal management structure, decision-making process, financial practice, trading styles, attendance risk factor, etc. It has been observed that most SMEs are one person shown or are run by two or three individuals, usually relatives, friends or business partners, who take most of the decisions. There is no serious distinction between private and business assets, and subjective and personal factors play a large role in decision making. The personal stakes SME entrepreneur have in their business are much higher than those of the corporate executives in their companies. This enhances the attendance risks and commits entrepreneur even more strongly to the success of their ventures. The findings indicate that high levels of technical inefficiency, which reduce their potential output levels significantly, characterize the Nigeria SMEs. There is therefore strong need to assist SMEs to improve their technical efficiency through adequate supply of inputs, markets and credit facilities, and undertaking extensive infrastructural development and training could be important measures. The comparative factors have to do with the way SMEs are situated vis--vis large enterprises in the corporate sector. They are small and medium sized in comparison with the large corporate entities with which they share a given economic space. SMEs therefore comes in varying sizes and SMEs in one country may well be larger than big companies in another. The interesting feature is that, not withstanding their absolute sizes, the problem confronting SMEs appear to be similar in most countries whether developing or developed.

2.2.1 CLASSIFICATION AND CATEGORY OF SMES IN NIGERIA

SMEs in Nigeria can be categorized into urban and rural enterprises. The former can be subdivided into organized and unorganized enterprises. The organized ones tend to have paid employees with a registered office whereas the unorganized category is mainly made up of artisan who work in open spaces, temporary wooden structures, or at home and employ little or in some cases no salaried workers. They rely mostly on family members or apprentices. Rural enterprises are largely made up of family groups, individual artisan, women engaged in food production from local crops. The major activities within this sectors include:- soap and detergents, fabrics, clothing and tailoring, textile and leather, village blacksmiths, tinsmith, ceramics, timber and winning, bricks and cement, beverages, food processing, bakeries, wood furniture, electronic assembly, agro processing, chemical based products and mechanics.

2.2.2 CHALLENGES FACED BY NIGERIA SMES

Market: A major growth factor is being able to spot and meet market gaps. Nigerian SMEs ability to spot market gap has never been doubt. However, beyond spotting the gaps, proper assessment of the market potentials and dynamics are necessary for optimal value proposition and consequently avoiding investing wrongly. A well proven method is either to do test marketing or conduct a market research based on the initial information at hand. Either or both of these will give better understanding of the market, the player and the operating rules in that market. Usually, this information is adequate to aid the SMEs make quality decision on whether to quit or to enter the market, the information gathered especially at the market research stage will help in deciding how to position the company. Unfortunately, once someone is perceived to be making money in a particular market segment, rather than properly studying the market and the unmet gaps with the view to making a superior value proposition, Nigerian SMEs will rather copy. Lack of innovation and superior value proposition has brought to the fast food industry. This has led to continuous expansion of the market and the growth of the fast culture in Nigeria. Needs are being met across strata. So much has the market been expanded that the big multinationals are now dusting their shoes to enter the market. The lesson here is that of market gaps are spotted and properly developed, this

will lead to increase in the absorptive capacity of that market, which in turn opens the economy for growth and development. Infrastructure: Although there is a general consensus that lack of adequate infrastructure renders the Nigerian SMES uncompetitive, World bank study puts the infrastructural burden of Nigeria companies at 30%. For SMES, this burden is likely to be higher. The implication of course is that in an increasingly globalize world, Nigerian products will become expensive in the world market i.e. depress export. Nigerian will therefore continue to be a monolithic economy, depending only on oil with its attendant consequences. In the last three years or so, we are all witnesses and benefactors of the opening up of the telecom sector Beyond the GSM, how many of us would have believed that international calls would crash the way they did? Yes technology (the \internet) partly accounted for this but imagine the kind of funds SMES will free up (perhaps to be used as working capital) if they didnt have to invest in their own generator, borehole, access road, etc. In most countries where SMES are contributing significantly to economic growth, they worry less about infrastructure and until Nigeria are able to make similar strides in roads, public power and water supply, Nigeria SMES will continue to run on the spot.

Services: Right from the stage of conception of business idea through start up to functional business, SMES need guidance, mentoring, business advisory and professional services. In countries where SMES are making significant impact on the economy, business development service providers are readily available to give necessary assistance to SMES. They help in packaging their business plans, give information on the market they are venturing into, give advice on how best to enter the market/position their product and services. Where they lack particular skills and/ or experience to adequately excel in their venture, business development service providers will arrange for capacity building of SMES. In a nutshell, they increase their chances of being successful. In Nigeria however, we have limited business development services providers that are properly organized to meaningfully help SMES to navigate the business terrain and nurture them to growth. Some are ill equipped. A number of the states chambers of commerce and

organized private sector have one form of business development service or the other and are providing services to their members More recently however, market driven non governmental organizations (NGOs) are now springing up to meet the gap of providing business development services to SMES. An enterprises development service is one of such. As more business development service providers join the race, Nigerian SMES can only have access to better quality services that will put them on the same growth pedestal as their counterpart that are meaningfully to contributing to their countrys economic growth.

Finance: SMES lack of access to finance is perhaps the most visible of all the growth constraints. Little wonder why most efforts on the part of the Nigerian government seem to have been focused on this constraint. A major reason why funds flow into this sector has been slow because of the perceived high risk of the sectors. For the SMES that do have access, the rate is usually too high. Consequently, unless the SMEs is involved in distributive trade, there is no way the can meet their obligations to the lending institutions. Unfortunately, there is a major mismatch in the nature of funds available ( mostly short term) compared to the nature of funds required by the productive sector (medium to long term). In an effort to resolve this, the bankers committee (with the encouragement of the federal government) commenced the small and medium equity investment scheme (SMEIS) initiaitive aimed at solvig the long term capital needs of SMES. Unfortunately, both the banks and Nigerian SMES are new to equity funding. Current research indicates that Nigerian SMES prefer debt to equity. The key point to know here is that if this sector is that important to economic growth and the government desires this sector to make meaningful contribution to GDP, then the responsibility is on all the stakeholders to make genuine effort to provide funds to the sector. Without this, the contribution of Nigeria SMEs to economic growth will continue to be marginal

Information A major growth constraint of Nigerian SMES is lack of access to information. Erroneously, people have misinterpreted the axiom information is power by sitting on the information rather

letting it serve the common good. Today, pockets of information exist in various organizations but the real usefulness would have been in its consolidation and availability to SMES. In countries where significant strides are being made by SMEs, information is made readily available to them. For instance, in Taiwan, when government emphasis was on the export market due to limited internal market and the need to expand the foreign exchange base, everyone knew they had to export to survive. Tax incentives were given to export oriented companies among other incentives. They were allowed to use their earnings to meet their importation needs. In fact the slogan was export or die. In Nigeria, how many SMEs can boost of knowing government policy as it affects their industry beyond the list of banned items? How much information can small and medium enterprise development agency of Nigeria (SMEDAN) offer the SMEs? Navigating the internet for country information on Nigeria, the best one gets was two years old. For progressive countries like Singapore, they had their figures updated. There is indeed a dire need for national information centre may be that is what federal office of statistics is supposed to be. Countries that are not endowed as Nigeria are positively tuning information into useful tool not as endowed as Nigeria are positively turning information into useful tool for quality decision making. If our SMEs must grow, we too must begin to leverage on information that is useful and accessible to stakeholders in the sectors.

Technology: Technology has changed and will continue to change the way we do business in the world. For instance, with the advert of the internet, there has been great reduction in transaction cost, increase in the efficiency and accuracy of processing orders and a significant reduction in the cost of entering new markets. Making bids across the continent is at the speed of the internet and within the cost structure of SMEs. Technology has indeed leveled the playing field. Technology also allow for easier storage and faster retrieval of information. With technology, Nigerian SMEs have access to information on the best equipment for optimal production on how technology can production processes. However, access to the internet is not only expensive for the average Nigerian SMEs, but a significant number still require training if we are to have the desire d impact. In conclusion, if we want Nigerian SMES to contribute meaningfully to economic growth like the rest of their counterparts in the world, then everybody have a role to play in confronting the market, infrastructure, services, finance, information and

technology (MISFIT) factors. The government must create an enabling environment, be more innovative in terms of policy formulation consistency. The funding institutions must be sincere about providing funds to this sector and initiate programs that will help in reducing the risk perception of the sector. The SMEs must subject themselves to best practices, transparency and accountability. The business development service providers must deliver accountability. The business development service providers must deliver quality services that genuinely support the SMEs. Then and only then can we truly take Nigerian SMES beyond the stage of marginal contribution to economic growth.

2.2.4 STRATEGIES FOR SURVIVAL OF NIGERIAN SMES

Over the years, the federal government has taken various steps, including monetary, fiscal and industrial policy measures to promote the development of small and Medium Scale Enterprises (SMEs). Specifically. The government has been active in the following areas: y y Funding and setting up of industrial estate to reduce overhead costs. Establishing specialized financial institutions, including the Small Scale Industry Credit Scheme (SSICSs), Nigerian Industrial Development Bank (NIDB), Nigerian Bank for commerce and industry (NBIC) to provide long-term credit; y Facilitating and guaranteeing external finance by the World Bank, African Development Bank and other international financial institutions, y Facilitating the establishment of the National Directorate of Employment (NDE), which also initiated the setting up of new SMEs? y Establishing of the National Economic Reconstruction Fund (NERFUND) to provide medium to long term local and foreign loans for small and medium scale businesses, particularly those located in the ruaral areas ; and y Provision of technical training and advisory services through the Industrial Development Centre. y Small and medium Industry Equity Investment Scheme (SMIEIS)

2.2.5 VARIOUS BODIES, AGENCIES, AND SCHEME ESTABLISHMENT FOR THE SUPPORT OF SMES IN NIGERIA.

2.2.5.1 THE SMALL AND MEDIUM INDUSTRIES EQUITY INVESTMENT SCHEME (SMIEIS) The Small and Medium Enterprises Equity Investment Scheme (SMIEIS) is an initiative of the Bankers' Committee. The initiative was in response to the federal government's concerns and policy measures for the promotion of small and medium enterprises (SMEs) as vehicles for rapid industrialization, sustainable economic development, poverty alleviation and employment generation. The Scheme requires all banks in Nigeria to set aside 10% of their Profit after Tax (PAT) for equity investment and promotion of small and medium enterprises. Funding to be provided under the scheme shall be in the form of loans or equity investment or a combination of both in eligible enterprises.

PURPOSE OF THE SCHEME The 10%PBT to be set aside annually shall be invested in the SMEs as the banking industry contribution to the federal government efforts towards stimulating economic growth, developing local technology, and generating employment. The funding to be provided under the scheme shall be in the form of equity investment in eligible enterprises. This will reduce the burden of interest and other financial charges expected under normal bank lending, as well as provide financial advisory, technical, and managerial support from the banking industry. Activities covered by the scheme: Every legal business activity is covered with the exception of: Trading/merchandising Financial Services Definition of a small and medium enterprise: For the purpose of this scheme, a small and medium enterprise is defined as any enterprise with a maximum asset base of N1.5-billion

(excluding land and working capital), and with no lower or upper limit of staff. This is subject to review by the Bankers' Committee from time to time. Eligibility for funding: To be eligible for funding under the Scheme, a prospective beneficiary shall: Comply with the provisions the Companies and Allied Matters Act (1990) such as filing of annual returns, including audited financial statements; and Comply with all applicable tax laws and regulations and render regular returns to the appropriate authorities. Modalities of the scheme: Funds invested by participating banks shall be in the form of loans or equity investment or a combination of both in eligible enterprises. Interest on loan shall be single digit subject to a maximum of 9%. Maximum amount investible in any enterprise: The maximum amount investible in any enterprise is limited to 20% of the bank's annual set aside funds subject to a maximum of N500-million. Deadline for investing funds/investment exit: The time limit to invest the funds set-aside shall be 12 months after the AGM of the bank. Banks shall remain equity partners in the business enterprises for a minimum of 3 years after which they may exit anytime. Requirements by beneficiaries: Beneficiaries will be expected to: Ensure prudent utilization of funds; Keep up-to-date records on the companies activities under the Scheme;

Make the companies books, records and structures available for inspection by the appropriate authorities (including banks and the CBN) when required; Comply with guidelines of the Scheme; and Provide monthly financial and operational reports to the investing banks before the 15th of the next succeeding month. The recommendations of industrial associations, particularly Manufacturers Association of Nigeria (MAN); National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); National Association of Small and Medium Scale Enterprises (NASME); and National Association of Small Scale Industries (NASSI) will be mandatory for members of these associations. Membership of recognised NGOs engaged in entrepreneurial development and promotion of small and medium scale enterprises will also be an advantage. 2.2.5.2 THE NATIONAL DIRECTORATE OF EMPLOYMENT (NDE) The National Directorate of Employment (NDE) was set up as an employment agency. The NDE has developed four major programs: y y y y Vocational Skills Development (VSD), Small Scale Enterprises (SSE), Rural Employment Promotion (REP) Special Public Works (SPW)

The programs have the following training strategies: y y y y Vocational Skills Acquisition, and Entrepreneurship/ Business training. Rural Employment promotion, and Labor- based works Employment Counseling and Resettlement of trained beneficiaries

VOCATIONAL SKILLS DEVELOPMENT PROGRAM: The program carried out by the NDEs are: Vocational Skills Development Department and targets unemployed school leavers (graduates and non-graduates). Such school leavers are

attached to masters artisans and women for periods long enough for the apprentice to acquire necessary skills. In the rural areas, where master artisan and women are inadequate or nonexistent, well equipped mobile workshop (schools on wheels) are deployed to train unemployed persons who have no resources to come to town in order to access this program. SMALL SCALE ENTERPRISES PROGRAM: The small and medium scale enterprises program is implemented by the small scale enterprise department and focuses on unemployed graduates of tertiary institutions. The target groups are exposed to entrepreneurship development program to how to set up their own business. They are also sent on internship to offices to acquire practical experience and after a successful completion of their course, NDE assists them in obtaining loans from the Nigerian Agricultural, Co-operative and Rural Development Bank (NACRDB) in other to set up their business RURAL EMPLOYMENT PROMOTION PROGRAM: The NDE established the rural Employment Promotion Program in a bid to awaken the interest of the unemployed youths in agriculture, exploit the tremendous opportunities for employment and wealth creation in the agricultural sector, and consequently stem the rural-urban drift of the youths. Through this program, beneficiaries are trained on modern agricultural and agro-allied practices. SPECIAL PUBLIC WORKS PROGRAM: The special Public Works program is managed by the Special Public Works Department and is designed to provide immediate temporary employment for unemployment youths (graduates/ non-graduates). The objective is to utilize this valuable manpower resource in carrying out necessary public works using labour intensive techniques, enable the participants obtain short term employment while they acquire new skills and trade experience. Example of public projects executed under this program includes tree planting, construction, and maintenance of roads, environmental beautification, and sanitation. Graduates are also sent to work temporarily in enterprises collaborating with NDE and sometimes are fortunate enough to become employed as permanent staff. NDE supports the beneficiaries of this program by paying them a specified wages.

2.2.5.3

THE

NIGERIAN

AGRICULTURAL,

CO-OPERATIVE,

AND

RURAL

DEVELOPMENT BANK (NACRDB) The Nigerian Agricultural, Co-operative, and Rural Development Bank (NACRDB) were formulated because of the merger of the Family Economic Advancement Program (FEAP), Peoples Bank of Nigeria (PBN), and the Nigeria Agricultural and Co-operative Bank (NACB). It is dedicated to financing agriculture at both micro and macro levels. OBJECTIVES OF NACRDB The main objectives of NACRDB is to provide affordable financial and advisory services to the farm and non-farm enterprises of the Nigerian economy using well trained and highly motivated staff, backed by appropriated technology, thereby fostering accelerated agricultural and rural development. Other objectives include: * Acceptance of savings deposit from customers; * Provision of opportunities for self employment in the rural areas, thereby reducing rural-urban migration * Purveyance of affordable credit facilities to the less privileges segment of the Nigerian society who cannot readily access the services of conventional banks * Inculcating of banking habits at grass-root levels of the Nigerian society, and * Encouragement of the formation of co-operative societies at all levels. * The key services rendered by NACRDB are as follows: * Savings mobilization: savings is tied to credit in NACRDB operations. The savings serve three important functions: - Acts as cash collateral - Provides information for lenders - Fosters banking habits among the target population. * Lending: The entire Banks loan is structured as Short Term loan, Medium Term loan, and Long term loan. They are meant to finance specific well defined purposes projects that are consistent with the Banks mandate. * The Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB)

Limited have been adopted for the channeling of funds meant for the development, expansion, growth, and production of agricultural products in the Nigerian economy. 2.2.5.4 BANK OF INDUSTRY (BOI) The federal Government establishes BOI, this bank emerged from the governments rationalization of some Development Finance Institution (DFIS) namely the Nigeria Industrial Development Bank (NIDB), Nigeria Bank for Commerce and Industry (NBCI), National Economic Reconstruction Fund (NERFUND) THE SUBSIDIARIES OF BOI FROM ITS MERGER WITH THE NIDB: * Leasing Company of Nigeria (LECON) * NIDB Trustees Limited (NTL) * NDIB Consultancy and Finance limited (NIDB CONSULT) * Industrial and Development Insurance Brokers (IDIB) FACILITIES OF BOI: * Initial capital base of N50 billion * Six Zonal offices. TYPES OF PROJECT FINANCED BY BOI: * Projects in the areas where Nigeria has comparative advantage * Project that engage in the efficient conversion of local raw material into finished products * Ventures that can be least cost producers of good quality products that could be successfully marketed locally and / or internationally PRODUCTS AND SERVICE DELIVERED BY BOI: * Guarantee Medium and long term loan; * Working capital finance; * Management of dedicated funds; * Equity financing; lease financing and Co-financing; * Investment in corporate bodies; * business development services;

* Trusteeship; Insurance and stock brokerage; * Foreign exchange dealership. REFORM PROPOSAL O F BOI The BOI is intended to focus on the private sector in both funding and commercial operation. The bank has opted to adopt the existing prudential guidelines for banks though more stringent when compared with the CBN proposed to apply some standards use by other finance company for BOI. The capitalization of BOI should be indexed against a strong currency preferably united states of American dollars. This is to meet the debt-equity ratio criteria set by international funding agencies to enable BOI enjoy their patronage. BOI focuses on SMEs with linkages within the broad economy with a view to enhancing overall industrial interaction, expanding output and employment and utilizing local resources to its fullest advantage. The huge SMIEIS fund currently accumulated by the banks will help BOI fulfill its mandate. 2.2.5.5 SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AGENCY OF NIGERIA (SMEDAN) SMEDAN was established to promote the development of Micro, Small and Medium Enterprises (MSME) sector of the Nigerian Economy. THE OBJECTIVE OF SMEDAN ARE TO: * Source, process, and disseminate business information. * Develop policy. * Establish business support program. * Build capacity and promote services. * Enhance MSME access to finance. ACCESS TO FINANCE SERVICES OF SMEDAN INCLUDES: * Assistance to MSMEs to prepare bankable business plans * Appraisal and recommendation of project proposals from MSMEs to partner- financial institutions.

* Collaboration with promoters of specialized (micro) finance schemes for the benefit of MSMEs. 2.2.5.6 THE NATIONAL POVERTY ERADICATION PROGRAM (NAPEP) The NAPEP was positioned to effectively and passionately fight the scourge of poverty in the country. Which is a vital element for success in the fight against poverty, for development of the country. In line with government vision, the National Poverty Eradication Program, as the face of the federal governments commitment to the fight against extreme forms of poverty, is poised to strengthen all effective and responsive poverty eradication strategies as well as unfold the implementation of new strategies designed for even greater impact on poverty in the country and expressed optimism that it will yield the desired results. The fight against poverty is everybodys responsibility and as such, effort will be made to mobilize resources and facilities across the nation toward eradicating poverty, since there already exists a support at the top, all that was required was the collective will for the fight against poverty to be successful. The collective support and participation of all stakeholders:The stakeholders would pool together all resources necessary for the fight against poverty adding that NAPEP, as the experts, would ensure that the fight against poverty was on course and yields the desired objective in line with the vision of the government. NAPEP aims at

reaching out to the poorest of the poor and the vulnerable groups who are prone to slipping in and out of poverty. For any strategy on poverty eradication to be successful, it must be able to reach deep into the community to affect the lives of our target population, in an open, transparent, effective, and humane way. NAPEP as the apex agency in the fight against poverty would put measures in place that would ensure a significant rise in per capita income, modernization of our villages, attitudinal changes, and value orientation in our society. * The new strategies in the fight against poverty will be to: * Strengthen wining partnership at the federal, state, and local government levels. * Strengthen partnership with the private sector, Non Governmental Organizations, community development groups , as well as Faith Based organizations. * Use the newly designed Village Economic Development Solutions, to spur economic

development from the community levels. NAPEP poverty eradication strategies will focus on community based development. This means that local communities will be empowered to help design and set up their own machineries, focusing on their own priorities as identified by them in determining the most effective way out of poverty in each community. * Ensure that every economic activity by key organizations and industries have poverty solutions * Use the federal Governments Conditional Cash transfer program, tagged in Care of the poor(COPE) to provide cash transfer to the poorest of the poor in selected communities using the NAPEP Human Capacity Development Index. 2.2.5.7 THE NATIONAL ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGY (NEEDS) This is the Nigerias plan for prosperity. It is the people ways of letting the government know what kind of Nigeria they wish to live in, now and in the future. Ways of letting the people know the government how it plans to overcome the deep and pervasive obstacles to progress that the government and the people have indentified. It is also away of letting the international community know where Nigeria stand in the region and in the world and how it wishes to be supported. NEEDS wishes to make poverty thing of the past in Nigeria. It aims to create a Nigeria that Nigerians can be proud to belong to and grateful to inhabit, a Nigeria that rewards hard work, protects its people and their property, and offers its children better prospect than those they may be tempted to seek in Europe or United States. All citizens, regardless of gender, race, religion, or politics, should feel that they have a stake in Nigerias future and that their loyalty and diligence will be rewarded. The NEEDS vision is also one in which Nigeria fulfils its potential to become Africas largest economy and a major player in the global economy. NEEDS focuses on four key strategies: reorienting values, reducing poverty, creating wealth, and generating employment. NEEDS is about the Nigerian people. Their welfare, health, employment, education. Political power, physical security, and empowerment are of paramount importance in realizing this vision of the future. To reduce poverty and inequality, the plans proposes acting on the several fronts:

* Offering farmers improved irrigation, machinery and crop varieties will help boosts agricultural productivity and tackle poverty head on, since half of Nigerians poor people work on agriculture. * Supporting small and medium scale enterprise will help create jobs. * NEEDS seeks to implement an integrated rural development program to stem the flow of migration from rural to urban areas * half of Nigerians people are children, the bridge to prosperous future. Needs

recognizes the importance of children by making the improvement of the education system a top priority `

* NEEDS emphasizes the critical importance of improving infrastructure. Reliable electricity and a better maintained network of roads will encourage business to expand.

2.3 Poverty Revolution Through SMEs in Nigeria

The contributions of SMEs to Nigerias economy are not contestable as about 10% 0f total manufacturing output and 70% of the industrial employments are by SMEs. SMEs also promote industrial and economic development through the utilization of local resources; production of intermediate goods and the transformation of rural technology. In fact SMEs are generally regarded as the engine driving the growth of this and other economies and provide the best opportunity for job creation and rural development. In most major economies and special agencies of government are created to provide support to SMEs. The funding requirements of SMES are also given special consideration by both the formal funding institution; Banks; Micro credit Agencies like the donors and specialized NGOs. A survey conducted by the researcher amidst some NGOs and banks in Nigeria revealed the following: That an SME partnership was setup in September 2001, to make equity and equity related investment in the small and medium sized enterprises (SMEs) sector of the Nigeria economy. SME partnership (SMEP) is targeted at funds available from local banks for small and medium industries equity. Some investment in Nigeria that have benefited from this partnership includes, Oakwood Park Investment, which is a purpose built execution center with residential facilities also known as the protea Hotel Oakwood Park Lagos, managed by Protea Hotel Group of South Africa of which the SMEP hold about 17.79% of the investment other businesses in this category are Impex Worldwide Wide Nigeria Limited, Falcon Gas Limited, Ikorodu, Medicare

Investment Services Ltd, V.I, Lagos, where SMEP owns 30% and Nigerian Starch Mills Limited, in Ihiala, Anambra with mechanized farms in Imo, Anambra and Kwara states etc. On September 19, 2003, another fund called SME II partnership was established. The purpose and primary activity being the same as SMEP. Its key features includes a target investment size of up to N200million, typical equity ownership of between 25% to over 50% with minimum investment of 30% IRR and aggregate commitments of N5,billion. Though all the SME investment efforts above rich in content and principles, very few businesses benefited from the programmes, while the economic environment is not fully supportive and conducive for virile business growth. The few business that benefited are big firms, while the small scale business could not meet up with the requirements of the lending agencies and banks.

2.4 CONCEPTUAL AND THEORITICAL FRAMEWORK

The concept and definition of small and medium scale enterprises is dynamic in character and varies with time and also varies among institutions and countries. Notwithstanding, the basic definitional parameters are the same. \they include: Number of employees, asset base and turnover. Hence current definitions are based on a mix of the above parameters. A small and medium scale enterprises is an organization whose investment (including land and working capital) do not exceed N5,000,000,00. Small and medium scale enterprise is also seen as an investment with total capital of between N100,000,00 and N2,000,000,00 excluding land but including working capital, while cottage and micro cottage industries are seen as investment with capital not exceeding N100,000.00 excluding land but including working capital (NIPC, 1999) SMIES and NERFUND (2004) define SMES as an enterprise with an asset base not exceeding N2,000,000,00 excluding land working capital with staff strength of not less than 10 and not more than 300. A cursory glance at the structure of SMEs in Nigeria reveals that 50% are engage in distributive trade, 10% in manufacturing, 30% in agriculture and the rest 10% in services. A special feature of Nigerian SMES is that distributive trade component is generally considered more commercially viable than the manufacturing component hence they attract more funding from banks and other financial institutions (Ibru, 2004)

Obitayo (2000) stated that globally, the small and medium scale enterprises are noted for their immense contributions to development process and as engine of economic growth. They are promoted as a critical segment of the manufacturing sub-sector, effective strategy for tackling unemployment, diversifying output and achieving trade and balance of payment, given their nature and characteristics with respect to quick adaptation of technologies, manageable number of workers and reduced capital intensiveness. Nnanna (2001) stated that small and medium scale enterprises needs funds to bring together the other factors of production- land, labour and capital for production to take place. Unfortunately small and medium scale enterprises have been discriminated against by financial institutions because of the high risk associated with financing them, Access to economic sources of finance for small and medium scale enterprises has, therefore, been a major issue in literature of economic and industrial development. Nnanna (2003) acknowledged that, small and medium scale enterprises are considered generally as the bedrock of the industrial development of any country. Apart from the numerous goods produced by SMES, they provide veritable means of large scale employment, as they are usually labour intensive. They also provide training grounds, for entrepreneur even as they generally rely more on the use of local materials. Moreover, if well managed, the SMES can gradually transform into the giant corporations of tomorrow. These contribution thus explain why Government and international Agencies mobilize efforts towards the realization of sustainable industrial growth and the creation of mass employment through the rapid growth and development on the small scale enterprises. Okogbue (2004) put foreword that, the only way to revitalize sustained and nurture the small and medium scale enterprise is to complement simultaneous small and medium scale enterprises through designing and building equipments and machines using local materials. Perhaps, this calls for the urgent establishment of mother industry i.e. the machine tool industry, which is necessary for viable industrial engineering design. This will enable local production of machineries and equipment needed for our local industries. What is needed is to design and fabricate necessary equipment, and applying standard quality control measures required in various sectors of the manufacturing industry. Small and Medium Scale Development Agency (2004) proposed compiling, reviewing and updating all existing economic policies and legislation as they affect SMES, proposed

changes where necessary and advice the introduction of tax relief where necessary, an example is NAFDACS three room requirement for pure water producers as one requirement that should be waived for school leavers who are just coming into the business. The law should be relaxed for this group of promoters argued SMEDAN. Adelaja (2003) argued that, there is a critical need to re-orientation our people to switch to buying made in Nigeria goods because Nigeria has become a dumping ground in virtually everything. She added that SMEDAN will work closely with news agency of Nigeria and other media group to create the much needed awareness campaign Ajakaiye (2003) stated that the central bank of Nigeria (CBN) has initiated a project for baseline economic studies to develop an integrated information system for small and medium enterprises SMES to foster better implementation of small and medium industries equity investment scheme SMEIS. The information gathered from the exercise will serve as a compendium for prospective investors in SMES and would be widely disseminated. Nzotta (2003) added that micro credit have been recognized as one of the most effective strategies for poverty alleviation in third world countries. This is because its potentials for the empowerment of the poor and the improvement of incomes of the economically deprived. Poverty results from the fact that a large proportion of the population has very low income and thus lives below the poverty line. Low income is the result of low productivity and hence low levels of gross domestic product. Fakiyesi (2001) in a recent study examined the featured of the poor in Nigeria. According to him, the poor in Nigeria have limited access to savings and credit facilities, Good road, and pipe borne water, Innovation technology and output markets, They are predominantly in the agricultural sector and in petty trading utility traditional inputs. He furthers posits that female headed households, widows and single mothers are particularly vulnerable to poverty.

REFERENCES