CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Small and medium scale enterprise (SMEs) are the cornerstone of any

nations industrial and economic growth and development. They are accorded

specific attention based on their expected impact and potential contributions on

wide and diversified production based as well as their speedy effects in achieving

macro-economics objectives relating to income distribution, full equipment scale,

and development of local technology. They also play dominant role in the

management skills and promoting indigenous entrepreneurship.

The government having recognized the importance of SMEs in promoting

and development has played appreciable role in promoting its continued survival

and growth.

Small scale business can also contribute significantly to full implementation

of development objectives. To this end, various policies have been formulated to

encourage their proliferation.

A basic fact is that the successfulness of these SMEs depend on the

availability of basic infrastructural facilities like good road networks electricity,

1
and the likes. The deficiency or deplorable state of these basic infrastructure

facilities could impede on the growth and development of this important sector.

Poor infrastructural facilities could affect the growth and development of SMEs in

any society, Delta State inclusive.

The basic objectives of government policies as contained in the fiscal and

monetary policy measures are to improve the financing and other supporting

services to SMEs by expanding and improving the access to credit, infrastructural

facilities, reducing their cost of productivity, boosting the profitability enhancing

their survival and growth capacities as well as expanding their products

competitive in the export market. It is undoubtedly accepted without any further

argument that SMEs are the engine room for economic growth of any nation,

especially a developing country like Nigeria, that they cannot be relegated to the

background. However lack of good infrastructural facilities could pose a barrier to

the potency of SMEs. Consequently, this study is embarked upon to examine the

place of poor infrastructural facilities in the operation and viability of SMEs with

particular reference to Asaba, Delta State.

2
1.2 Statement of the Problem.

The growth and development of any nations economy cannot be performed

by the large scale enterprise alone. Thus the SMEs have joined the hand wages of

sector contributing towards the growth and development of the nations economy.

SMEs have an important role to perform in the social and economic

development of Nigeria in the creation of opportunities, the mobilization of local

resources mitigation of rural urban migration and the achievement of more

distribution of industrial enterprises in different part of the country.

SMEs form an integral part of a healthy national economy. The valuable

contribution of SMEs are widely recognized by all sectors of the society as can bee

seen by many effects to aid small business taking place at the federal, state and

local levels. A capital factor to the growth and meaningful contribution of these

SMEs to national economy is the existence of adequate infrastructure facilities that

ensure conducive business operation.

This study is therefore o

ut to examine the effects of poor infrastructural facilities that affect the growth and

development of SMEs and by extension the development of the economy, poor

infrastructural facilities affects productivity, profitability and survival of SMEs.

Specifically, general lack of good road, electricity power, rail system,

3
communication sewage disposal, others, all affect the society and SMEs. The limit

of innovation and competitiveness.

It is a common knowledge that these necessary basic infrastructural facilities

are in deplorable state Nigeria, Electricity power supply is grossly epileptic, the

roads are dealt traps, the rail system is moribund while supply of clean water is out

of place as the pipes, where they exist very definition of rust and dilapidation. In

site of this deplorable state of infrastructural facilities, SMEs have continued their

existence. The probing question is what are the effects of this enervate state of

infrastructural facilities on these SMEs this is a challenge before this study.

1.3 Objective of the Study.

The primary aim of this research is to identify and analyze the effects of

poor infrastructural facilities in the growth and development of SMEs in a

developing economy, with particular reference to Asaba, Delta State. The specific

objective include:

1. To know if poor infrastructural facilities results in low productivity of SMEs.

2. To determine id poor infrastructural facilities affect the survival of SMEs.

3. To ascertain whether poor infrastructural facilities affect the growth and

development of SMEs.

4
4. To ascertain the relationship between poor infrastructural facilities and high

cost of production of SMES.

1.4 Research Questions.

The following questions are formulated for purpose of the study:

1. Does poor infrastructural facilities affect the growth and development of SMEs

in Asaba?

2. Does poor infrastructural facilities result in low production output?

3. Is there any relationship between poor infrastructural facilities and the survival

of SMEs in Asaba?

4. Does poor infrastructure facilities affect the profitability of SMEs in Asaba?

5. Is there any relationship between poor infrastructural facilities and High cost of

production of SMEs in Asaba.

1.5 Scope and Limitation of the Study.

The scope is centered on small and medium scale enterprise in Asaba, Delta

State, Specifically on effects of poor infrastructural facilities in the growth and

development of SMEs.

The researcher encountered some difficulties in the course of the study the

time required the completion of the projection was very short. Also access to

5
information was difficult just as there was the problem of limited finance. But in

all of these the researcher tried her possible best to ensure that the research was

successful by surmounting difficulties.

1.6 Significance of the Study

There is no doubt that the result of this study research will be ranges from

policy makers, owners of SMEs, researchers and the residing public.

Policy makers or economic planners will find the study useful as it will

enable them to know which areas they can be useful to all SMEs. It will also be

useful to operators of SMEs in Nigeria in general and Delta State in particular by

equipping with survival strategies in the face of death of infrastructural faculties

coupled with economic depression.

Researcher will equally find the study useful as it will serve as vital valid

and dependable secondary source of data.

1.7 Definition of term.

Some of the terms used in the study considered necessary to be defined are

stated below:

6
Small and medium scale Enterprise (SMEs): A business if it employs less than a

certain number of people, if it operates from less than a certain in number of plants,

if their value is less than a certain figure, and in other ways.

From the above definition, of SMEs, it can be seen that this definition varies

from one industry to another and from one country to another. However, the

following characteristics of SMEs are generally accepted.

a. Limited access to financial resources.

b. High labour turnover.

c. Simple management structure

d. Relative size.

Growth longman English Dictionary defines growth as the act of developing.

Facilities: A means things or equipment for use, that is the equipment used in an

enterprise to perform its functions.

Development: Means the gradual growth that involves qualitative and quantitative

improvement from a lower standard to a higher one.

7
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter reviews past work on the subject matter available to the

researchers. It will center on issuing relating to effective of poor infrastructural

facilities in the growth and development of SMEs. It will discuss under the

following sub headings. The concept of SMEs, the contributions of SMEs,

Relevance of infrastructural facilities and relevant literature on the problem of

SMEs.

2.2 Concepts of SMEs.

There is hardly any single of SMEs even in the same industry or country.

According to small business Administration, an agency of united of America

Government, small scale business is any is any business that is independently

owned and managed, not dominant in it’s field.

Small scale business as one that is owned, managed, controlled by one or

more persons, is family in there a decision making, has an undifferentiated small

share of market and, employ less than “50” people. This new connotes that small

scale business could be owned by one or two person and that decisions reached are

8
function of taste, view, goals and aspiration of the family in addition, it share in the

market is small and employs limited employees.

A small scale business as one that is independently owned and managed and

does not dominate its market.

That is a small business cannot be part of another business, big or small.

They small scale business people must be their own boss, free to run their business

as they pleases.

Generally, the companies and Allied matters Act, 1990, gives avenue of

small scale business in section 351 subsection “1” and states that “A” company

qualifies as a small company in a year if for that year the following conditions are

met.

i. Private company having a share capital

ii. Non of its member is an alien.

iii. Non of its members is a member of government.

iv. The directors between them holds not less than 52% if its equally share

capital.

These specification revealed that small scale business can only be arranged

by individuals where Nigerian citizens, no foreign partners, no government

influence. Specifying amount of yearly turn over to a greater extent, pose some
9
limitations: a excessive control of the entrepreneurship resulting in inaccuracy in

the rendering of production and sales value?

2.3 The Concept of Infrastructural Facilities

The term “infrastructural facilities” typically refers in the technical structure

that support a society, such as roads, water supply, sewer, electricity, tele-

communication and so forth and can be defined as the typical components of

interrelated systems recording commodities and services essential to enable system

or enhance social living conditions. A comprehension of infrastructural span not

only these public work facilities but also the operating procedures management

practices and development policies that interact together with society demand and

physical world to facilitate the transport of people and goods, provision of water

for disposal of the society waste products provision of energy. Where it is needed

and transmission of information with a between business environment.

2.4 Constraints to the development of SMEs.

The fact that has emerged from the appraisal of the various past and present

initiatives on the promotion of SMEs is that although finance is a major constraint

to the development in Delta state. It is by no means the only or most important

constraint. The effective utilization of substantial financial resources provided

under the various past programmes was constrained by such factors as inadequate

10
managerial skills as absence of the enabling environment for investment in small

and medium scale enterprises.

The incidence of in adequate working capital which constraint productive

capacities for the SMEs as well as absence of succession plan in the event of death

of the proprietor leads to many case to frequent early demise of SMEs.

A world bank study (1989) estimated that such cost accounted for 15-20

percent of their cost of establishing a manufacturing enterprise. Delta states

contemporary evidence has shown that the relative burden of the private provision

of infrastructural facilities is more heaven on SMEs than on large scale enterprises.

The incidence of inadequate working capital which constraining productive

capacities of the SMEs as well as absence of succession plan in the event of death

of the owner and inadequate infrastructural facilities such as telecommunication,

access roads, electricity, water supply constitutes one of the great test constraints to

SMEs development.

2.5 Importance of Infrastructural Facilities to SMEs.

Infrastructural facilities are in prerequisite to carry out the multi furious

activities in the SMEs infrastructure links people to live healthy and productive

lives. It support economic activities such as agriculture, fishing and trading of

goods and services and assist with the delivery of health and education services.
11
 Infrastructural facilities help in the production of goods and services and

also the distribution of finished goods or products to market, as well as basic social

services such as schools and hospitals, for example roads enable the transportation

of raw materials to a factor.

In some areas in Delta State, up to 60 percent of the population have no

access to sanitation services and up to 85 percent have no areas to electricity and

safe drinking water.

Access to basic infrastructure services can have impact in ways that we often

take for granted. For example access to electricity means that children can study at

home in the evening and teachers can prepare for the next days class, reliable roads

means that formers can take their produce to market, children can get to school and

the sick can get to the hospital. Addressing this needs is an important part of

international development assistance ([Link]).

Population often isolated with low population densities, people living in

rural area lends to have least access to infrastructural services.

They may have limited capacity to find and maintain core infrastructure

assets have a short life and considerable investment is required to rebuild (Esene

2005)

12
2.6 Effects of Poor Key Infrastructural facilities

In the growth and development of SMEs the key infrastructural facilities to

be highlighted here include road, transport and electricity.

2.6.1 Lack of Good Road.

This has been one of the problems affecting the growth and development of

SMEs in Delta State. Suffice to say that the availability of this critical

infrastructure enables SMEs to function effectively. Good road is necessary to

help in the distribution of goods and service, and also help in the transportation of

materials to their various locations.

2.6.2 High Transportation Cost

This is also a problem affecting the growth and development of SMEs in

Delta State. When transportation cost is high, it reduces the reaching out of

customers, with goods and services in various locations. This in some instances

will result in artificial scarcity. There will be inadequate supply of goods and

services due to the consideration of transport cost.

13
2.6.3 Poor Electricity Power Supply.

This leads to low production of goods and services as well as increased cost

of production while it makes SMEs to operate below capacity, they are unable to

meet set target. Lack of access to electricity negatively affects thegrowth and

development of SMEs as their production line becomes inconsistent just as their

cost of production escalates this making their product less competitive thus result

in economic loss.

14
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction.

The objectives of this study makes it important to collect vital data and

analyze them so as to draw valid conclusion. This chapter will discuss the various

methods of data collection used in the course of this research.

3.2 Research Design

The survey method of research was used as it is considered suitable in the

determination of the effects of poor infrastructural facilities in the growth and

development of small and medium scale Enterprise (SMEs).

3.3 Sources of Data

There are two basic sauces of data used in this study which are primary and

secondary sources.

The primary sources are the data that were gotten from their original

sources. Questionnaires was used to generate primary data for this study.

The secondary sources used for this study were gotten from journals,

textbooks, newspapers, and other publication.

15
3.4 Population of the Study.

The population of the study consist small & medium scale enterprise in

Asaba, Delta State it is obvious that the population is not only large but unknown.

The target group were poultry farmers, bakers, tailors/ fashion designers, food

processors and beauty hair dressings salon.

3.5 Sample and Sampling Procedure.

The sample size chosen for the study is one hundred (100) respondents.

Stratified and simple random sampling techniques were used to draw the sample

from the population.

3.6 Questionnaire Administration

A total of 100 questionnaires were distributed to the respondents personally

by the researchers and this enabled them to make clarification where required as

well as specified the level of return of the questionnaire.

3.7 Method of Data Analysis

Simple percentage and tables where used for the presentation of the data

collected. It will help to put the findings in a proper perspective to get accurate

result.

16
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Introduction

This chapter displays and interprets the data collected from the selected

SMEs. Each of the research questions will be brought into forces using tables

frequencies and simple percentage.

4.2 Distribution and Return of Questionnaire

A total of 100 questionnaire were administered to the respondents and 83

were returned completed while 17 were not returned. This represents 82% return

rate. This is shown in Table 1 below.

Table 1: Distribution and Return of Questionnaires.

Type of SMEs Number Number returned Number not

administered returned
Poultry farming 19 16 3
Bakery 38 31 7
Tailoring 8 7 1
Food processing 23 19 4
Hair dressing 12 16 17
Total 100 83 17
Source: Survey Data, 2016

17
Table one above shows that 100 questionnaires were administered out of which 83

were retrieved, while 17 failed to respond to the questionnaire.

4.3 Analysis of Personal Data

The personal data of the respondents to be analyzed here are: Age

distribution and Additional qualifications.

4.3.1 Age Distribution of respondents

The age distribution of the respondents are shown in table 2 below:

Table 2: Age Distribution.

Age Brackets Frequency Percentage (%)

20-29 23 28

30-39 18 21

40-49 28 34

50-59 7 8

60-80 above 7 8

Total 83 100

Source: Survey Data, 2016.

Table 2 above shows that majority, 28 (34%) of the respondents are be taken

40-49years age bracket.

18
4.3.2 Educational Qualification.

The educational qualifications of the respondents are shown in Table 3

below:

Table 3: Educational Qualifications.

Educational qualifications Frequency Percentages

Primary Sch. Cert. 20 24

Secondary Sch. Cert. 30 37

OND/NCE 16 19

HND/[Link] 17 20

Professional Qualifications - -

Total 83 100

Source: Field Survey, 2016.

Table 3 above shows that majority, 30 (37%) of the respondents hold

secondary school certificate as their highest educational qualifications.

4.4 Poor Infrastructural Facilities & Growth/Development of SMEs

The first research question of the study is on whether poor infrastructural

facilities affects the growth and development of SMEs. In Asaba and answers of

the respondents are shown in Table 4 below.

Table 4: Infrastructural facilities & growth/development of SMEs

19
 Responses Frequency Percentage %
Yes 80 96
No 3 4
Total 83 100
Source: Survey Data,2016

Table 4 above reveals that 80(96%) of the respondents which constitutes the

majority stated that poor infrastructural facilities affects the growth and

development of SMEs in Asaba, while 3(4%) disagreed with the view.

4.5 Poor Infrastructural Facilities and Low Production Output.

The respondents where asked if poor infrastructural facilities results in low

production output which is the second research question of the study and the result

is show in Table 5 below.

Table 5: Poor Infrastructural Facilities and Low Production Output.

Responses Frequency Percentages (%)

Yes 68 82

No 15 18

Total 83 100

Sources: Survey Data, 2016

20
Table 5 above reveals that 68(82%) of the respondents which constitute the

majority, stated that poor infrastructural facilities results in low production output,

while 15(18%) held contrary view.

4.6 Poor Infrastructural Facilities and Survival of SMEs.

The third research question of the study is on whether there is any

relationship between poor infrastructural facilities and the survival of SMEs in

Asaba and the answers of the respondents are shown in table 6 below.

Table 6: Poor infrastructural Facilities and Survival of SMEs.

Responses Frequency Percentage (%)

Yes 73 88

No 10 12

Total 83 100

Sources: Survey Data, 2016.

Table 6 above shows that 73(83%) of the respondents which constitute the

majority, stated that there is relationship between poor infrastructural facilities and

the survival of SMEs in Asabs while 10(12%) were of contrary view.

21
4.7 Poor Infrastructural Facilities and Profitability.

The fourth research question of the study is on whether does poor

infrastructural facilities affect the profitability of SMEs in Asaba the answer of the

respondents are shown in Table 7 below.

Table 7: Poor Infrastructural Facilities and Poor Profitability.

Responses Frequency Percentage (%)

Yes 71 86

No 12 14

Total 83 100

Source: Survey Data 2016

Table 7 above reveals that 71 (81%) of the respondent which constitutes the

majority stated the poor infrastructural facilities affects the profitability if SMEs in

Asaba, while 12(14%) disagree with the view.

4.8 Poor Infrastructural Facilities and high cost of Production.

The respondents were asked if there is any relationship between poor

infrastructural facilities and higher cost of production of SMEs in Asaba which is

the fifth research question of the study and the reactions of the respondents are

shown in Table 8 below.

22
Table 8: Poor Infrastructural Facilities and High Cost of Production

Responses Frequency Percentages (%)

Yes 51 61

No 32 39

Total 83 100

Source: Survey Data, 2016.

Table 8 above reveal that 51(61%) of the respondents which constitute the

majority, stated, that there is a relationship between poor infrastructural facilities

and high cost of production of SMEs in Asaba, while 32(39%) held contrary

opinion.

4.9 Findings

The analysis of the data obtained from the field as shown in this chapter lead

to the following findings:

It was found that poor infrastructural facilities affects the growth and

development of SMEs in Asaba (Table 4), results in low production output (Table

5) and affects the survival of SMEs in Asabi (Table 6) it was also found that poor

infrastructural facilities affects the profitability of SMEs (Table 7), as well as

results in high cost of production of SMEs in Asaba (Table 8).

CHAPTER FIVE
23
 SUMMARY, CONCLUSION RECOMMENDATIONS

5.1 Introduction

This is the chapter of the final chapter of this research. It contain the

summary of the study, conclusion and recommendations made by the researchers.

5.2 Summary

Infrastructural facilities are prerequisites to carry out the multi furious

activities in SMEs. The term infrastructural facilities “ Typically refers to the

technical structures that support a society, such as road, water supply, sewers,

electricity, telecommunication, and so fort and can be defined as the typical

components of services essential to enable sustain or enhance social living

condition. Infrastructural facilities helps in the production of goods and services

and also it distribution of finished product to market.

The deficiency deplorable state of these basic infrastructural facilities could

impede on the growth and development of this important sector. Poor

infrastructural facilities could affect the growth and development of SMEs in any

society, Delta State inclusive.

This research examined the effect of poor infrastructural facilities that affect

the growth and development of SMEs and by extension the development of the

24
economy, the statement of problem highlighted the deplorable state of basic

infrastructural facilities and potential limitation is poses on SMEs in the area under

investigation/negative. While the research question centered on the growth and

development of SMEs.

The population of the study consist small and medium scale Enterprises in

Asaba, Delta State, form which a sample size of hundred (100) respondent was

drawn using stratified and simple random sampling techniques.

The responses were analyzed in tables with simple percentage calculation,

interpreted and appropriate findings made, among which are that poor

infrastructural facilities affect the growth and development of SMEs, profitability,

and survival of SMEs in Asaba among others.

5.3 Conclusion

This study revealed that poor infrastructural facilities affect profitability of

SMEs as well as their survival, which by extension impede on the viability of

SMEs in the area under investigation. It is therefore concluded that infrastructural

facilities are sine qua non for any meaningful and sustainable entrepreneurship and

operation of SME in any economy.

5.4 Recommendation

25
 Based on the findings of the study which dwelt on the effects of poor

infrastructural facilities in the growth and development of SMEs, the following

recommendations are made.

 Government should provide adequate and regular electricity, power supply so

as to brings about sustained production and reduction of cost production

incurred by SMEs in the course of providing needed goods & services in the

society.

 Roads, railway system, bridges etc should be constructed for easy transportation

of good and services.

 Government should provided well qualifies people that will help to maintain the

facilities to enhance productivity.

 Adequate sewage disposal should be made available so that refuse will be

disposed well and facilitate a clean and conducive environment.

 Government should deliberately and urgently upgrade infrastructural facilities

across the country to enhance the operation and viability of SMEs and

consequently boost the economy as a whole.

26
 APPENDIX 1

BIBLIOGRAPHY

Anuku, C.O (2004). Foundation in Business Administration. Boji-Boji Owa:

Communication professional.

Anyeety, et al (1994). Small and Medium scale Business. Lagos: Print Direct
Publications.

Esene, R.A (2005). Introduction to Business and Management: Agbor: Krisbec

Publications.

Fajana, E. (1997). The role of Small Scale business” Unpublished project.

Federal Republic of Nigeria Companies and Allied matters Act, (CAMA) 1990.
Lagos: Government printer

Inegbenebor, A.H (1993). Small Firm and its Environment Unpublished lecture
Notes on Small Business Finance. Delta State Polytechnic, Ozoro.

Otamye A.P (2001). Small and medium, scale Objectives Lagos: Alpha Median
Ltd.

Jamodu, P. (2001). Small Enterprise and its Development. Akure: Oriade

publications.

Olannye, A.P (2002).Business Policy and Strategy Unpublished Lecture Series.

Lagos: University of Port-harcourt Graduate Scholl, vol 1

Olanya, A.P and Oyibo, E.A. (2002). Small Business Management: An

entrepreneurship approach: Lagos: Alpha media ltd.

Oyibo, E.A (2002) Motivating the small Business: Lagos: Alpha media ltd.
27
 APPENDIX II

DEPARTMENT OD BUSINESS ADMINISTRATION & MANAGEMENT

SCHOOL OF BUSINESS STUDIES DELTA STATE POLYTECHNIC
OZORO.

Dear Respondents

QUESTIONNAIRE

The researchers are final year ND student in the above named institution and
currently carrying out research study entitled “Effects of poor Infrastructural
Facilities in the Growth and Development of SMEs in Asaba, Delta State and it is
designed to seek your own opinion or perception of the subject under investigation.

The researcher assure you that the information you will give only be used for
academic purpose and treated confidential. To ensure your anonymity your name is
not required in this questionnaire.

Your honest response in this direction is highly solicited. Thank you for your
anticipated cooperation.

Yours Faithfully,

Researchers

28
 QUESTIONNAIRE

Please read through the questions carefully and provide answers to the questions.
Kindly tick (v) the option that are most appropriate.

SECTION A

1. Sex (a) Male ( ) (b) Female ( )

2. Age: (a) 20-29 ( ) (b) 30-39( ) (c) 40-49 ( ) (d) 50-59( ) (e)
60 & above( )
3. Educational qualifications
(a) Primary School ( ) (b) secondary school certificate ( ) (c) OND/NCE ( )
(d) HND/[Link] (e) Professional qualification?
4. Type of Business: (a) Poultry Farming ( ) (b) Bakery ( )(c) tailoring( )(d)
hair dressing ( )

SECTION B

5. Does poor infrastructural facilities affect the growth and development of SMEs
in Asaba? Yes ( ) No ( )
6. Does poor infrastructural facilities result in low production output? Yes ( ) No
( )
7. Does poor infrastructural facilities and the survival of SMEs in Asaba? Yes ( )
No ( )
8. Does infrastructural facilities affect the profitability of SMEs in Asaba? Yes ( )
No ( )
9. Does poor infrastructural facilities and high cost of production of SMEs in
Asabs? Yes ( ) No ( )

29