PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE INDUSTRIES IN NIGERIA.

ABSTRACT

The problems of Small and Medium Scale Industries (SMIs) in Nigerian cannot be understated as a number of factors tend to limit their growth potentials. They’re still faced with the issue of large capital outlay and to overcome this problem, external borrowing has become inevitable. Commercial banks appear to be the most likely source of funds. Thus, the overall objective of this research is to identify ways and means by which the vibrancy of small and medium scale industries will be sustained so that they can play the expected role as one of the engines for growth in Nigeria’s economic development effort. While a descriptive statistics research design was adopted in the investigation. Outcome of the study indicates that, there exists an inverse relationship (though not statistically significant) between the amount of domestic credit made available to SMI’s and the output of SMI’S in Nigeria. This trend has shown the poor attitude of commercial banks towards the granting of loans to SMI’s in Nigeria. Conclusively, the inability of our commercial banks to grant effective loans to SMI’s have translated to low level of output of SMI’s to GDP. This in turn has impacted negatively on average capacity utilization. While commercial banks are expected to come to the rescue of SMI’s, the truth must be said, that these institutions are profit oriented and may not be in a vantage position to give long term loans with depositor funds that are predominantly short tenured. Based on the findings of study, this paper recommends that, the intervention programs put in place to reduce the problems of the SMI’s should be strengthened. Lastly, the Bank of Industry (BOI) should be properly positioned in its mandate of providing financial assistance for the establishment of large, medium and small projects as well as the expansion, diversification and modernization of existing enterprises and to rehabilitate the ailing ones.