THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES IN RURAL

DEVELOPMENT

A STUDY OF SELECTED SMALL BUSINESS IN ISEYIN

BY

OGUNDIMU ESTHER TEMITAYO

21/BAM/041

THE DEPARTMENT OF BUSINESS ADMINISTRATION

FACULTY OF FINANCIAL AND MANAGEMENT

SAF POLYTECHNIC ISEYIN, OYO STATE.

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

NATIONAL DIPLOMA (ND) IN BUSINESS ADMINISTRATION

OCTOBER, 2023
 CERTIFICATION

This is to certify that this project “THE IMPACT OF SMALL AND MEDIUM SCALE
ENTERPRISES IN RURAL DEVELOPMENT ” was done by OGUNDIMU ESTHER
TEMITAYO a student of Business administration department, SAF Polytechnic Iseyin, with the
MATRIC NO: 21/BAM041 and supervised by MR. BABTUNDE.

_______________ _______________

MR BABATUNDE DATE

SUPERVISOR

_________________ ________________

MR AMUDA DATE

H.O.D BUSINESS ADMINISTRATION

ii
DEDICATION

I dedicate this project to God almighty the giver if wisdom, for sparing my life and also making
my program a successful one.

iii
ACKNOWLEDGEMENT

First and foremost, praises and thanks be to the almighty Allah for giving me a sound of
mind and energy throughout this research.

I am highly indebted and thankful to my dedicated, valuable guidance, encouragement,

advice, criticism, suggestions and committed supervisor Comrade Babatunde for his intellectual
and academic guidance that has enabled me produce this research work. His supervisory skills
have been widely fruitful to me in as far as this research is concerned.

I also acknowledge my wonderful H.O.D, MR AMUDA, and to my understanding and ever

listening lecturer MR Lasisi Mubarak, MR Ariyo Salawu, MR Ahmed J.A, MR Hamzat, MR
Saad, MR Asabom, MR Mutairu, MR Akadi, for their invested effort in giving me the best of
knowledge, may God bless you all.

To my friends Adebayo Theophilus, Shogbayi Segun Testimony, Ilesanmi Olamide Isaac,

Animashaun Aminat , Banjo Temitope and Fred Adaeze. Thanks for the standing by me, thanks
for the support you give in every way you can. May God grant you heart desires.

Finally, I wish to acknowledge all authors, books, journals, lecturer note, I used, I thank them
for taking time to research and making learning a easy thing for others.

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ABSTRACT

The study sought to describe the role SMEs play in rural development in Iseyin. A survey of 50
respondents were purposively and randomly selected to answer questions on the key role SMEs’
play in rural development, SMEs contributory factors to rural development, and the challenges
that confront SME operators in contributing to rural development. The study observed that SMEs
play the role of: creating jobs in rural areas, decentralised use and distribution of resources;
altering production quickly to exploit changing market conditions for rural development; filling
the niche markets in the national economy that are too small for mass producers; introduction of
innovations into the market to serve as a catalyst for societal development and deepening the
manufacturing sector and fostering competitiveness. Again, the setting up of NVTI in the rural
areas; established entrepreneurial development programs; attitude towards risk and a competitive
nature; and ability to manage work force and managing accounts enable SMEs to contribute to
rural development. The study further discovered that ineffective business development services;
inadequate access to finance; constraints on women to develop their entrepreneurial potentials
and difficulty with gaining access to appropriate technology and information on available
techniques are the major challenges confronting SMEs in Iseyin, Oyo state in their effort to
contribute to rural development. The study recommends among others that: inculcating of the
study of SME into the syllabus of tertiary education, and more institutions supporting the
development of rural entrepreneurship as well as strategic development alliances should be
established.

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 TABLE OF CONTENT

Contents
CERTIFICATION............................................................................................................ii
DEDICATION.................................................................................................................iii
ACKNOWLEDGEMENT...............................................................................................iv
ABSTRACT......................................................................................................................v
CHAPTER ONE..........................................................................................................viii
INTRODUCTION.........................................................................................................viii
1.1 Background to the Study..........................................................................................viii
1.2 Statement of the Problem............................................................................................x
1.3 Objectives of the Study..............................................................................................xi
1.4 Research Questions....................................................................................................xi
1.5 Research Hypothesis.................................................................................................xii
1.6 Significance of the Study..........................................................................................xii
1.7 Scope and Limitation of the Study...........................................................................xiii
1.8 Historical Background of the Study.........................................................................xiii
CHAPTER TWO...........................................................................................................xv
LITERATURE REVIEW................................................................................................xv
2.0 Introduction...............................................................................................................xv
2.1 Conceptual Framework.............................................................................................xv
2.1.1 Concept of SMEs...................................................................................................xv
2.1.2 Overview of MSEs and Policy Framework.........................................................xvii
2.1.3 Public institutions in support of MSEs in Nigeria..............................................xviii
2.1.3.1 The National Board for Small Scale Industries (NBSSI)................................xviii
2.1.3.2 GRATIS Foundation..........................................................................................xix
2.1.3.3 The Rural Enterprise Project (REP)...................................................................xix
2.1.4 Diversifying Rural Livelihood Sources: Significance of SMEs............................xx
2.1.5 The Concept of Development...............................................................................xxi
2.1.5.1 Local Development...........................................................................................xxii
2.1.5.2 Rural Development..........................................................................................xxiv
2.1.5.2 Economic Development....................................................................................xxv
2.1.6 Constraints To MSE Development.....................................................................xxvi

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2.2 Empirical Evidence............................................................................................................xxviii

CHAPTER THREE....................................................................................................xxx
METHODOLOGY........................................................................................................xxx
3.0 Introduction.............................................................................................................xxx
3.1 Research Design.....................................................................................................xxxi
3.2 Study Population...................................................................................................xxxi
3.3 Sampling Size.........................................................................................................xxxi
3.4 Sampling Technique..............................................................................................xxxii
3.5 Instrumentation.....................................................................................................xxxii
3.6 Data Collection......................................................................................................xxxii
3.7 Data Analysis Method..........................................................................................xxxiii
CHAPTER FOUR....................................................................................................xxxiv
DATA ANALYSIS, PRESENTATION AND DISCUSSIONS................................xxxiv
CHAPTER FIVE...........................................................................................................xlii
SUMMARY, CONCLUSION AND RECOMMENDATIONS....................................xlii
5.0 Introduction..............................................................................................................xlii
5.1 Summary of Findings...............................................................................................xlii
5.2 Conclusions.............................................................................................................xliii
5.3 Recommendations...................................................................................................xliv
References.....................................................................................................................xlvi
Appendix.......................................................................................................................xlix

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The role of micro and small enterprises (MSEs) as engines of endogenous development in

rural economies is increasingly recognized in development theory and has attracted the attention

of policy makers (Tetteh & Frempong, 2009). According to Tacoli et al, (2003) MSEs add value

to agricultural products and play crucial roles in the decentralised use and distribution of

resources. Again, they augment government efforts to achieve economic growth and poverty

reduction in rural and urban areas (African Development Bank, 2005). Wangwe (1999) argues

further that MSEs tend to ensure balanced economic growth since they are concentrated in

different parts of the country. Once more, Reijonen and Komppula (2007) posit that MSEs have

been credited for introducing innovations into the market to serve as a catalyst for societal

development (Reijonen & Komppula, 2007). The development and promotion of MSEs can

deepen the manufacturing sector and foster competitiveness.

A vibrant MSE sector can also help to achieve a more equitable distribution of the benefits of

economic growth by alleviating some of the problems adssociated with uneven income

distribution (UNCTAD, 2001). Consequently, many development plans in developing countries

have placed strong emphasis on the development of an entrepreneurial middle-class that create

employment and has the potential to overcome institutional conditions that hamper growth in

rural areas. For example, in Nigeria the Growth and Poverty Reduction Strategy (GPRS I &II)

viii
identified MSEs as engines of growth, wealth creation and avenues for employment generation

for the majority of its citizens.

In Nigeria a vibrant MSE sector in the rural areas is very important since about 60% of the

country’s population reside in these areas where poverty is more pronounced. According to the

Nigeria Statistical Service (2012), about 86% of the total population living below the poverty

line in Nigeria can be found in the rural areas. Recognising the critical role of the MSEs in

poverty reduction, a number of existing institutions, which have a mandate to promote

industrialisation in the rural areas, have been strengthened to facilitate more economic change on

the countryside. Tetteh and Frempong (2009) posit that in order to build strong rural economy,

the government of Nigeria has set up National Vocational Training Institutions (NVTI),

established entrepreneurial development programs as well as favourable conditions for micro

financial institutions (MFIs) and other infrastructural services to encourage the growth and

development of both informal and formal MSEs in the country.

The problems of rural development in Nigeria have become a major concern today. This concern

notwithstanding, the problems seem as intractable as ever. There are significant disparities in

income and standards of living between the rural and urban populations (GPRS, 2004). This has

resulted in the continuous increase in the movement of people from the countryside to the city,

creating a serious social crisis, the ramification of which is affecting the quality of life. The

manifestations of this include; people sleeping on pavements and others sprawling in shanty

slums, ragged beggars, crimes and other deviant behaviours such as prostitution, drug addiction

and alcohol abuse (GPRS, 2004).

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1.2 Statement of the Problem

Petrin (1994) affirms that rural development is now being linked more and more to

SMEs. SMEs stand as a vehicle to improve the quality of life for individuals, families and

communities and to sustain a healthy economy and environment. SMEs orientation in rural areas

is based on stimulating local entrepreneurial talent and subsequent growth of indigenous

companies. This in turn would create jobs and add economic value to a region, and at the same

time it will keep scarce resources within the community. In line with this Gavian et al (2002)

have suggested that SMEs are traditionally thought of as well poised to respond to increased

demand by creating jobs. Again, Lyson (1995) echoes the prospects of small-enterprise

framework as a possible rural development strategy for economically disadvantaged

communities and provides this description of the nature of small-scale flexibly specialized firms:

“First, these businesses would provide products for local consumption that are not readily

available in the mass market. Second, small-scale technically sophisticated enterprises would be

able to fill the niche markets in the national economy that are too small for mass producers.

Third, small, craft-based, flexibly specialized enterprises can alter production quickly to exploit

changing market conditions.”

According to Benzing and colleagues (2009), factors enabling SMEs to contribute to rural

development can be categorized into psychological and personal skills, management skills and

training, and external environment. Stefanovic et al., (2010) and Frese et al., (2002) describe

urge of independence, innovativeness, attitude towards risk and a competitive nature as a

psychological attributes relating to success. Managerial skills comprise of ability to manage

work force and managing accounts, environmental conditions consists of sufficient governmental

support, access to the capital and support of family and friends (Benzing et al., 2009).

x
The lack of entrepreneur business management experience and training, however, may create a

barrier equally powerful and limit the growth potential of microenterprises. This is spurred by its

popularity as a spatial development tool and a panacea to the financial needs of rural

entrepreneurs, who are often unable to meet the loan acquisition requirements of conventional

commercial banks, the management and control of which is vested in the people as enshrined in

the Banking Law 1989 (Decree 225) (Nigeria : Banking law Document). Rural finance

contributes to community economic development by lifting the poor and low-income people out

of poverty by enabling them to engage in more productive farm and non-farm income-generating

activities to raise their living standards (Zeller et al, 1996). The effects of these are manifested in

improvement in their nutritional status, health and education, particularly in women and children

(MkNelly and Dunford 1999, Khandker 1998, Wright 2000).

1.3 Objectives of the Study

The main objective of the study was the role of SMEs in rural development.

Based on the problem statement above, the study seeks to:

1. Ascertain the key role SMEs’ play in rural development.

2. Identify factors that enable SMEs to contribute to rural development.

3. Ascertain the challenges that confront SME operators in contributing to rural development.

1.4 Research Questions

Based on the objectives above, the study seeks to address the following questions:

1. What key role do SMEs’ play in rural development?

2. What factors enable SMEs to contribute to rural development?

3. What challenges confront SME operators in contributing to rural development?

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1.5 Research Hypothesis

Hypothesis One

Ho: SMEs has no key role on rural development.

Hi: SMEs has a key role on rural development.

Hypothesis Two

Ho: SMEs does not have effective factors that would contribute to rural development.

Hi: SMEs does have effective factors that would contribute to rural development.

Hpothesis three

Ho:SMEs does not have significant on rural development.

Hi: SMEs does have significant on rural development.

1.6 Significance of the Study

Rural enterprises are important generators of employment and economic growth

internationally. With majority of Nigeria's population living in rural areas with agriculture and

small scale activities as their main economic activities, the rural sector produces the bulk of the

nation's output. Hence, the standard of living of the rural dwellers need to be improved. One way

of doing this is a carefully planned and implemented rural finance programmes to SMEs

necessary to accelerate the pace of economic development. The study therefore sought to

ascertain the key role SMEs’ play in rural development; identify factors that enable SMEs to

contribute to rural development; and ascertain the challenges that confront SME operators in

contributing to rural development. The findings of the research will serve as inputs and lessons to

the government, stakeholders and those agencies spearheading the campaign for support for

SMEs to promote rural development.

xii
1.7 Scope and Limitation of the Study

The study did not cover all the Districts. The study was done in only Iseyin town. The

study is focused on SME operators who employ at least 2-3 persons for the products and services

provided. The study also aims at using own soap making stores, barbering shops, salons,

provision stores, carpentry shops, dressmaking shops for the sampling of opinions for

presentation and analysis of data.

Among the limitation of this study is the fact that only SMEs in Iseyin town were covered.
Second is the difficulty in gathering data and information, much of which is considered sensitive.
Another relates to the culture of not keeping accurate data and records by most SMEs. Many
heads of SMEs had little time for interview owing to their tight schedules.

1.8 Historical Background of the Study

Iseyin is a city located in Oyo, Nigeria. It is approximately 100 km (62 mi) north of Ibadan. The
city was estimated to have a population of 236,000, according to United Nations 2005 estimate,
which increased to 362,990 in 2011,[1] and has a total land mass of 1,819 km2 (702 sq mi).

Iseyin which is the focus of this study, is a city located in the Oyo state.it is approximately
100km (62 mi) north of Ibadan. The city was estimated to have population of 236,000, per a
United Nations 2005 estimate, which increase to 362,990 in 2011, and has a mass of 1,419 km2
(548 sq mi).

Iseyin is saturated on Longitude 3.5914•E and latitude 7.9765•N. Its strategic location as a gate
way city between the south and north makes it become a socio- cultural, religious and political
melting point of the nation.

It is also an important commercial, industrial and institutional center. The rapid physical
development nature of the city make the provision, maintenance and funding infrastructure
epileptic

xiii
Iseyin comprises of four major words. The Gambari and Fulani wards that comprises Hausas and
Fulanis, and the Ajikobi and Alanamu wards that are made of the Yoruba with other smaller or
sub-wards.

Traditionally most indigenes engage in farming weaving. With the changing status of the town
many more are Trader, civil servants, artisans etc.

xiv
CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter is generally about reviewing relevant literature from text books, journals, articles

and other publications that are relevant to SMEs and Rural development in Nigeria .

2.1 Conceptual Framework

2.1.1 Concept of SMEs

The concept of small scale enterprises relates, generally, to small manufacturing activities

including primary products processing, handicrafts, construction and repair services. In Nigeria

two major definitions may be used to describe small scale industry: one based on capital

requirements and the other based on employment size. The National Board for Small Scale

Industries (NBSSI) defines small-scale industry as one whose capital requirements for plant and

equipment do not exceed the cedi equivalent of 100,000 United States dollars. The Nigeria

statistical service defines small-scale industry as one which does not employ more than 29

persons (Boapeah, 1994:10). This second definition is the one commonly used. Firms employing

30 or more persons are normally included in the enforcement of employment and minimum wage

legislations in Nigeria and are thus regarded as formal. On the other hand, those employing less

than 30 persons are described, generally, as informal since they are not normally registered,

(Boapeah, 1994).

xv
The World Bank (1976) refers to firms with fixed assets (excluding land) less than US$ 250,000

in value as Small-Scale Enterprises. The USAID (1990) defines Small-Scale Enterprises as firms

with less than 50 employees and at least half the output is sold while UNIDO (1986) refers to

firms with employees ranging from 5 to 19 as Small Scale Enterprises in developing countries

(Kayanula 2000).

Steel and Webster, (1989) refers to Small Scale Enterprises in Nigeria as enterprises with an

employment cut-off of 29 employees. They also made further division as follows: Micro

enterprises: - those employing fewer than 6 workers; Very small enterprises: -those employing 6

to 9 workers and Small enterprises: -those employing between 10 and 29 workers.

The European Union (EU) uses the term ‘Small and Medium Enterprise’ (SME) to describe

small enterprises. The SME is further divided into three components: Micro-enterprises: - those

with employees between 1 to 9; Small enterprises: - those with employees between 10 to 99; and

Medium enterprises: - those with employees between 100 to 499.

According to Dinye (1991), small-scale industries are defined as manufacturing units employing

not more than 30 persons. For the purpose of differentiating small-scale industries from the other

small-scale non-farm economic activities, the emphasis is placed on the manufacturing aspect.

Manufacturing means producing or making physical items. This means that pure service

activities such as government services, retail trade, banking, recreation and insurance services

are not included. However, repair services are included in the manufacturing enterprises because

they have something to do with formally manufactured goods. The argument is that

manufacturers do not always produce a finished good but only perform one stage in a sequence

of a process (Chapman and Walker, 1987:p.3 in Dinye, 1991).

xvi
From the above discussions, it is realized that various organizations have different parameters for

defining micro, small and medium scale enterprises. For the purpose of this work an operational

definition is required. The most commonly used criterion identified from the various definitions

is the number of employees of the enterprise. As contained in its Industrial Statistics, the Nigeria

Statistical Service (GSS) considers firms with less than 30 employees as Small Scale Enterprises

(Kayanula, 2000) and (Boapeah, 1992: 5). Steel and Webster, (1989) further clarify micro

enterprise as those employing fewer than 6 workers.

2.1.2 Overview of MSEs and Policy Framework

The MSEs are important to the economy of Nigeria This is buttressed by the fact that the

industrial and business sectors are dominated by a large informal sector. For example, about 70%

of the Nigeria ian enterprises are micro to small sized and it is estimated that nearly 40% of

Nigeria ’s GNI is attributable to informal sector activity (Nigeria Government, 2002). It is

believed that small firms can more easily propel growth in the economy than the large ones due

to their numbers and niches they occupy in the national economy (Nigeria Government 2002).

For the majority in informal enterprises, which are the focus of this paper, a lot more needs to be

done in terms of technical, advisory and financial support to enable them to grow and contribute

meaningfully not only to the rural economy but the national economic development as a whole.

Results from the Nigeria Living Standard Survey-3 indicate that about 69% of the population is

employed in the MSE sector with a significant number of them located in the rural areas (Nigeria

Statistical Service, 2000).

The government policy for MSEs which is under review has the objective of creating a

conducive environment for MSEs to grow and facilitate the development of a vibrant, productive

xvii
and competitive MSEs sector in the country (Ministry of Trade and Industry, 2002). Under the

policy, the Government, among others, seeks to: (i) Promote dynamic enterprise culture for

innovation (ii) Promote employment growth within the informal sector (iii) Develop MSE to

serve as a means to establish linkages between the formal and informal sectors of the economy

(iv) Improve the technology base, product quality and productivity of the MSE sector (v)

Upgrade the application of indigenous technologies (Ministry of Trade and Industry, 2002).

2.1.3 Public institutions in support of MSEs in Nigeria

The National Board for Small Scale Industries (NBSSI), GRATIS Foundation and the Rural

Enterprise Project (REP) have been established to support the development of MSEs in Nigeria

Each of these institutions has a special purpose in relation to MSEs:

2.1.3.1 The National Board for Small Scale Industries (NBSSI)

The NBSSI, a public funded organisation is the apex body charged with the responsibility for the

promotion and development of the MSEs in Nigeria The present form of the NBSSI has the main

objectives of: (i) Contributing to the creation of an enabling environment for small-scale

enterprise development. (ii) Contributing to the development of an enterprise culture in Nigeria

(iii) Providing non-financial support for small-scale business development. (iv) Facilitating

access to credit for small-scale enterprises. (v) Promoting MSEs sectoral associations.

The NBSSI is further supporting the MSEs with technical and advisory services through its

regional Business Advisory Centres found in the 10 regions of the country. It provides training to

the MSEs in preparation of business plans, book keeping and simple business management

practices.

xviii
2.1.3.2 GRATIS Foundation

The GRATIS Foundation has the mandate to promote small-scale industrialisation in Nigeria

through transferring appropriate technologies to small-scale industrialists through training,

manufacturing and the supply of machine tools, plants and equipment. GRATIS operates through

a network of Intermediate Technology Transfer Units (ITTUs), now referred to as Regional

Technology Transfer Centres (RTTCs). The RTTC exist in nine regions of the country and is

responsible for providing hands-on short and long term training for small business entrepreneurs

in areas such as metal fabrication and design, textiles, pottery and soaping and others. GRATIS

Foundation has also provided training, business and technical advice, access to equipment and

tools to enable artisans and entrepreneurs have a hands-on experience. The Foundation has also

introduced women in rural communities to equipment that has been designed and manufactured

by GRATIS/ITTU.

The services provided by GRATIS and the RTTCs are made possible through the support of the

Government of Nigeria the European Union and the Canadian International Development

Agency (CIDA). Funding for specific projects has been provided by the German Agency for

Technical Cooperation (GTZ) and the British Department Fund for International Development

(DFID), (Ayeetey et al 2001).

2.1.3.3 The Rural Enterprise Project (REP)

Another important institution is the Rural Enterprise Project (REP) which has the objective of

creating wealth and improving living conditions in rural areas, especially the incomes of women

and vulnerable groups through increased self-employment. The Project provides the MSEs with

a development package, which involves a mix of business development services, technology

xix
transfer, support for apprenticeship training, and rural finance services. The Project is supported

by the International Fund for Agricultural Development (IFAD), the Agricultural Development

Bank (AfDB) and the government of Nigeria .

The Rural Enterprise Project has been collaborating with NBSSI, Rural Banks, District

Assemblies, GRATIS and other governmental organisations to support the growth of the MSEs

in the rural areas. In conjunction with these organisations, it has been providing training

programmes in areas such as business management, record keeping, book keeping and banking

procedures, marketing clinics, credit management, costing and pricing, business ethics and

negotiation skills among others. It has been organising annual exhibitions for its clients to show

case their products and also expose them to markets in the urban areas. The activities of these

institutions definitely have made some impacts on the MSEs. However, as illustrated in this

paper a lot more needs to be done to build the competence and capabilities of the MSEs to enable

them contribute significantly to the rural economies.

2.1.4 Diversifying Rural Livelihood Sources: Significance of SMEs

Rurality has been labelled with agriculture in Nigeria despite the erratic weather conditions

coupled with increasing diversification of rural economies. Meijerink and Roza (2007) observe

that rural farmers do not depend solely on agriculture as it is estimated that rural non-farm

income constitutes on average 42% of rural incomes in Africa, 32% in Asia and 40% in Latin

America. Moreover, in areas with predominantly subsistence agriculture including many regions

in Africa, non-farm employment particularly SMEs constitutes as high as 40% of rural household

income. SMEs form an important part of rural economies and have been contributing

significantly to rural poverty reduction in many parts of Africa.

xx
Underscoring the importance of SMEs in rural areas, Davis et al. (2009) argue that rural

economies are not limited to the agriculture sector but embrace all the economic activities,

infrastructure and natural resources necessary for development. According to Davis (2006) non-

farm based activities in rural areas like SMEs include all those economic activities associated

with waged work or self employment, income generating activities that are not agricultural but

located in rural areas including manufacturing (agro processing) and setting up small businesses

and switching from cash crop cultivation to commodity trading especially in circumstances such

as off agricultural seasons. The expansion of SMEs and the diversification of income sources are

desirable policy objectives towards sustainable economic development by offering individuals

and households options to improve their livelihood security through access to alternative income

generating activities.

2.1.5 The Concept of Development

Todaro (1992) said it best when he described development as needing to be perceived as a multi-

dimensional process involving changes in structures, attitudes and institutions coupled with

acceleration of economic growth, the reduction of inequality and eradication of absolute poverty.

Thus development must encompass the entire gamut of changes by which an entire social system

linked to the diverse basic needs and desires of individuals and social groups improves from a

condition of life perceived as unsatisfactory and towards a situation or condition of life regarded

as materially and spiritually better.

According to Dudley Seers, (1969) the questions to ask about a country’s development are: What

has been happening to poverty? What has been happening to unemployment? What has been

happening to inequality? If the values of all these three indicators have declined, then there has

xxi
been a period of development for the country concerned. If two or all the three indicators have

been worsening, then it would be strange to call the results development even if per capita

income doubled.

According to Todaro (1992), development has three objectives: (i) to increase the availability

and broaden the distribution of basic life sustaining essentials such as food, shelter and health to

all members of society; (ii) to improve levels of living including creation of more jobs, better

education and more attention to cultural values. This helps to generate greater individual and

national self esteem; and (iii) to bring about a wide range of economic and social choice to

individuals and nations, freeing them from dependence, servitude, ignorance and human misery.

2.1.5.1 Local Development

According to Hart and Murray (2000) local development incorporates eight characteristics.

These characteristics are that it is bottom up approach, integrative, strategically driven,

collaborative, interactive, multi-dimensional, reflective and assets based.

A bottom up approach refers to priorities which are determined in an environment that depicts

the interest of local governments, the business sector, community groups and voluntary

organizations.

Integrative means local development takes into consideration making connections vertically and

horizontally between stakeholders and across programs. This allows for enhanced capacity

which, in turn, allows for seamless policy making and smooth management.

Strategically driven means there is a clear cut direction which is based on local understanding of

local issues and aided by a realistic vision of the future. With local development being

xxii
collaborative, there is involvement of a number of stakeholders working together rather than on

an individual basis. For local development to be interactive it should not be perceived as mainly

a technical activity better left to others who appear more qualified. Local development is said to

be multi-dimensional, when apart from dealing with job creation, business growth and

connecting people to jobs within the locality, it also covers a wide range of social action; it

involves the most marginalized in local society, but requires the participation of those who may,

in relative terms, be asset rich. Local development is reflective when it is always willing to learn

from experience regarding what works well under different circumstances and what could work

better. Local development is assets based when there is involvement of public funds, private

sector funds and contribution from the community to stimulate local development to do more

things better and lead to the desired goal of sustainability.

According to the United Nations Capital Development Fund [UNCDF] (2011) poverty-reduction

through local development is built upon: (i) focusing on development of basic public

infrastructure investment and service delivery for the poor, mainly in the rural areas of Least

Developed Countries. This calls for increased financing, with major improvements in the policy

and institutional framework for delivery, for more effective use of funds allocated. (ii) the

potentially key role of effective local government in promoting and improving dialogue and

partnership between the state, citizens and their communities, civil society and the private sector

in local planning and service delivery. (iii) the need for local capacity building and institutional

change and for national decentralization policy reform in Least Developed Countries (LDCs) in

order to fulfill this potential.

xxiii
In Nigeria Kokor (2001) identifies ‘local level’ as the District (group of communities), Area

Councils, and Urban, Town, Zonal and Unit Committees as defined under Nigeria ’s new Local

Government System. Local level can be refered to the area from local government level down to

the individual household level. Hence, local level development covers the same areas where

group or collective action is intensified with common identity and sense of ownership and

oneness.

Kokor (2001) further explains with an example that a feeder road, which connects communities

to the district headquarters, is of local concern because it affects the accessibility of those

communities to the rest of the district and generates a feeling of ownership and affection from

within the locality. On the other hand, a highway road network that links several states or regions

is not of local concern because it does not directly affect any particular locality or group of

localities, and does not fall directly within the purview of local government responsibility.

Many development actors operate at the local level in Nigeria These include the government,

nongovernmental organizations, community based organization and churches. The District

Assembly is the fulcrum around which all local development activities are carried out. The

District Assemblies have the mandate to plan, coordinate and supervise development activities at

the local level.

2.1.5.2 Rural Development

Rural development in general denotes the actions and initiatives taken to improve the standard of

living in non-Urban neighborhoods, countryside, and remote villages. These communities

characterized by a low ratio of inhabitants to open space. Agricultural activities may be

xxiv
prominent in this case whereas economic activities would relate to the primary sector, production

of food stuffs and raw materials. (Wikipedia, 2011).

Rural development aims at finding the ways to improve rural lives with participation of the rural

people themselves so as to meet the required need of the rural area. The outsider may not

understand the setting, culture, language and other things prevalent in the local area. As such,

local people themselves have to participate in their sustainable rural development. In developing

countries like Nepal and India, integrated development approaches are being followed up. In this

context, many approaches and ideas have been developed and followed up, for instance, PRA-

Participatory Rural Appraisal (PRA) and Rapid Rural Appraisal (RRA) etc. (Wikipedia, 2011)

2.1.5.2 Economic Development

Economic development is a broad term that generally refers to the sustained, concerted effort of

policymakers and community to promote the standard of living and economic health in a specific

area. Such effort can involve multiple areas including development of: human capital, critical

infrastructure, regional competitiveness, environmental sustainability, social inclusion, health,

safety, literacy, and other initiatives. It should be noted that economic development differs from

economic growth. Whereas economic development is a policy intervention endeavor with aims

of economic and social well-being of people, economic growth is a phenomenon of market

productivity and rise in GDP. (Wikipedia, 2011).

The term economic development implies progressive changes in the socio-economic structure of

a country. Viewed in this way, economic development involves a steady decline in agricultural

shares in GNP and continuous increase in shares of industries, trade banking construction and

services. Further. Whereas economic growth merely refers to rise in output, development implies

xxv
change in technological and institutional organization of production as well as in distributive

pattern of income (Ankomah, 2012).

Hence, compared to the objective of development, economic growth is realized easily. By a

larger mobilization of resources and raising productivity, output level can be raised. The process

of development is far more extensive than economic growth. Apart from a rise in output, it

involves changes in composition of output, shift in the allocation of productive resources, and

elimination or reduction of poverty, inequalities and unemployment.

Development can be conceived as a Multi-Dimensional processes or phenomena. If there is

increase in GNP more than the increase in per capita income then we can say that Development

is possible. When living conditions of a population improve then we can say that this is also an

indicator of economic Development. (Economics for Development [EfD], 2011).

Rural areas as defined by Abban (1986) are areas with some or all of the following features: (i)

an area of inhabitation where the majority of the people are engaged in primary economic

activities such as food crop farming, subsistence animal husbandry, fishing, hunting, petty

trading, etc; (ii) a Location of the country where the per capita income is significantly lower than

the national average; and (iii) location of the country where the population lacks basic social

amenities such as potable drinking water, electricity, health and sanitation facilities, motorable

roads, and recreational facilities.

2.1.6 Constraints To MSE Development

According to (UNCTAD, 2011), Micro and Small Scale Enterprises in least developing countries

faces the following problems; unfriendly legal and regulatory environment; ineffective Business

xxvi
development services; inadequate access to finance; inadequate public-private sector dialogue;

competition brought about by trade liberalization; constraints on women to develop their

entrepreneurial potentials.

The cost and cumbersome administrative procedures of legal regulatory environment discourage

MSEs from formalizing their businesses. The inability of MSEs to regularize their businesses

deprives them from the possibility to secure public contracts, access to credit, renewal of licenses

and opportunities for subcontracting work.

Production in the industrial sector is now knowledge-based and competition occurs on the basis

of both continuous innovation and price. Entrepreneurs need to muster design, have extensive

knowledge of markets and technology, and become innovative. There is the need to support

linkages and networking as a key mechanism to facilitate the development of SMEs. Only a

small number of MSEs in developing countries benefit from Business Development Services.

Most BDS are often confined to urban areas. (UNCTAD, 2011).

In some countries heavy reliance on donors and NGOs for the provision of BDS has resulted in a

lack of continuity in their provision. Conflicts between the policies of Governments and donors

in the provision of BDS are not uncommon. Governments and NGOs alike develop support

programmes without sufficient consultation or knowledge of each other’s programmes, leading

to rivalry, duplication of efforts, piecemeal interventions and inefficient use of scarce resources.

(UNCTAD, 2011).

Lack of access to medium or long-term credit is a major constraint for those enterprises that wish

to expand their activities. Reasons being that SMEs present a high risk to the lender and

xxvii
unfortunately most have poor accounting records and lack any other financial records. While

trade liberalization has, in some cases, eased the supply constraints for small firms, it has also

presented them with intense competition from foreign goods (UNCTAD, 2011).

Research shows that although many women own or run microenterprises (and in many cases

form the majority of micro-entrepreneurs), few of them enter the formal sector, and, as a result,

only a small number of women’s micro businesses graduate into SMEs. (UNCTAD, 2011).

Kayanula and Quartey, (2000) listed the following as constraints to the development of SMEs in

Nigeria and Malawi: (i) Access to inputs, their availability or cost is an important problem. (ii)

Access to finance remained a dominant constraint to small scale enterprises in Nigeria .

(Ibid,2000). (iii) SMEs have difficulty with gaining access to appropriate technology and

information on available techniques. (iv) Distribution channels, which are not efficient and are

often dominated by larger firms, pose important limitations to market access for SMEs. In

Nigeria demand constraints limited the growth of SMEs. (v) Trade liberalization has made

SMEs face greater external competition and the need to expand market share. For example,

tailors in Techiman (Nigeria ) who used to make several pairs of trousers in a month went

without any orders with the coming into effect of trade liberalization. (Riedel et al,1988). (vi)

The problem of regulatory constraints was also cited with issues of high cost of business

registration and long bureaucratic administrative constraints. (vii) SME have inadequate

Entrepreneurial & Business Management Skills.

2.2 Empirical Evidence

Tetteh and Frempong (2009) conducted a study on developing the rural economy of Nigeria

through micro and small enterprises (MSEs). The paper identified apprenticeship as the

xxviii
dominant source of skill acquisition for a majority of the entrepreneurs while word-of–mouth

was their main advertising mechanism. Also, informal MSEs have limited market avenues and

used their business premises to sell mostly to individuals. Access to start-up capital was mainly

personal savings or family support and this points to the failure of micro-credit schemes in the

country. In conclusion, the paper recommends transformations in formal banking policies and the

strengthening of Micro Financial Institutions MFIs to adequately support growth oriented

enterprises to enable them to contribute to endogenous developmental role in Nigeria .

Ankomah (2012) observed in his study on Promoting Micro and Small Scale Industries in

Nigeria for Local Development: A Case Study of the Rural Enterprises Project in Asante Akim

South District that micro and small scale enterprises are a key source of employment for the

youth in the AASD, as 84.6% of the MSE operators interviewed were within the age range of 20

-40 years. It also came to light that project institutional structures and activities have been

mainstreamed into the local government system. The REP II spearheaded the establishment of

the Business Advisory Centre and the Sub Committee on Micro and Small Enterprises

Promotion in the AASD. High cost of inputs and inadequate funds were identified among others

as the challenges faced by Micro and Small Scale Enterprise operators. It is recommended that

the Government of Nigeria pursue the renewal of the third phase of the Rural Enterprises Project,

so that apart from the 66 districts that have benefited from the project’s services, other districts in

the country can also benefit from the project services.

Anane (2013) conducted a study on Sustainability of Small and Medium Scale Enterprises in

Rural Nigeria : The Role of Microfinance Institutions. The study revealed that although there are

challenges of untimely disbursement and repayment of loans, the paper suggests recipients of

xxix
microfinance products and services are better off in terms of enhancing the activities of their

SMEs, improving outputs and ensuring prudent financial management than those without

microfinance services. The paper recommends timely disbursement of credit, flexible terms of

credit repayment and awareness programmes to ensure the sustainability of SMEs

CHAPTER THREE

METHODOLOGY

3.0 Introduction

xxx
This chapter outlines the procedure that the researcher adopted in conducting the research. It

addressed the introduction, profile of the study area, study type, study variable, study population,

sampling size and sampling technique, research design, data collection tools/Instruments, Data

analysis method and ethical consideration.

3.1 Research Design

A research design is a plan, structure and strategy of investigation so conceived as to obtain

answers to research questions or problems (Kumar, 2011). The design for this study was a

survey. A survey research strategy is normally conducted through the use of questionnaires or

structured interviews or, possibly, structured observation (Saunders, Lewis & Thornhill, (2023)).

3.2 Study Population

A population according to Saunders et al, (2007) is the full set of cases from which a sample is

taken, Zikmund (2000), on his part explained as all possible subjects who have the attributes in

which the researcher is interested. The study population was all SME operators in Iseyin Town.

However, a sample population of those who own soap making stores, barbering shops, salons,

provision stores, carpentry shops, dressmaking shops and employ at least two persons for the

products and services provided was considered. The population for the study was 70 people.

3.3 Sampling Size

xxxi
Sampling technique relates to the “procedure” or “appropriate method” used in the selection of a

sample Kumekpor (2002).The sampling technique for selecting the sample size (n = 50) is

simple random and purposive.

3.4 Sampling Technique

Simple random sampling is important to the study, since this technique ensured some

randomness and representativeness in the sample. A purposive sampling method was selected

because of the knowledge and expertise of the respondents making them suitable for the study

(Sarantakos, 2005). This method of sampling allowed the researcher to select subjects who were

relevant to the research. This method was preferred because collecting data from all subjects that

comprise the total population was complex. With purposive sampling method, collecting data

was not complicated because it eliminated the respondents who did not meet the requirements or

were not relevant to the study.

3.5 Instrumentation

The questionnaire would be used to gather information on the impact of leadership styles on
employee’s performance. According to Okoro (2001;52) the questionnaire is a vital instruments
for gathering information from people about their opinions, attitudes, behavior and perception on
a given phenomenon. The question is a five point likes type question, with a choice of strongly
agree to strongly disagree .The chi-square non-parametric is used to test the hypothesis for the
study .The study main focus is to determine whether there is a link between leader behaviour and
employee performance .And also to find out if leader behaviour is effect on organizational
performances.

3.6 Data Collection

xxxii
In the course of this study, the researcher will make use of both primary and secondary data. The
primary data will be collected through the administration of a structured questionnaire on the
case study. Additional information will be gotten from management journals, newspapers,
magazines, write-ups, papers printed in symposia and also textbooks. This data collected in this
study will be analyzed with a view to studying the impact of various.

3.7 Data Analysis Method

Data analysis involves the reduction of accumulated data to a manageable size, developing

summaries, looking for patterns and applying statistical techniques (Cooper & Schindler, 2003).

The primary data to be gathered was analysed using the Statistical Package for Social Science

(SPSS) version 25 and Microsoft Excel. The study employed the use of descriptive procedures

including frequencies and percentages to analyze the data and was presented by means of bar

charts, tables and bar graphs.

xxxiii
CHAPTER FOUR

DATA ANALYSIS, PRESENTATION AND DISCUSSIONS

4.0 Introduction

The data collected was analyzed using the SPSS Software and Microsoft Excel. In this section,
questions that are related to the research objectives and the literature review were considered.
The collected questionnaires were numbered and the researcher went through to see if all
questions were answered. Results are presented in tabular forms as below. Again, the chapter
also discusses results of the study by comparing and contrasting it with reviewed literature.

Table 4.1 Distribution of respondent based on their Age

Age Frequency Percentage

19-30 21 42.0
31-40 19 38.0
Above 40 10 20.0
Total 50.0 100.0
Sources Field Survey, (2023).

From Table 4.1 above, 21 respondents representing 42.0% are between the ages of 19-30 years.
Again, 19 respondents representing 38.0% are between the ages of 31-40 while 10 respondents
representing 20% are above 40 years.Therefore, the majority of respondent ere within

Table 4.2 Distribution of respondent based on their Gender

Gender Frequency Percentage

Male 17 34.0
Female 33 66.0
Total 50 100.0
Sources Field Survey, (2023)

17 respondents representing 34.0% are males while 33 respondents representing 66.0% are
females, this shows majority of the respondents are female. It shows that majority of the
respondent are female. Therefore, the majority of the respondent are within the age of 19-30

xxxiv
Table 4.3 Distribution of respondent based on their Educational Level

Educational Level Frequency Percentage

No formal Education 11 22.0
SSCE 29 58.0
NCE 6 12.0
1st Degree 4 8.0
Total 50.0 100.0
. Sources Field Survey, (2023)

In terms of education, 11 respondents representing 22.0% have had no formal education; 29

respondents representing 58.0% have completed SSCE; 6 respondents representing 12.0% have
completed NCE; 4 respondents representing 8.0% have also completed 1st degree.This indicates
that majority of the respondents are SSCE holders.

Table 4.4 Distribution of respondent based on their Type of Business

Type of Business Frequency Percentage

Hair dressing 15 30.0
Carpentary 17 34.0
Dressmaking 12 24.0
Vulganizers 6 12.0
Total 50.0 100.0
Sources Field Survey, (2023)

Table 4.4, indicates that 15 respondents representing 30.0% of the respondents are into hair
dressing while 17 respondents representing 34.0% carpentry. Furthermore, 12 respondents
representing 24.0% are into dress making while 6 respondents representing 12.0% are into
dressmaking. This indicates that major of the respondenst are into capentary.

xxxv
Answers to Research Question

The Key Role SMEs’ Play in Rural Development

Role SA A D SD Total
F % F % F % F % F %
SMEs create jobs in the
rural areas 35 70.0 5 10.0 0 0.00 10 20.0 50 100.0
SMEs alter production
quickly to exploit changing
market condition for rural
development 39 78.0 0 0.00 1 2.0 10 20.0 50 100.0

SMEs fill the markets in

the national economy that
are too small for areas 0 0.00 45 90.0 5 10.0 0 0.00 50 100.0
procedures

Credited for introducing

innovation into the market
to serve as a catalyst for
societal development 29 58.0 0 0.00 0 0.00 21 42.0 50 100.0

Depending the
manufacturing sector and 45 90.0 0.0 0.00 0 0.00 5 10.0 50 100.0
fostering competitiveness. 0
Table 4.5: Role of SMEs in Rural Development

Sources Field Survey, (2023)

Key: SA = Strongly agree, A = Agree,, D = Disagree, SD = Strongly disagree;

Observation from the field work analyzed and presented in Table 4.5 vividly shows that in terms
of creating of jobs, a lot of the respondents were in favor. 35(70.0%) and 5(10.0%) strongly
agreed and agreed to this statement while another 10(20.0%) of the respondents were in
disagreement to this statement. Majority 39(78.0%) of the respondents strongly agreed that
SMEs alter production quickly to exploit changing market conditions for rural development.
However, 1(2.0%) and 10(20.0%) of the respondents disagreed and strongly disagreed with this
view. Relatively 45(90.0%) of the respondents strongly agreed that SMEs fill the niche markets
in the national

xxxvi
economy that are too small for mass producers. In the opinion of 5(10.0%) of the respondents,
they disagree to this assertion. Furthermore, 29(58.0%) of the respondents claimed that SMEs are
credited for introducing innovations into the market to serve as a catalyst for societal
development. However, in the view of 21(42.0%) of the respondents this assertion is totally the
opposite. Minority 45(90.0%) of the respondents strongly agreed that SMEs help in deepening
the manufacturing sector and fostering competitiveness. Nonetheless, 5(10.0%) of the
respondents think otherwise.

Factors that enable SMEs to Contribute to Rural Development

Factors SA A D SD Total
F % F % F % F % F %
The setting up
of NVTI in the 47 97 0 0.00 3 6.0 0 0.00 50 100.
rural areas 0
Established
entrepreneurial
development 50 100. 0 0.00 0 0.00 0 0.00 50 100.
programs 0 0

Attitude
towards risk
and a 0 0.00 50 100.0 0 0.00 0 0 50 100.
competitive 0
nature
Ability to
manage work
force and 33 66.0 0 0.00 10 20.0 7 14.0 50 100.
managing 0
accounts
Table 4.6: Factors that enabling SMEs to Contribute to Rural Development
Source field survey (2023)

Table 4.6 above gives an indication on factors that enables SMEs to contribute to rural
development. A glance at the table from the first statement shows that majority 47(94.0%) of the
respondents strongly agree that one of the enabling factors towards SMEs contribution to rural
development is the setting up of NVTI in the rural areas. However, from the field work presented
in the Table above, only a hand full of respondents 3(6.0%) disagree with this assertion. All the

xxxvii
respondents 50(100%) are in strong agreement that established entrepreneurial development
programs in the rural areas will help SMEs operators in their effort to contributing to rural
development. Again, all the respondents 50(100%) are in agreement that attitude towards risk
and a competitive nature will go a long way in SMEs contribution to rural development. Once
more, 33(66.0%) of the respondents strongly agree that ability to manage work force and
managing accounts will help SMEs effort in contributing to rural development. However,
10(20.0%) and 7(14.0%) of the respondents disagree and strongly disagree with this statement.

The challenges that confront SME Operators in Contributing to Rural Development

Table 4.7 Factors confronting SMEs operators in Contributing to Rural Development
Challenges SA A D SD Total
F % F % F % F % F %
Unfriendly legal and
regulatory environment. 10 20.0 0 0.00 17 34.0 25 46 50 100
Ineffective access to
finance. 29 58.0 13 26.0 0 0.00 8 16.0 50 100
Inadequate public private
sector dialogue 0 0.00 0 0.00 49 98.0 1 0.2 50 100
Competition brought
about by trade liberation 0 0.00 0 0.00 50 100 0 0.00 50 100
Constraints on women to
develop their 35 70.0 0 0.00 15 30.0 0 0.00 50 100
entrepreneurial potentials
Inadequate
entrepreneurial & 50 100 0 0.00 0 0.00 0 0.00 50 100
business managerial skill
Inefficient distribution
channels often dominated 7 14.0 3 6.0 17 34.0 23 46.0 50 100
by large firms
Difficulty with gaining
access to appropriate
technology and 43 86.0 0 0.00 0 0.00 7 14.0 50 100
information on available
techniques
Source field survey (2023)

xxxviii
Data presented in Table 4.7 above shows that 10(20.0%) respondents strongly agree that
unfriendly legal and regulatory environment accounts for SMEs failure in contributing to rural
development. However, 17(34.0%) and 23(46.0%) disagree and strongly disagree that unfriendly
legal and regulatory environment is a contributing factor in SMEs inability to contribute to rural
development. 29(58.0%) and 13(26.0%) of the respondents strongly agree and agree respectively
that ineffective business development services accounts for one of the challenges confronting
SMEs in contributing to rural development.

However, 8(16.0%) of the respondents do not share in this view. In the case of inadequate access
to finance, majority of the respondents 49(98.0%) of the respondents opine that it is a major
threat to their contribution to rural development while 1 (0.2%) respondent strongly agrees with
this opinion. Inadequate public-private sector dialogue is not a challenge to SMEs in Iseyin in
their effort to contribute to rural development and this is represented by 49(98.0%) and 1(0.2%)
of the respondents who respectively disagree and strongly disagree that inadequate public-private
sector dialogue is a challenge to SMEs in Iseyin in their effort to contribute to rural development.
All the respondents 50(100%) disagree that competition brought about by trade liberalization is a
challenge to SMEs in contributing to rural development. 35(70.0%) of the respondents are of the
view that constraints on women to develop their entrepreneurial potentials is a big challenge
when it comes to SMEs contributing to rural development. All the respondents strongly agree
that inadequate entrepreneurial and business management skills poses a challenge to SMEs effort
in contributing to rural development.

Moreover, 7(14.0%) and 3(6.0%) of the respondents strongly agree and agree that inefficient
distribution channels often dominated by larger firms is a challenge to SMEs in their effort to
contributing to rural development while 17(34.0%) and 23(46.0%) of the respodents disagree.
Difficulty with gaining access to appropriate technology and information on available techniques
is supported as a challenge hindering SMEs ability to contributing to rural development by
43(86.0%) of the respondents. However, 7(14.0%) of the respondents strongly disagree with this
view.

xxxix
4.2 Discussion of Results

4.2.1 Demographic Characteristics of Respondents

The data presentation on the demographic characteristic of the respondents shows that
majority 21(42.0%) of the respondents are between the ages of 19-30 years. This gives a clear
indication that majority of the youth in Iseyin are into entrepreneurship. Thus, micro and small
scale enterprises are a key source of employment for the youth and this finding affirms a study
by Ankomah (2012) who observed that this avenue is a key source of employment to the youth.
Another revealing feature of this population is that it is dominated by females 33(66.0%) who
have their education up to the JHS level 29(58.0%).

4.2.2 The Key Role SMEs’ Play in Rural Development

This study unveiled that SMEs create jobs in the rural areas. This revelation was by
majority 40(80.0%) of the respondents. This finding support what Petrin (1994) and Gavian et al
(2002) found. They found that rural development is now being linked more and more to SMEs
by creating jobs in the rural areas. Again, SMEs alter production quickly to exploit changing
market conditions for rural development and this represents 39(78.0%) of the respondents. SMEs
fill the niche markets in the national economy that are too small for mass producers which
represents 45(90.0%) of the respondents. These findings support what Lyson (1995) found. He
found that SMEs echoe the prospects of small-enterprise framework as a possible rural
development strategy for economically disadvantaged communities. SMEs again play the key
role in introducing innovations into the market to serve as a catalyst for societal development
which represents 29(58.0%) of the respondents. SMEs as well deepen the manufacturing sector
and foster competitiveness 45(90.0%).

4.2.3 Factors that enable SMEs to Contribute to Rural Development

This study has revealed that factors such as the setting up of NVTI in the rural areas
47(94.0%); and established entrepreneurial development programs 50(100%) enable SMEs in
their effort in contributing to rural development. Again, attitude towards risk and a competitive
nature 50(100%) and ability to manage work force and managing accounts 33 (66.0%) enable
SMEs to contribute to rural development. These findings support what Stefanovic et al., (2010),
Frese et al., (2002) and Benzing et al., (2009) found. They found that attitude towards risk and a

xl
competitive nature, ability to manage work force and managing accounts and as a psychological
and managerial attributes relating to success of SMEs.

4.2.4 The Challenges that confront SME Operators in contributing to Rural Development
The data presentation has brought to light that ineffective Business development services is a
major challenge to SMEs in contributing to rural development. This view represents 42(71.0%)
of the respondents. Another challenge that this study has discovered is inadequate access to
finance. This view is expressed by 50(100%) of the respondents. This finding supports a study
conducted by Tetteh and Frempong (2009) who find that Access to start-up capital was mainly
personal savings or family support and this points to the failure of micro-credit schemes in the
country. Constraints on women to develop their entrepreneurial potentials is another challenge
confronting SMEs in their effort to developing rural Nigeria This opinion is expressed by
35(70.0%) of the respondents. 43(86.0%) of the respondents opined that difficulty with gaining
access to appropriate technology and information on available techniques is also another big
challenge to them.

xli
CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 Introduction

This chapter presents the summary of the findings, conclusions and recommendation of the study

based on major findings. The recommendations based on major finding are provided for MFIs

management teams, government and those agencies spearheading the campaign for support for

rural enterprises.

5.1 Summary of Findings

This study was conducted to investigate the role SMEs play in rural development. By this

primary objective, other sub objectives: to ascertain the key role SMEs’ play in rural

development, to identify factors that enable SMEs to contribute to rural development, and to

ascertain the challenges that confront SME operators in contributing to rural development.

The data presentation on the demographic characteristic of the respondents shows that majority

of the youth in Iseyin are into entrepreneurship. Thus, micro and small scale enterprises are a key

source of employment for the youth. Another revealing feature of this population is that it is

dominated by females who have their education up to the JHS level.

In finding out the key role SMEs’ play in rural development, this study has discovered that

SMEs create jobs in rural areas. SMEs once more alter production quickly to exploit changing

market conditions for rural development. SMEs again fill the niche markets in the national

economy that are too small for mass producers. SMEs further introduce innovations into the

xlii
market to serve as a catalyst for societal development. Moreover, SMEs deepen the

manufacturing sector and foster competitiveness.

The study unveiled from the factors that enable SMEs to contribute to rural development that the

setting up of NVTI in the rural areas; established entrepreneurial development programs; attitude

towards risk and a competitive nature; and ability to manage work force and managing accounts

enable SMEs to contribute to rural development.

This study has discovered that the challenges that confront SME operators in contributing to

rural development include: ineffective business development services; inadequate access to

finance; constraints on women to develop their entrepreneurial potentials and difficulty with

gaining access to appropriate technology and information on available techniques.

5.2 Conclusions

The following conclusions were made based on the findings:

 It may be concluded that SMEs play the role of: creating jobs in rural areas , decentralised

use and distribution of resources; altering production quickly to exploit changing market

conditions for rural development; filling the niche markets in the national economy that

are too small for mass producers; introduction of innovations into the market to serve as a

catalyst for societal development and deepening the manufacturing sector and fostering

competitiveness.

 It may as well be concluded that the setting up of NVTI in the rural areas; e stablished

entrepreneurial development programs; attitude towards risk and a competitive nature;

and ability to manage work force and managing accounts enable SMEs to contribute to

rural development.

xliii
  It may as well be concluded that ineffective business development services; inadequate

access to finance; constraints on women to develop their entrepreneurial potentials and

difficulty with gaining access to appropriate technology and information on available

techniques are the major challenges confronting SMEs in Iseyin Distrcit in their effort to

contribute to rural development.

5.3 Recommendations

Base on the findings of this study, the following recommendations are made:

 The inculcating of the study of SME into the syllabus of tertiary education will go a long

way in helping boost the sector. Tertiary students must be taught to be more

entrepreneurial and given the necessary support from the structures by the state, they can

be able to contribute to the building of the SME sector and the national development at

large.

 Banks and other Non Banking Financial Institutions should come out with well designed

products and services that will adequately meet the financial needs of the SME sector.

 Government must provide the incentive and ready market for the products of the SME

sector.

 Workshops and training needs of entrepreneurs must be enhanced to sharpen their

managerial competencies and enhance their outputs.

xliv
 SME business men and women must be encouraged to take advantage of the

advancement in ICT to improve upon their output and increase the value of their final

product or service.

 The government should consider the option of going into strategic partnerships with

development partners abroad to give adequate source of finance to SMEs. This

partnership can also look at sourcing for raw materials at cheaper prices and providing

ready market source for final products and services for these SMEs all on long contract

terms.

 Sound national economic policy with respect to agriculture, including recognition of the

vital contribution of entrepreneurship to rural economic development.

 Policies and special programs for the development and channeling of entrepreneurial

talent.

 Entrepreneurial thinking about rural development, not only by farmers but also by

everyone and every rural development organization.

 More institutions supporting the development of rural entrepreneurship as well

as strategic development alliances should be established.

xlv
References

Abban, J. B. (1986). The Pattern of Industries in Rural Development, in Brown C. K., Rural
Development in Nigeria Nigeria University Press, Accra.
African Development Bank (2005). African Economic Outlook 2004/2005: Recent Economic
Trends in Africa and Prospects for 2006. African Development Bank, Abidjan
Discussion. Retrieved on May 10, (2023) from http://www.uneca.org/eca_resources/
publications/books/era2006/chap1.pdf.
Anane G. K, Cobbina P. B., Manu J. K., (2013). Sustainability of Small and Medium Scale
Enterprises in Rural Nigeria : The Role of Microfinance Institutions. Asian Economic and
Financial Review. 3(8): 1003-1017 1003.
Ankomah K. M. (2012). Promoting Micro And Small Scale Industries In Nigeria For Local
Development: A Case Study Of The Rural Enterprises Project In Asante Akim South
District.
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Appendix

Questionnaire for SME operators

I am a final year student of SAF Polytechnic Iseyin Oyo State, Nigeria. Fiapre undertaking a
study on the topic; the role of SMEs in rural development. You have been selected to assist in
this study. Your identity (such as name, contact, signature, etc.) is not needed. I hope you will be
objective in answering the questions and by so doing you will be helping in achieving the
objective of this study. This information is collected solely for academic research purposes. The
information you provide will be treated as strictly confidential.

Thank you for your participation.

PART I: Personal Data of Respondent

Status ………………………. Age ……………

Location ……………………. Sex: Male [ ] Female [ ]

Educational background: SHS [ ] 1st Degree [ ] Masters [ ] Doctorate [ ]

PART II: The Key Role SMEs’ Play in Rural Development

Please indicate the extent to which you agree to the following statements by ticking [√] at the
appropriate response.
Strongly Agree (SA) = 4 ……………………………… Strongly Disagree (SD) = 1

S/ The following are SME role in rural development SA A D SD

N
1 SMEs create jobs in the rural areas.
2 SMEs alter production quickly to exploit changing
market conditions for rural development.

3 SMEs fill the niche markets in the national economy

that are too small for mass producers.

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4 Credited for introducing innovations into the market to
serve as a catalyst for societal development
5 Deepening the manufacturing sector and fostering
competitiveness.

6. In your own words, how are you helping to contribute to the development of Iseyin town?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………………………

PART III: Factors that enable SMEs to Contribute to Rural Development

Please indicate the extent to which you agree to the following statements by ticking [√] at the
appropriate response.
Strongly Agree (SA) = 4 ……………………………… Strongly Disagree (SD) = 1

S/ Factors enabling SMEs to contribute to rural SA A D SD

N development
7 The setting up of NVTI in the rural areas.
8 Established entrepreneurial development programs.

9 Attitude towards risk and a competitive nature.

10 Ability to manage work force and managing accounts.

11. What other factors do you think enables you to contribute to to the development of Iseyin
town?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………………………

PART IV: The Challenges that confront SME Operators in contributing to Rural
Development
Please indicate the extent to which you agree to the following statements by ticking [√] at the
appropriate response.
Strongly Agree (SA) = 4 ……………………………… Strongly Disagree (SD) = 1

l
S/ Challenges of SME operators towards rural SA A D SD
N development
12 Unfriendly legal and regulatory environment.
13 Ineffective Business development services.
14 Inadequate access to finance.
15 Inadequate public-private sector dialogue.
16 Competition brought about by trade liberalization.
17 Constraints on women to develop their entrepreneurial
potentials.
18 Inadequate Entrepreneurial & Business Management
Skills.
19 Inefficient distribution channels often dominated by
larger firms.
20 Difficulty with gaining access to appropriate
technology and information on available techniques.

21. In what ways can these challenges be improved?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………

li