CHAPTER ONE
INTRODUCTION
1.1 Background of Study Before, the various governments of this country – Local, State and Federal had directed attention on the establishment of gigantic industries in the urban centres of the country. This they believed, though erroneously, that large scale industry is the only yardstick of measuring the economic power of any country. This crave for large scale industry was dominant during the oil boom (Isemin, 2008). This resulted in the utter neglect of the nation’s rural areas which contain about 85% of the nation’s total population. However, with dwindling of the oil money coupled with the oil crisis in the mid 80s, there was a sudden awareness on the part of the Federal Government that rural development should be the centre piece for industrial transformation (Omorodion, 2009). In realization of this, and in pursuance of its attainment, the Nigerian Government created various agencies such as the directorate of food, roads and rural infrastructures (DFRRI) to work in partnership with the rural communities towards the provision of amenities such as rural roads, Pipe-born water and electricity which are essential for setting up small scale industry. In addition, the National Directorate of Employment was created to train and develop school leavers’ skills for independence. The directorate also provides financial and technical assistance to individuals wishing to start business of their own. Also they provide credit/loan scheme to help provide financial assistance to individuals to set-up small-scale business. In spite all these efforts by the government, small scale businesses are still faced with lot of problems. Under capitalization creates the problem of not buying merchandise independently at best price, in adequate quality and qualities. Poor business accountability makes it difficult to assess the operating results of the business and at times starves the firms of its liquid resources. Some of the Government policies and Regulations brings distortions in the structure and management of these businesses. Inadequate and poor maintenance of infrastructural facilities, inadequate capital/funding, lack of managerial skill and project counseling, misappropriation of funds by government officials, to mention but a few, it has helped to increase the problems small scale businesses in Nigerian rural communities (Chukwujekwu, 2007) . SMEs makeup the largest proportion of businesses all over the world and are hence the engine that drives world financial system and the stepping stone to industrialization, both for developing and developed Nations. According to Chea, (2009) small industries account for about 88% of the small scale industries while 12% is credited to the medium industries in Malaysia. In Nigeria, SMEs make up about 97% of the economy, hence they play a very important and major role in the development of the economy through job creation, poverty alleviation and foreign exchange conservation (Imeokparia et al. 2014). Although SMEs are smaller in size, they are the most important enterprise in the economy due to the fact that when all the individual enterprises are combined, they exceed that of the larger companies. SMEs businesses involves very small micro-firms run by one or two persons and very slow growth or no growth to fast growing medium businesses earning millions of dollars and majority employing as many as 250.