Indigenous Financing And The Growth of Small Scale Enterprise In Akure South local government
CHAPTER ONE/Introduction
Background to the Study
As the global debate on reducing world poverty increases, rural communities have been identified as mostly affected poverty ridden areas. Poverty is a global phenomenon which threatens the survival of mankind (Appleton and Song, 1999). Hence, effort to bridge the gap of poverty reduction through job creation especially at the rural areas is a priority for international organizations. Part of the giant stride taking for instance, is the millennium declaration of the United Nations signed by 189 countries commits the global community to reduce by half the proportion of the world‟s poor and hungry by 2015 Millennium Development Goals (MDG, 2013). In addressing this, various measures at improving rural economic conditions have been advanced by international communities among such are United Nations, World Bank and ECOWAS among others. A common and most recommended solution towards achieving this has been „conscious development of Small and Medium Enterprises (SMEs) at the rural areas‟. Globally, SMEs have been considered to be the engine of growth of modern economies and serve to provide more employment to a large portion of the population in a given economy than the big organizations, hence contribute in reducing poverty (Fatai, 2011). More so, recent researches have linked rural economic growth with small business development (Eme, 2014; Oba and Onuoha, 2013; Masanai and Fatoki, 2012). In Nigeria, it is evident that SMEs have various constraints, among which are; poor access to finance, inadequate infrastructure, weak government regulatory support, poor demand for local made goods, among others (Kadiri, 2012; Eme, 2014). Among the various constraints, poor access to finance is proved to be most vital and critical to SMEs in sub-Sahara Africa (World Bank, 2013). Therefore, availability of alternative sources of finance is a priority issue at developing rural SMEs as an engine for employment creation and poverty alleviation in the rural areas, and socio-economic stability at large.
STATEMENT OF THE PROBLEM
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Research Objectives
This study aims at examining the Indigenous financing and the growth of small scale enterprise in Akure South local government. In order to achieve a proper investigation, the following specific objectives were set:
- To examine if the informal financing option such as personal savings, contribution from relations and friends, mobile bankers etc. contribute to rural SMEs growth in Akure South L.G.A.
- To ascertain the major factors responsible for SMEs poor access to finance in the study area.
Research Questions
- Would the adoption of informal financing option such as personal savings, contribution from relations and friends, mobile bankers etc. improve rural SMEs?
- Are there major factors responsible for SMEs poor access to finance in the rural areas?