Poverty Alleviation – The Role Of Government And Small Scale Businesses

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Over two decades after independence, unemployment and poverty were not as prevalent in Nigeria as they are now. The agricultural, industrial, and public sectors were able to absorb the majority of the labor force (Huglice & Musselman 1993). According to Nwakobi (1995), poverty is a worldwide problem that affects nations and people differently; it impacts people at varying depths and levels at various times and stages of life. There is no country that is completely devoid of poverty. Third-world nations have the greatest poverty rates as well as the lowest levels of socioeconomic development. Poverty can be said to be a state in which a person is unable to meet his or her basic needs for food, clothing, and shelter, is unable to meet social and economic obligations, lacks gainful employment, skills, assets, and has limited access to social and economic infrastructure such as education, health, portable water, and sanitation (Feldman, 1999).

Poverty, according to several experts, is a term with various connotations. It might be difficult for some people to define poverty. According to Haiman, as stated in Kure (2002), poverty is defined as the inability to meet fundamental demands necessary for a decent living; more often than not, individuals who are labeled poor are those whose resources are insufficient to meet the basic essentials of existence. Poverty is a vicious spiral, and breaking free from it is difficult. This is based on the reality that impoverished families are more likely to remain poor. According to Broom & Longnecker (1992), poverty is defined as the inability to meet fundamental demands necessary for a decent living. Those who are deemed poor are those whose resources are insufficient to meet the basic essentials of existence. Poverty, he claims, has a complicated cycle, and breaking free from it is difficult. This is based on the reality that impoverished families are more likely to remain poor (Oshagbenius, 1995). They have low income levels, a high risk of likeness, limited access to education, mobility, information, and training; in fact, poor parents cannot provide their children with the opportunities for good health and education that are required to improve their lot and the lot of their children in the future. As a result, the harsh legacy of poverty is passed down from generation to generation and from parents to children. The impoverished are frequently uneducated, have poor health, and have a short life expectancy but with the rise in the number of small scale businesses, the level of poverty has been said to reduce though this is highly contestable  (Oshagbenius, 1995).

In Nigeria, a small scale firm is defined as any processing, service, or manufacturing company with an investment in machinery and equipment more than N500,000 (Nwakobi,1995). For Nigeria as a country, the importance of Small Scale Enterprises should not be underestimated at this important juncture in the nation’s socioeconomic and political growth, particularly if the government is to give dividends to the citizens. Small scale enterprises are the driving force behind such industrial growth and economic development, owing to their significant role in assuring diversification and expansion of industrial production, as well as the attainment of basic development goals.Small scale businesses have played an important part in the development of a country’s economic growth as well as reducing poverty via the creation of new employment and providing income for the people (Yewande,1991). SMEs are beneficial not just during periods of economic prosperity, but also during periods of economic slump. Small firms make up a larger proportion of all enterprises in almost every country, and they provide the majority of private sector employment and production.

1.2 STATEMENT OF THE PROBLEM

Poverty is the most significant impediment and challenge that people face, particularly throughout the world. Broom & Longnecker (1992) opined that asof 2014, there were around 2.4 billion people worldwide living in poverty, with an income of USD 2 or less per day, the majority of whom were from developing or underdeveloped nations on the African and Asian continents (Feldman, 1999). Between 1991 and 2014, the number of people living in poverty decreased significantly. As a result, the decreases are concentrated mostly in wealthier nations. Nigeria has been plagued by the issue of poverty and this has been a been a problem different administrations have tried to curb but with no felt effect. This may be ascribed to a variety of issues, including mismanagement of people and material resources, indiscipline, and a lack of political will on the part of the government from post-independence Nigeria to the present. Instead of addressing poverty in society, our policymakers and leaders have used their positions to engage in squandamania, embezzlement, corruption, and money laundering, to the detriment of the suffering people. Small Scale Enterprises not only represent the country’s key potential for industrialisation and a means to an end of poverty, but they also contribute significantly to long-term growth in terms of taxation, raw material requirements, job creation, and poverty reduction  (Oshagbenius, 1995).

Despite their vital role in the country, small scale firms in Nigeria have a high failure rate due to the presence of big scale commercial enterprises that may act as a competitive force to them, exacerbating an already dire situation in the country. While small firms’ contributions to growth are widely recognised, entrepreneurs in this sector confront several challenges that impede their long-term survival and development (Nwakobi, 1995).

Yewande (1991) stated that, the government has implemented several policies, made several laws and allowed several initiatives/programs in which a majority has not seen the light of the day. Despite all of these programs, the country is still plagued by poverty. What is to be done?

1.3 OBJECTIVES OF THE STUDY

The primary objective of this study is to assess the roles of government and small scale businesses in the alleviation of poverty. Other objectives of this study are:

1. To examine the factors that influence poverty
2. To examine the effectiveness of small scale businesses on poverty alleviation in Nigeria

iii.      To examine the challenges of small scale businesses in Nigeria.

1. To determine the effectiveness of government policies in the alleviation of poverty.
2. To find out the current programs undertaken by government to aid poverty alleviation.

1.4 RESEARCH QUESTIONS

The following research questions will be answered by this study

1. What are the factors influencing poverty?
2. Are small scale businesses in Nigeria effective towards poverty alleviation in Nigeria?

iii.      What are the challenges of small scale businesses in Nigeria?

1. Are government policies effective in the alleviation of poverty?
2. What are the current programs undertaken by government to aid poverty alleviation?

1.5 SIGNIFICANCE OF THE STUDY

This study will be greatly significant to the general public as the findings of this study will show what poverty is, the causes of poverty, the roles of government and small scale businesses in the alleviation of poverty and the different programs undertaken by government to alleviate poverty.

This study will also be beneficial to small scale businesses as the findings will highlight their challenges and try to proffer possible solutions to those problems.

Finally, this study will serve as an existing material for further studies and future reference.

1.6 SCOPE OF THE STUDY

This study will be focused on poverty alleviation: the role of government and small scale businesses. It will also focus on the causes of poverty, the effect of small scale businesses and government on poverty alleviation and the challenges of small scale businesses.

This study will be using small business owners in Lokoja LGA of Kogi State as enrolled participants for the survey.

1.7 LIMITATIONS OF THE STUDY

This study will be limited to poverty alleviation: the role of government and small scale businesses. It will also be limited to the causes of poverty, the effect of small scale businesses and government on poverty alleviation and the challenges of small scale businesses.

This study will be using small business owners in Lokoja LGA of Kogi State as enrolled participants for the survey and as such further studies is needed if it is to be used any where else.

1.8 DEFINITION OF TERMS

Poverty alleviation: is a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty

Small scale businesses: are privately owned corporations, partnerships, or sole proprietorships which have fewer employees and/or less annual revenue than a regular-sized business or corporation

REFERENCES

Broom and Longnecker (1992): The Impact of Entrepreneurial Development in an Economy.Enterprises.

Huglice and Musselman (1993): Small Scale Enterprises and the Economy.

Nwakobi, E. (1995): Small Scale Enterprise and the Economy.

Feldman, C. (1999): The Importance of Small and medium Scale

Oshagbenius, J. (1995): The Impact of Small and Medium Scale Enterprises in Nigerian Economy.

Yewande, M. (1991): The Role of Government in the Development of Small and Medium Scale Enterprise in an Economy.

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