Page 1 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 06
July 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 75
Challenges of Small and Medium Scale Enterprises in
Osogbo Metropolis of Osun State, Nigeria
Ajayi Adeola1 & Jegede Charles Temitope Ph.D2
2. Institute for Entrepreneurship & Development Studies, Obafemi Awolowo University,
Ile-Ife, Osun State, Nigeria1.
Email: ajayifunso4christ@gmail.com, Email: temitope.jegede@yahoo.com
Abstract
This study investigated the challenges of
small and medium enterprises in Osogbo
Metropolis of Osun State, Nigeria with a
view to identifying the problems militating
against the performance of the small and
medium enterprises subsector to the Nigeria
economy and recommend solutions to make
the sub-sector strong and vibrant in order to
play the crucial role in Nigeria economy
growth and development.
Primary and secondary sources of data were
utilized for the study. Primary sources of
data were employed using structures
questionnaires while secondary sources
were from books, journals, newspapers,
internet sources and public lectures on the
field of industrial small and medium scale
enterprises.
Multi stage random sampling was used to
select a total of 120 respondents utilized for
the study. Both descriptive and inferential
statistics were used to achieve the objectives
of the study. Sec
The results from the questionnaires revealed
that SMEs have performed below
expectation due to a combination of
challenges which ranges from financial
constraint, poor managerial skills, poor
road network, weakness in organizational
marketing and information, low and
dwindling consumer personal, multiple
taxes, insecurity of lives and properties and
lexies, attitude and habits of SMEs
themselves through frequent policy changes
and somersault government instability and
environmental related factor among others.
The paper concluded that government
should take a practical radical approach to
address the identified problems of SMEs in
Osogbo Metropolis of Osun State, Nigeria.
KEWWORDS: Small and Medium Scale
Enterprises, Development, Income
Generation, Employment Generation,
Poverty Reduction.
Background to the Study
Small and Medium Scale Enterprises have
drawn a lot of interest among scholars,
policy makers, business meant and people in
general.
SMEs are one of the principal forces in the
development of a nation. SMEs stimulate
private ownership and entrepreneurial skills
and can adapt quickly to changing market
Page 2 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 06
July 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 76
situation, generate employment help
diversify economic activities and make a
significant contribution to exports and trade.
International agencies and organizations
(World Bank, United Nations Industrial
Development Organization (UNIDO),
Department for International Agencies and
Organizations (World Bank, United Nations
Industrial Development Organization
(UNIDO), Department for International
Development (DFID) Europe an investment
Bank (EIB) have invested in them. Locally,
several non-governmental organizations
such as Fate Foundation, Support and
Training Entrepreneurship Programme
(STEP) the Nigeria Investment Promotion
Commission (NIPC) have been promoting
the growth of SMEs in Nigeria through
advocacy and capacity building initiatives
and have continued to canvass for better
support structures for operators in the SME
subsector(Onugu, 2005).
Small and Medium Enterprises (SMEs)
occupy a place of pride in virtually every
country of the world. Because of their
(SMEs) significant roles in the growth and
development of various economics, they
have been aptly referred to as “the engine
catalysts for socio-economic transformation
of any country” (Ajagu, 2005).
They also represent a veritable vehicle for
the achievement of national economic
objectives of employment generation and
poverty reduction at low investment cost as
well as the development entrepreneurial
capabilities including indigenous technology
(Fatal, 2011).
It has however been worrisome that despite
the incentives, policies, programmes and
support aimed at revamping the SMEs, they
have reformed below expectation in Nigeria.
Thus this study sets out to investigate the
challenges of SMEs in Osogbo Metropolis
of Osun State, Nigeria.
Statement of the Problem
Small and Medium Enterprises (SMEs) in
Nigeria has fallen short of expectation and
hence have not played the vital role to the
economy growth of Nigeria. This situation
has been of great concern to this
government, citizenry, operators,
practitioners and the organized private
sector groups. This situation is more
disturbing and worrisome when compared
with the SMEs in developed countries. It has
been shown that there is a high correlation
between the degrees of poverty hunger,
unemployment, economic well-being
(standard of living) of the citizens or
countries and the degree or vibrancy of the
respective country’s SMEs.
The time is now to do something surgical to
this situation of our SMEs given the
aggravating level of poverty in Nigeria and
the need to meet up with time. It is against
these background problems that the
researcher investigates the challenges of
small and medium scale enterprises in
Osogbo Metropolis of Osun State, Nigeria
and recommends solutions to reduce these
challenges.
Objective of the study
The objectives of the Study are to
i. review literature on Small and
Medium Scale Enterprises
ii. identify challenges of Small and
Medium Scale Enterprises; and
Page 3 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 06
July 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 77
iii. make appropriate recommendations
for solving or alleviating the identified
challenges of
the Small and Medium Scale
Enterprises in Osogbo Metropolis of Osun
State, Nigeria.
Literature Review
Many scholars have written on Small and
Medium Scale Enterprises in Nigeria. This
fact underscores the essence, importance and
relevance of SMEs to the development of
any given economy.
It has drawn a lot of interest among scholars,
policy makers, businessmen and people in
general. The role played by SMEs in
developed economics buttresses the fact that
SMEs is an engine of growth and
development of many nations (Chowdhury,
2007).
This stems from the fact almost all countries
that focused on the SMEs have succeeded in
the significant reduction and its
enhancement in the quality and standard of
living, reduction in crime rate, increase in
per capital income as well as rapid growth in
EDP among other salutary effects (Mordi,
2005).
National Council on Industry (19992)
defined Small Scale Enterprises as those
with fixed assets above #1 million but not
exceeding #10million excluding land but
including working capital while Medium
Scale Enterprises are those with fixed assets,
excluding land but including working capital
of over #10 million but not exceeding
#40million.
This definition was revised in 1996 with
Small Scale Enterprises defined as
enterprises with total cost above #1 million
but not exceeding #40million, with a labour
size of between 11 and 35 workers while
Medium Scale Enterprises area defined as
enterprises with total cost above
#150million and a labour size over 100
workers.
Gbolami (2006) et al. (2010) regarded SMEs
as firms that have fewer employees and a
lower turnover and assets than large firms
such as multi-national companies.
According to Onugu (2005), SMEs are
increasingly recognized as the principal
means for achieving equitable and
sustainable industrial diversification and
dispersal .In most counties of the world,
SMEs account for well over half of the total
share of employment, sales and value added.
European Union also defined Small and
Medium Enterprises (SMEs) as enterprises
which employ fewer than 250persons and
which have an annual turnover not
exceeding 50million euro or an annual
balance sheet total not exceeding 43million
euro.
Gholami et al. (2010) regarded SMEs as
firms that have fewer employees and a lower
annual turnover and assets than large firms
such as multi-national companies. Hudson et
al. (2001) also agreed that SMEs may be
differentiated from larger companies a
number of key characteristics such as
personalized management with devolution
of authority, resource limitations in in terms
of management and manpower, finance,
reliance on a number of small customers,
limited market operations, flat and flexible
