Challenges of Small Scale Business in Ogbomosho North Local Government Area of Oyo State

CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

The small scale businesses have a very important and effective role in developed countries generally and in developing countries especially because it is considered the backbone of their economies. Rajan (2013) states that the definition of small scale businesses may vary from county – to – country, year – to – year, from period to period and from time to time according to the level of economic development reached in a country. Sometimes it is defined in terms of number of workers employed and on the use of electric power supply and also in terms of investment made.

            Despite of these small scale businesses when established varies in its mode of formation, its sizes, its organizational set up, and in its activity. The reason for this is because the type chosen by each individual operator will depend on the financial capability to manage such business.  Small scale business forms the bedrock of the economic growth of every nation. This is because no nation can achieve a viable economic growth and development without the establishment of small scale business. The entrepreneurship which is part of small scale business is very relevant to the empowerment of the citizens for sustainable development. It gives substantial opportunities for the assumption and the use of local raw materials for vertical and horizontal linkages. Therefore, it has been said that the growth and development of small scale business would improve the economy and welfare of Nigerians.

Also, new businesses bring new and improved products and services thereby increasing competition and challenging existing business to improve their performance. Since 1960s to date, small scale business have been given due recognition especially in the developed nations for playing very important roles towards posturing accelerated economic growth, development and stability within several economics. However, it appears that, considering the enormous potentials of the small scale business sector and despite the acknowledgement of its immense contribution to sustainable economic development, its performance still falls below expectation in many developing countries most especially Nigeria. This is because sectors in these developing countries have been bedeviled by several factors such as management ability militating against its performance and leading to an increase in the rate of small scale businesses failure. These factors include the unfavorable and very harsh economic; conditions resulting from unstable government policies, strained by the difficulty in accessing credits from banks and other financial institutions; high operating cost, lack of transparency and corruption.