EXAMINING THE IMPACT OF GOVERNMENT INCENTIVES IN PROMOTION OF SMALL AND MEDIUM ENTERPRISES (SMES) IN KANO STATE.

Chapter one 1.1 Background of the study Ever since the adoption of economic reform in Nigeria in 1986, the policies makers emphasized on how to enhance the activities of micro, and small scale enterprises. Micro and small scale enterprises have the prospect for import substitution, developing domestic linkage for rapid and sustainable industrial development. SMEs ensure industrialization I.e the ability rely largely on the effectiveness use of local contents, and also generate employment in the nation provide authorities with revenue, assure a more even distribution of industrial development in the nation, consisting rural areas as well as facilitating the growth of non oil exports(Osotimehin & Olajide 2012). Small and medium enterprises (SMEs) contribute towards standard of living, bring about sustainable local capital formation and achieve high level of productivity and capacity. They are recognized as the principal mean of achieving equitable and sustainable industrial diversification and dispersal. Ogujiuba and stiegher (2013) assert that small and medium scale enterprises (SMEs) account for well over half of the share of employment, sales and value added. SMEs contribute most viable and Veritable vehicle for self sustaining and industrial development, as they possess the capacity to grow an indigenous enterprises culture of jobs reductions in income disparity, production of goods and services in the economy, as well as providing a fertile ground for skills development and acquisition. SMEs serve as mechanism for backwards integration and technology innovation, development especially in modifying and perfecting technology breakthrough and also represents the sub sector of special focus in any meaningful economic reconstructing program that target employment generation, poverty alleviation, food security, rapid industrialization and reduce rural urban migration Ogujiuba (2004)reported that since independence, promoting small and medium scale enterprises as the foundation of economic progress has been recognised in Nigeria by every regime. This is because of its perceived relevance in ensuring increase in per capita income and output, reducing the burden of unemployment and effective utilization of local raw material. At present, the government provide it services through a large number of public institutions which directly involved in the development of small and medium enterprises (SMEs) in Nigeria. They provide various assistant including provision of credits, training, technology, marketing management. Although the government has given it fullest support. The key issue recorded in the SMEs sector is that it has shown that a less performance against the large scale enterprises in the national economy. (Osotimehin, jegede, and Olajide(2012). Small and medium scale enterprises (SMEs) in Nigeria have not performed creditably well and they have not played expected significant role in economic growth. They equally have not influenced apprentice training so as to accelerate employment and poverty alleviation. This situation has been a great concern to the government, citizens, operators, practitioners, and organised private sectors. With the realization of the potential of the SMEs, government at different levels in Nigeria have devised a means of supporting them in order to promote and sustain their development . It is believed that massive assistance such as; financial technical., marketing and managerial from government are essential for SMEs to grow. Government have stepped up effort to promote the development of SMEs through increased incentives scheme including enhanced budgetary allocation for technical assistance programs (Akinlabi2012) Various financial institutions in charge of micro credit and policy instruments such as the Nigeria Agricultural co-operative and Rural Development Bank (NACRDB), National Economic Reconstruction Fund (NE REFUND), Nigerian Bank for Commerce and industry (NBCI), World Bank assisted small scale enterprises scheme (SMES), Nigerian Export and Import Bank (NEXIM), The People Bank of Nigeria (PBN), Small and Medium enterprises Equity Investment Scheme (SMEEIS), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), and another policy oriented institutions like entrepreneurship Development policy (EDP) run by the National Directorate of Employment (NDE) Industrial Development Center(IDC), among others were introduced to offer technical and financial assistance to small and medium scale enterprises. This have also been fiscal Incentives, grants, bilateral and aids from multilateral agencies as well as specialized institutions towards making the small and medium enterprises and partnership vibrant. It's been forever great concern that this vital sub sector has fallen short of Expectations. The situation is more disturbance and worrying when compared to other developing and developed countries has been achieved with their cottage business coupled with significant attention to apprenticeship training and employment generation. It has been indicated that there is a high correlation between the degree of poverty, hunger, unemployment, economic well being of the citizens of the countries and the degree of vibrancy of the respective countries small and medium scale enterprises (Akinlab, 2012). Despite this intervention has undertaken by successive government to improve the performance of small and medium scale enterprises (SMEs), not much progress seems to have been achieved. This study, therefore, examines the government incentives in promotion of small and medium scale enterprises in kano state. 1.2 Statement of the problem In Nigeria the greatest obstacles that small and medium scale enterprises (SMEs) have to grappled with is access to funds. This is further compounded by the fact that even where credit facilities are available, the required collateral to access the facilities are thorny. This situation has led to shutdown of many of them, resulting in the lost of thousands of unskilled, semi skilled and skilled jobs across the country. Micro finance is emerged as a noble substitute for informal credit in order to provide soft loans to entrepreneurs who are financially Constrained. Micro finance covers a board range of financial services including loans, deposits, payment services and insurance to the poor and low income households and their micro enterprises (chinweuba & OK palace 2015) The federal government of Nigeria has over the year displayed and shown interest in ensuring adequate finance and support for small and medium scale enterprises (SMEs) by formulating various trade and industrial policies to estimate growth in that sector. Yet small and medium scale enterprises (SMEs) in the country have packed or now operating below average capacity. According to Oladele (2012), over 12 textiles companies operating along Oshidi-Apapa express way, In lags state alone havecompletely closed down while not less than 10 trailers of 30 tons capacity of smuggled textiles of various types enter the city of Kano daily from the neighboring countries. Covet (1980), observes that several small and medium scale enterprises operators are highly proficient in their technical field but are well experienced in. Managerial competence. This may be part of the reasons for longevity in their backwardness. It has however been observed that insufficient capacity is still the bottle neck faced by small scale operators in Nigeria (Ogechukwu, 2011).others argued that small and medium scale enterprises (SMEs) failure in the country is due to deliberate divert of capacity collateral for ostentatious spending and refusals to pay back the capital And interest, this attitude is attributed to financial indiscipline, as well as inconsistency of government policies Njoku, 2002; Ogujiuba 2004 & Osadebe 2007). It has also been argued that an inaccessible collateral requirements by SMEs operators was also responsible for their poor performance (Isern, 2009). In order to obstruct further setback on the development of SMEs in Nigeria, the small and medium enterprises development agency (SMEDAN) was established by the SMEDAN act of 2003 to promote the development of Micro, small and medium enterprises (MSMEs) sector of the economy. Part of the mandate of SMEDAN was to establish a structured and sufficient MSMEs sector that will enhance a sustainable economic development of the country through stimulating, monitoring and coordinating the development of MSMEs (SMEDAN, 2005). Based on aforementioned statement it has been observed that there is a na get I've growth on the development of small and medium scale enterprises (SMEs) despite many intervention of governments. The study specifically examine the impact of government incentives in promoting of small and medium scale enterprises in Kano state. 1.3 Objective of the study The main objective of this study is to examine the impact of government incentives in promotion of small and medium enterprises (SMEs) in Kano state. Other specific objectives are : i. To determine the government financial support on the growth of SMEs in Kano state. ii. To determine government training support on the growth of SMEs in Kano state. iii. To determine government policies on the growth of SMEs in Kano state. 1.4 Research questions This research shall attempt to provide answer to the following questions: i. What is the effect of government financial support on the growth of SMEs in Kano metropolis? ii. What is the effect of government Training support on the growth of SMEs in Kano metropolis? iii. What is the effect of government policies on the growth of SMEs in Kano metropolis? 1.5 Significance of the study This study is significant because it will bring to the understanding of the reader the true position of government programs towards the promotion of small and medium scale enterprises (SMEs). However, the significance of this study cannot be overemphasised, considering the fact that rapid development of small and medium scale enterprises (SMEs) sector will contribute immensely to the development of any economy. One of the major impediment to this rapid development is the death of both debt and equity finance. Accessing finance has been identified as the key elements for SMEs to succeed in their drive to build productive capacity ;to compete, to create jobs and other opportunities and to contribute towards poverty alleviation in the developing countries. Thus, this study is significant to the extent that determine the contributions that government programs will have to SMEs, because every successful government have vowed to support individuals and group initiatives in the establishment of small and medium enterprises and study is of immense benefit to government as it will aid in the fine tuning of policies that are intended to boost SMEs sector through support programmes The study will benefit small and medium enterprises as well as government policy makers concerning small and medium enterprises development. The study also adds to the existing body of students and other researchers. 1.6 Scope of the study This research cover the impact of government incentives in promotion of small and medium enterprises in Kano state. The study is concentrated on small and medium scale enterprises in Kano state. However, it was not possible to cover all the small and medium scale enterprises in Kano; that she is because more energy is required as well as it is expensive. The singer market in Kano state selected;the reason is to see if is challenges faced by small and medium scale enterprises within the market from government support programmes to meet up their target from recent fire outbreak in the year 2016.