ACCOUNTING AND MANAGEMENT PROBLEMS OF SMALL

SCALE INDUSTRIES IN IMO STATE (A CASE STUDY PF

SMALL SCALE INDUSTRIES IN EZINIHITTE LOCAL

GOVERNMENT AREA

ABSTRACT

The industrialization of every nation emanates from the ability

of private individuals and government in business to make

optimum allocation of available resources in order to achieve

future objectives. Business in the third world countries is

characterized by ineffective and ineffectual utilization of

available resources which has limited the scope of business to

small scale.

This calls for the application of some theories in the field of

management accounting to enhance the productivity of existing

small scale businesses in the third world countries.

Small scale enterprises encounter problems which often times

result into pre � mature death of such industries or/production

below capacity. Some of these problems lie largely outside the

control of the entrepreneur. These are the problems to be

solved, by the government in the interest of industrial

development of Nation while other problems arise from the

enterprenuer�s limitation in his decision making process.

This study, has been limited to Imo state by the project writer

after a thorough research.

An analysis of factors that contributed to this development

would be highlighted and useful recommendation towards

resolving these problems would be made. The researcher is

optimistic in view of the fact that if these recommendation are

adhered to, they will go a long way in achieving the objectives

of this research work.

 TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

1.2 Statement of problem

1.3 Purpose of the study

1.4 Importance of the study

1.5 Scope or delimitation of the study

1.6 Working hypothesis

1.7 Definition of term

CHAPTER TWO

2.1 Review of related literature

2.2 Local literature

2.3 Foreign related literature

2.4 Relationship to the study

CHAPTER THREE

3.1 Research methodology

3.2 Sampling procedures

3.3 Source of data

3.4 Statistical treatment and analysis of data

CHAPTER FOUR

5.1 Discussion on the results of findings

5.2 Conclusions and

recommendation Bibliography

Appendix
 CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Histories of various developed countries have shown that

industrial revolution had been the main cause for their economic

survival. Their great financial strength have come principally

through the acquisition of industrial and technological

power. Small � scale industries undisputedly constitute the

bedrock for any meaningful industrial development and for the

acquisition of this industrial and technological power.

Without exception, all big industrial organization be they multi �

national or indigenous, started in a small way. Small scale

industrial set � ups abound, but most of them are buying and

selling outfits. Considering the economic situation in the

country, the entrepreneurs in the state, now more than ever

need to branch out into some other areas outside buying and
selling. One would appreciate the fact that one can make

quicker and more money by buying and selling. But this is only

for a short term investment in the production of goods

(manufacturing), though it has a longer payback period

ensures a longer lasting profit. This could not only be a safer

investment for the entrepreneur in the long run, but it is also a

sure way of providing employment for our teeming high school

and university graduates.

The Nigerian economy in the last two decades has passed

through various stages. From the oil boom era of the seventies

to the period of wasteful spending and painlessness of the

early eighties and the present economic down turn.

One must appreciate the fact that the survival of the sole

proprietor in the Nigerian economy today would depend of his

initiative, drive and quick adaptation to the environment. The

age of �buy, buy, buy� and �sell, sell, sell� is permanently over

in this country. The sole proprietor must appreciate this fact and more

to study the economy and develop interest in some manufacturing no

matter how small the scale, so as to be sure of the survival in today

or future Nigeria.

Most traders especially if Imo state origins who are seeing the

writing on the wall of destiny are gradually investing in

industries and where necessary, are working with foreign or

indigenous experts to make the enterprise successful. There

are in this state numerous Engineers, Accountants,

Economists and other people in other fields who possess the

intellectual ability to set up an industry but hardly find the

necessary fund to do so.

Ezinihitte Local Government Area on which the research work

is based, is one of the local government area of Imo state. It is

stated on the Eastern side of the state and lies on the boarder

axis between Abia and Imo state. Ezinihitte local government is

made up of various Autonomous communities with a total

population of about six hundred thousand people. A greater

percentage of the people are engaged in Agriculture while

others are engaged in trading as well as traditional and

industrial activities such as pot moulding, basket and mat

weaving, hair dressing. Others are block moulding, Bakery,

poultry, soap making, food processing e.t.c. Most of those

activities are small scale establishments and sole

proprietorship and partnership oriented.

A good number of people have shown their concern over the

development of Ezinihitte local government area and Imo state

in general. People like Engr. Roy Umenyi who had carried a

study of this nature, discovered a lot of bottle � necks in the

development of the local government in question. Such studies

also revealed that answers to poor development of the area

could be found largely on the insufficient investment in

industrial activities. This has struck the mind of the project

writer to carry out a research into the problems militating

against the establishment and development of small scale

industries in Ezinihitte local government area.

1.2 STATEMENT OF PROBLEM

Industrialization has been identified as a basic tool for rural

development. Ezinihitte local government area which is

primarily a rural area is faced with multifarious problems in its

efforts towards industrialization of the locality.

Thus, this study title �Accounting and management problems of

small scale industries in Imo state (a case study of small scale

industries in Ezinihitte local government Area, attempts to

determine why:
 - There are only few small scale industries in Ezinihitte

local government area.

- The few industries existing are not prospering

- There is a high rate of infant mortality of small scale

industries in the area.

- What scares the investors from making investment in

small scale industries in the area under review.

1.3 PURPOSE OF STUDY

The main purpose of this study are:-

i) To find out why there are only few small scale

industries in Ezinihitte local government area.

ii) To determine the major problems confronting small

scale industrialists in Imo state and Ezinihitte local

government area in particular.

iii) To determine why the few industries existing are not

making progress and also why there is a high rate of

 infant mortality of such industries in the local

government in question.

iv) To determine the extent to which poor financial

records has hindered the multiplication and prosperity

of small scale industries in the area.

v) To determine the role of small scale industries and

their possible contribution towards economic

development of Imo state and Ezinihitte local

government Area in particular.

vi) To make possible recommendations aimed at

ameliorating or eliminating the problems militating

against the establishment and development of small

scale industries in Ezinihitte local government area.

vii) To find out what roles the government and the

financial institution should play towards alleviating the

sufferings of small scale industrialists in Ezinihitte local

government area.
4.1 IMPORTANCE OF THE STUDY

It is felt that this study would be of immense benefits to a

number of individuals and firms in the following ways:

i. This study is going to provide its numerous readers a

clear insight into the problems militating against the

establishment and development of small scale

industries in Imo state especially in the rural areas.

ii. It would equally provide a basis for further studies into

other aspects of problems of industrialization in the

country.

iii. The study would also benefit the business men and

the industrialists in particular since it would sereal to

them the possible causes of poor industrial

development and the reasons for infant mortality of

small scale industries in the local government in

question.
 iv. It is also felt that business consultants would benefits

from this study since it would give them a clear insight

into the problems of small scale establishment and the

possible solutions to such problems.

v. Students of business studies in general would find this

study very interesting since it cut across all aspects of

business establishment

vi. Finally it is also viewed that this study would be of

significance to the planning authorities since it would

provide them with the necessary information needed

in articulation of economic activities.

1.5 SCOPE AND DELIMITATION OF THE STUDY

This study titled �Accounting and management problems of

small scale industries in Imo state� a case study of small �

scale industries in Ezinihitte local government area would have

been extended to cover the whole of Imo state and beyond and
also to cover all aspects of problems of business establishment

but in view of the huge financial requirement involved coupled

with the short period within which the study would be

completed, the project writer is compelled to limit the scope of

the study to only the accounting and management problems of

small scale industries in Ezinihitte local government area of

Imo state.

1.6 WORKING HYPOTHESIS

having reviewed the theories and opinions of different authors

and business giants, the project writer wishes to formulate the

following working hypothesis:

i. Poor financial records in the major cause of infant

morality of small scale industries in Ezinihitte Local

government Area.

ii. Lack of Trust (Co-operations among small scale

industrialists is the chief cause of fewer number of

 small scale industries in Ezinihitte local government

area.

1.7 DEFINITION OF TERMS

At this juncture, the project writer deems if necessary to define

and explain some of the cause of this study.

ACCOUNTING: �Accounting may be defined as a process by

which data relating to the economic activities of an organization

are recorded, measured and communicated to interested

parties for analysis and interpretation�.

From the definition we discover that accounting is made up of

three major branches.

- Financial Accounting

- Cost Accounting and

- Management accounting
Financial Accounting: Can be said to be the process of

classifying and recording of actual transaction of an entity in

monetary terms in accordance with established concept,

principles, accounting standard and legal requirement and

presents as accurate a view as possible of the effect of those

transaction over the period and at the year end.

Management Accounting:- In the terminology of management

and financial accounting published by LCMA, management

Accounting is said to be �the application of professional

knowledge and skill in the preparation and presentation of

accounting information in such a way as to assist management

in the formulation of policies and in the planning and control of

the operations of the undertaker�. (ICMA).

Cost Accounting: Is said to be �that part of management

accounting which establishes budgets and standard costs and

actual cost of operation, processes, department or product and

the analysis of variances, profitability or social use of funds.

(ICMA).

Book Keeping: This can be said to be the art of recording

business transaction in such a manner that the financial

position of the enterprise can be readily ascertained.

BUSINESS ENTITY CONVENTION:- This may be defined as

the convention which tends to distinguish the affairs of the

business from the personal affairs of the owners. In effects, the

capital injects into the business represents a measure of the

business indebtedness to the owners. For this convention to be

observed, there must be proper books of account.

DEPRECIATION: This has four different meanings depending

upon the circumstances, but the project writer is concerned

with the cost allocation of the fixed assets. He is concerned

with the recovery of money invested in the assets in question.

Based on this view, the writer defines depreciation as the

systematic allocation of the cost of fixed assets to expenses

over the accounting periods making up their useful life.

INDUSTRY:- For the purpose of this study, the word industry

shall be used in a limited sense, that is we shall be referring to

a plant under a single management and not a collection of

undertakings producing identical or related products or

services with different ownership and management.

Meanwhile the research defines industry as an economic

organization that employs both economic, technical and human

resources to produce goods and services.

SMALL SCALE INDUSTRY:- The definition of small scale

enterprises varies form time to time and according to

institutions. For instance, the Central Bank of Nigeria�s (CBN)

Monetary policy circular No. 22 of 1988 defined small � scale

enterprises (excluding general commerce) as enterprises in

which total investment (including land and working capital) did

not exceed N500,000 and or the annual turnover did not exceed

N5 million. Following the persistent depreciation in the

exchange rate of the naira, the maximum size of capital

investment has been raised to N5 million and the turnover to

N25 million since 1990. In the 1993 Budget, the Federal

Government of Nigeria defined small � scale enterprises, for

purposes of commercial Bank loans, as those enterprises with

annual turnover not exceeding N500,000 and for merchant bank

loans those enterprises with capital investment not

exceeding N2 million (excluding cost of land) or a maximum of

N5 million. The national Economic reconstruction fund

(NERFUND) puts the ceiling for small � scale industries at N10

million. Section 376(2) of the companies and Allied Matters

Decree of 1990 defines a �small company� as one with:

a) Annual turnover not more than the N2 million;

b) Net assets value not more than N1 million.

In this project work, the writer wishes as those enterprises

whose total cost, excluding cost of land but, including working

capital, are above N1 million but not exceeding N10 million,

which are owned, managed and controlled by one or few

persons, and family influenced in decision making, have

relatively small share of the market and employ not more than

fifty people.

However, for the purpose of this research, it is pertinent to

classify industries under the following headings;

a. MANUFACTURING INDUSTRIES:- These are those

industries engaged in manufacturing activities through the

input of raw materials, technical as well as human resources to

produce finished product(s) which are often referred to as their

industries, bread industries, block molding industries etc.

b. SERVICE INDUSTRIES:- These are industries that

engage in rendering services of various types to people such

services industries include: tailoring industries, motor and

motorcycle repairing, Hair dressing saloons, petrol filling

station, Hotels etc.

c. AGRO- BASED /PROCESSING INDUSTRIES:- This

covers such industries like rice milling industry, cassava

processing, palm oil processing industries and poultry industry.

This category of industries engage themselves either in the

production or processing of Agricultural products.

CHAPTER TWO

2.1 REVIEW OF RELATED LITERATURE

There has been diversified theories and opinions about

industrialization as a tool for economic development of any

country. Most of these opinions and theories have been

expressed by academic giants in the field of business, different

writers in different textbook, journals, lecture series and

Newspapers. Thus, it has become pertinent for the project writer

to review some of these opinion and theories with a view of

identifying the logic behind them. This will provide the project

writer with all the necessary ideas based on industrialization so

as to draw a valid conclusion of the research work.

2.2 LOCAL LITERATURE

In view of the immense contributions of small scale industries

towards the economic development of any Nation, both the

Federal and State Governments and recently Local

government, have stepped up efforts to promote the

development of small-scale enterprises through incentive

scheme, including enhanced budgetary allocation for technical

assistance programmes

In the words of Dr. F.R.C Ezemenari the former General

Manager Ajaokuta steel company Ltd, he stated that any

strategy that will promote rapid industrialization and the

sustained and profitable operation of industrial venture must

first address itself to the problems.

He went on to discuss those problems which he started as the

major obstacles towards rapid industrialization of this country.

Such problems are:-

 - Inadequate infrastructural facilities

- Inadequate information flow.

- Absence of reasonable incentives.

- Absence of Disciplined and patriotic workforce

- Inadequate attention to research and development.

Further, he stated that other constraints against rapid

industrialization of this country include the absence of a well �

developed iron and steel industry which in his opinion is the

bedrock of real industrialization and inadequate food

production.

Still on the problems of small scale enterprises, lack of

incentives and inadequate budgetary allocations for technical

assistance programmes are some of the federal and state

governments are tackling in order to promote the development

of these enterprises.
Unfortunately, these class of enterprises have low credit rating

which has made it difficult to redress the fundamental problems

hindering small scale enterprises access to credit. Their low

credit rating is attributable largely to their;

- Weak capital base

- High mortality rate

- Low productivity

- Shortage of management skill.

Indeed, the problems of weal capital base and poor access to

finance appear to have developed into some vicious circle,

leading to slow growth, stagnation, and even rapid demise of the

SSES. The impact of all existing credit schemes, in terms of

providing funds for meaningful and sustainable development

among the SSES to serve the expected role of catalyst for rapid

industrial development there is need for a more innovative

strategy for improved access to development for the SSES that

would address their inability to provide collateral securities for

loans from formal credit institutions.

Mr. B. A Akuzaolu writing under the caption management

problems of small scale industries stated that the major

management problems of small � scale industries

originate from the background knowledge of the

entrepreneur. That some have considerable experience in

distributive trade and have only moved into producing

those goods which were there � to � core their stock � in

� trade. Others however have adopted completely, new

line and have only lazy knowledge of either the production

or marketing techniques of the product they are producing.

Further, he stated that there are yet others who

graduated from being small craftmen to small scale

 industrialists by simply increasing their equipment,

achieving a higher level of mechanization and at the

same time increasing their labour force.

Stating further, Mr. Akuazaolu states;

�Most small scale industries in Nigeria are unable to employ

competent managers and accountants.� This he noted results

in their books of account not always properly kept; that it is not

unusual to find a mix � up in personal and business funds and

consequently constant diversion of operating fund to the private

needs of the managing director.

In the opinion of the project writer, this in records with its

resultants consequences of incessant drawings of funds and

diversion of business funds into the private needs of the

Managing director is the major cause of infant mortality of small

scale industries in Imo state. Observation shows that whenever

a misfortune strikes, the Director tends to utilize the business

funds in solving the problem at hand.

Writing under the caption; problems of mini industries, Dr. C.P.

Ezeife managing director basic commerce and finance limited,

Ikoyi Lagos classified the problems of mini industries under two

headings;

Type 1 problems � these are the problems which lie largely

outside the control of the entrepreneur.

Under this heading he discussed such problems as;

- Knowledge and information.

- Inadequate infrastructure and;

- Difficulties with land.

Under these he wrote extensively on the problems associated

with knowledge and information, inadequate infrastructure and

difficulties with land and blamed these problems on the

government.

Type 2 problems � under this, he stated that the problems are

those resulting from the entrepreneur, his limitations and his

decision making process. He listed such problem as follows;

- Inadequate planning

- Inadequate funding

- All eggs in one basket

- Ignorance of imported raw materials

Still on the problems of small scale industries, Dr. M.C.

Okonkwo former National secretary Nigerian Association of

small scale industries has these to say; �It is often said that

small scale industries are easily valuable, this in itself change in

policy or economic climate�. He went further to enumerate

what he believes have constituted the major problems of small

scale industries as follows;

- Change on Government policies

- Lack of adequate manpower and training scheme.

- Insufficient source of finance

- Existence of fake small scale industrialists

- Availability of land

- Lack of adequate infrastructure.

- Lack of technical services.

- Lack of management skill

- Shortage of raw material supply.

- Lack of Research and Development

- Bureaucratic control

- Standard and Quality control

In a similar development Mr. E. Emoadi managing

Director/Chief, Executive Orient Bank of Nigeria limited shared

the same problems as discussed by Dr. Okonkwo but added

one more problem which is based on poor financial

management. Under this caption he stated �Most small scale

businesses maintain inadequate financial records. This is

because the entrepreneurs do not have enough understanding

of the basic principles of book � keeping and also lack of the

will to employ qualified manpower to maintain these records.

The businesses operate in confusion, unable to distinguish

between periodic gains and losses�.

He went further to state that often the owner � managers

cannot distinguish between their personal money and business

funds. The principle of business entity convention is often totally

lacking with the result that there is incessant diversion of

business funds to managing directors private use. He went

further to say that it is due to lack of ability to project future cash

needs and the need for enough financial records which their

bankers may require on the event of a loan application, the

most of them are unable to obtain bank assistance.

Another problem which Mr. Emoadi discussed which is

different from that of Dr. Okonkwo is lack of feasibility studies.

Discussing this point, he stated that a lot of businesses

established in Nigeria on figments of imagination without first

finding out the financial and technical viability nor market

potential of the project. He concluded by saying that success of

any business depends on the degree and quality of planning

undertaken. That, projects not properly planned soon develops

problems which may be very costly to rectify.

Dr. C.P. Ezeife while delivering his lecture on the problems of

small scale industries in Imo state stated that the establishment

of small scale industries in Imo state is like a sack race.

That the government constitutes itself into a sack to the

establishment of small scale industries. That the government

will urge businessmens to set up industries, the same

government will impose stringent measures towards the

establishment of such industries.

It is under this note that Engr. Chris. C. Nkwonta the General

Manager Central Investment Company Limited, Enugu

enumerated the following problems associated with security

government Approvals/permits.

- Procurement of certificate of occupancy or local

government right of occupancy of the factory site.

- Legislation of Deeds of coureyance on industrial

properties.

- Consent to mortage industrial properties.

- Approval plan for the factory buildings.

 - Certificate of compliance from Nigeria Enterprises

Promotion Board.

- Approved of shareholding structure and allocation by

Nigerian securities and Exchange commission.

- Government compliance certificate by the government

environmental agencies.

- Certificate of quality products of the company by the

standards organization of Nigeria (SON)

The Imo state commissioner for commerce and industries Mr.

Fred Osuji in answer to a question thrown to him, stated that

the major problem of small scale industries in Imo state is not

finance as such. That the major problem is lack of trust and co-

operation among our people. That the money is always there

but the problem is how to mobilize this money. Arguing his

point further he sited the Nigerian experience during the 1983

currency exchange whereby a framer would come up with over

Nine thousand naira (N9000) hitherto hidden in earthen �

ware. He stated that until our people are able to rid themselves

of this lack of trust and co-operation, each person would want to

do it alone. Each person would like to be the managing director,

the accountant, the treasurer with his wife as the manager and

his son the P.R.O.

In a similar development, professor Martin O. Ijere called small

scale industries in Imo state love rangers. He went further to

state that this problem of �operation do it alone� has eaten

deep into the fabric of our people. In answer to the problem of

�operation do it alone,�� he advocated for the formation of

cooperative societies among small scale businessmen in Imo state.

He enumerated some of the problems of small scale industries

such as:
 - Lack of management acumen.

- Shortage of labour supply.

- Absence of Research facilities.

- Limited finance.

He concluded by saying that these problems as enumerated

above would be largely solved by the formation of co-operative

societies among small scale industrialists, in Imo state.

Professor M.B. Ajajaiye Managing Director Nigerian while

discussing small scale farmers and their finance problems

made the following assertion;

- Illiteracy and ignorance

- Small size of farm holding

- Little capital

- Lack of tangible assets

- Low income.
 - General rural milieu.

He went further by saying that these characteristics all

wrapped together make the service of formal source of finance

inaccessible to the small scale farmer. That the resultant effect

is that he becomes inevitably exposed to other informal source

of finance and stands to be exploited at the slightest

opportunity.

Writing under the caption �Importance of small scale business�

Mr. F.O. Okafor has this to say: �Small enterprises tend to

generate more employment per capital invested than the very

large undertakers. This is because small scale business are

generally more � labour � intensive than large scale ones. A

country which is infested with labour unemployment like Nigeria

should therefore adopt an industrial stratefy that emphasizes

small scale industrial units�. He further stated that the small

scale business units play a vital role in the decentralization of

industrial activities, that they often consitute a bridge � head for

attracting basic amenities to the country side, which in effect

help check the rural � urban mignation.

On the managerial aspect, Okafor stated that small scale

business can serve as nurseries for the development of

entrepreneurial, managerial and supervisory talents. That most

of the barons of industry in Nigeria today started off as owner-

manager of small scale establishment. Odutoller Group of

companies is a case in point. He further stated that a good

proportion of successful professional managers relieved their

professional apprenticeship in small firms.

Still under the importance of small scale industries long made

the following assertions �To bring the vicious circle of poverty

which circulate uneasily among our people, rapid

industrialization is a must, since it will have a positive effect on

the welfare of people. He further stated that establishment of

many industries will definitely give employment to many people

thereby reducing the social problems of unemployment.

Writing on the problems of unemployment industrialization in

Nigeria large asserts that acute shortage of capital is the most

immediate problems confronting industrialization in Nigeria

today. He further stated that many business men industrialists

who liked to set up industries in different parts of the country

could not do so due to lack of sufficient encouragement on the

part of governments to induce prospective investors who may

be localities of the country.

Writing under the caption problems of industrialization, lawal

appreciated the efforts of many government in industrial

development but pointed out that it would be share hypocrisy to

over � look the problems facing industrial development in West

Africa such problems he outlined as follows:

- Shortage of capital

- Problem of skilled and unskilled workers.

- Inadequacy of market for industrial goods

- Poor transport facilities and

- Shortage of raw materials.

Still under the same caption, Teriba seems to share the same

view with lawal by citing the problem;

- Shortage of capital

- Shortage of skilled labour

- Lack of internal market but went further to mention

other factors different from those presented by lawal.

These he stated as: lack of storage facilities, lack of financial

institution, poor basic services, fear of taking risk and

corruption.

According to Udoji ,The constraint which business men have to

under go before they establish industries is discouraging to the

growth of industries in Nigeria.

On another development, Mr. Onuoha writing on small scale

bakery opined that a bakery industry can be located anywhere

in Nigeria provided that there are infrastructural facilities such

as electricity, water, good roads, easy access to raw material

supply availability of both skilled and unskilled labour.

Commenting on the problems of industrial development in

West Africa Lawal and Lobbley maintained that West African

countries are best with problems in the way to industrialization.

They listed the problems as follows:

- Shortage of investment capital and of some raw

materials.

- Lack of expertise

- The weakness of the infrastructure, including the

absence, of well � developed transporting and

communication system.

- Qualitative shortage of labour

- A whole range of social, Cultural and political problems

which re-inforce people�s natual resistance to change.

Industrialization of the rural areas is a sine-quanon for

economic emancipation of this nation. It is on this note that the

former military Administrator of Imo state, appealed to the

people of Ezinihitte local government Area (during his

familiarization tour of the area) to re � direct their energies

towards investment in manufacturing and agriculture. He

reaffirmed the need for total mobilization and participation of the

people within the local government as a pre � requisite for any

meaningful transformation of the rural area.

Stressing the contribution of small scale industries, Mr.

Chukwudire has this to say: small scale industries if, properly

organized constitute basic foundation for gradual and balanced

growth, since these industries do not require finding from

abroad, as their capital requirement are often moderate�.

According to Mr. Osuji, �for development to exist, answer must

be found to the income distribution�. He further stated answer

to these questions could be found by affecting changes into the

economic structure through industrialization.

But industrialization according to Essien �is being faced with a

number of problems in Nigeria and unless there is any effort to

minimize there problems, our investment may continue to be

discouraging�. He pointed out that progress to industrialization

has been handicapped by lack of motorabl roads in different

parts of the country. This he said were often brought about by

poor construction or total abandonment of some of the

uncompleted jobs.

An observation to this effect revealed that the contract for the

construction of Owerri � Emekuku Road which linked Ezinihitte

in Imo state with Abia state and which was awarded by the past

Administration, was abandoned mid � way by the contractor

handling it, after he had collected the mobilization fee.

The problem of adequate water supply cannot be over �

emphasized. Most industries spend a good fraction of their

entire overhead in the construction of water reservoir or

boreholes to generate their much needed water.

This situation is in no doubt discouraging to some other

investors who could not raise enough capital with which to risk

boreholes or construct water reservoir in the rural areas where

they would like to set up their industrial projects.

On the problems of revival industrialization, Mgbeiofor made

these association, �there are problems that has to be faced

when establishing industries in the rural areas; there is lack of

skilled manpower as many youngmen prefer to live and work in

the urban areas, there were no amenities in the rural areas to

attract people. It was therefore, a difficult task to attract good

qualified staff and where this must be done, it means heavy

spending on the part of the entrepreneur who must provide

amenities like housing, good water supply and electric light of

possible.

He concluded by stressing the importance of small scale

industries to the rural areas by stating that siting of industry in

the rural areas will attract more investors and hence help in

economic growth of the nation.

Writing under the development of Nigeria, Nnoli has these to

say, �the widespread view within and outside the country that

Nigeria is developing is ill � conceived and misguided�. He

further stated that it is based on this motion of development that

commits Nigeria to a wholesale imitation of others and therefore

to a wholesale repudiation of our state of being.

He wondered when Nigeria would learn to stand on her own

feet. He listed a number of commodities being produced by the

West such as cars, radio sets, agricultural machinery etc. and

further stated that the more of such items Nigeria can procure

and produce within its territory, the closer she is presumed to

come to the standard of the west and therefore the more

developed it becomes.

He lamented that the cancer � warm that has eaten deep into

the fabric of the Nigerian society today is our inevitable

powerlessness to transform out internal and external

environment into the way we need and desire.

In another development, he stated among others, some of the

characteristics exhibited by Nigerians that hinder economic

development among these are:

- High rate of migration from the rural to the urban

areas.

- Lack of interest in work etc.

Arguing this point further, he maintained that this migration is

no way helpful to the increase agricultural products in the rural

areas. Thus, the rural areas are left to decay while the

condition of the cities have been worsening because of their

inability to handle this large influx of migrants.

In the opinion of the project writer, it is this rural urban migration

that has contributed to so many social ills in our society today.

Formost among these social is unemployment. Why can people

go back to the village, where they can be useful to themselves

instead of roaming about the street only to plan all sorts of evils

ranging from raging to highway robbery.

2.3 FOREIGN RELATED LITERATURE

Weston and Brighan writing under the caption small scale

firms, outlined the characteristics of small firms as follows.

 - how capital requirement.

- Relative simple technique

- A localization market.

Writing further under this same caption Weston and Brigham

stated that it is done to the above characteristics that small

firms face a number of problems. First among these problem is

lack of managerial skills. Arguing their point further, they stated

that the keyman may not possess the full range of managerial

skill required; that he might fail to keep adequate accounting

records, financial control system and the likes.

Still on the problem of management Weston and Brigham

stated that a relative high degree of managerial training,

experience and breadth might be necessary and yet often

lacking, that because of owner � managers� preoccupation with

the present he simply does not plan for management

succession. They further stated that statistics proves that a

good number of business failures in the united states of

America have been caused by the lack of experience

management than by any other factor.

Commenting on the capital requirement they stated that the

owner may suffer more problems, that the initial capital might

be fairly large but usually he does not have so much with the

result that the firm incurs an inadequate amount of trade

credits. That in extreme cases and if the firm is inefficient, that

little capital it might have would be quickly eroded. This they

concluded, accounts for high rate of infant mortality among

small business.

2.4 RELATIONSHIP TO THE STUDY

Having reviewed some opinions and theories put forward by so

many writers, we can now pause a while to see how these

opinions relate to one another and the relationship they bear to

the topic of the project titled �Accounting and Management

problem of small scale industries in Imo state�.

Going through the literature, we discovered that apart from Mr.

E.C. Ekwonu who wrote on the important role of accountant

towards the success of any business undertaken and Mr.

Onuoha who commented on the location of small scale bakery

and stated that this could be sited anywhere provided that

there are basic infrastructural facilities, all other seems to dwell

much on the problems, importance and contributions of small

scale industries towards economic emancipation of this state

and Nigeria in general; with particular reference to some of the

problems mentioned are:

- Inadequate infrastructural facilities.

- Inadequate information flow

- Inadequate / ignorance.

- Inadequate attention to research and development.

Inadequate domestic market was also mentioned but this does

not very much apply. It is known that the level of investment

depends on the level of demand for goods and services. Imo

state with a teeming population of over give million would

definitely provide large market for any product produced within

the state. During the point home, Ezinihitte local government

area with a population of over six hundred thousand would

provide efficient market for any goods produced for local

consumption within the local government.

On the importance and contribution of small scale industries

two states commissioner for commerce and industries and the

former military governor of Imo state seems to share the same

view by stressing the important contribution which small scale

industries could make towards the development of rural areas.

Speaking on different occasions each of these commissioners

advised the people concerned to make sure that at least one

small scale industry is sited in each community under their

jurisdiction, as this would provide employment to the rural

dwellers and reduce rural urban migration.

Going through the literature, we discovered that people like Mr.

Emoadi, Mr. F.O. Okafor, Mr. Akuazaolu and finally Weston &

Brigham are the people who really touched the main focus of

this research work while all others seems to loose sight of the

management and financial records of small scale industries.

Mr. Ike describe financial records as the bed rock of any

business undertaker. He really touched the very sensitive point

hitter to ignored by many writers. Mr. Ike being a banker

wondered how a business undertaken would obtain loan from

bank without proper financial records. He concluded by calling

for change of attitude among our businessmen and

industrialists and maintained that �operation do it alone� where

by one person would be the managing director, the Accountant,

and the wife the sale manager should be stopped if we really went

to industrialize our state.

Mr. Akuazaolu in his contribution wondered how many any

business undertaken could proper without employing the

service of competent manager and accountants.

Weston and Brightam also touched the main focus of this project

work. Borrowing a leaf from Weston and Brigham and all others

who discussed the financial aspect of business undertaken, the

writer believes that lack of expertise, lack of proper financial

records and poor management acumen are the reasons behind

poor development and infant mortality of small scale industries in

Imo state and in Ezinihitte local government

area in particular, which in effect has contributed to the fewer

number of such industries in the area under review.

Take a case where a business does not observe the business

entity convention with the result that there is incessant

drawings and diversion of business ever grow? Thus, this

situation does not augur well with the prosperity of small scale

industries. In extreme cases, the business is either

permanently stunted or ceases to exist.

An important problems also highlighted is the problem of lack of

trust among our people. To this professor M.O. Ijere tried to offer

a solution. In the first place the called for a strong organized

union of small scale industrialists and stated that from this union

they would form a co-operative society; if possible product by

product. For instance, co-operative society of soap

manufacturers. With such a society, they would be able

to identify black � legs among them. Through constant

interaction, they will get to know each other and trust one

another. He concluded by saying that such a society could

easily obtain bank assistance.

That every other problem ranging from ignorance of sources of

raw material and inadequate flow of information to insufficient

fund would be taken care of.

Before concluding this discussion on the relationship of the

literature to the study, we must not loose sight of an important

problem highlighte by Dr. F.R.C. Ezemenari the format general

manager and Chief Executive Ajokuta steel company limited.

In his closing remark, he highlighted the problem of inadequate

food production and wondered how a poorly fed population

could ever be able to provide what it takes to establish and

operate viable industries.

Finally, having carried out a careful review of the opinion of

different writers about industrialization, the project writer has

discovered that most of the writers have actually focused their

attention on the rural areas which is the aim behind this project

work. However, it is easier said than, done. However we want

to see it done by organizing more seminals/workshops.

The writer also discovered that most of the writers lost sight of

the need for objective suggestions aimed at finding the lasting

solution to the problems so mentioned.

 CHAPTER THREE

3.1 RESEARCH METHODOLOGY

In order to do justice to this research work, the project writer

has employed three different methods to elicit the required

information. The project writer used Questionnaire, Oral

interview method as her research instruments. In a situation

where the respondent was unable to supply the required

information, oral interview was employed to elicit the necessary

information. Language never constituted a barner since the

project writer hails from the state. Thus, the project writer found

it very convenient to communicate orally with those who could

not read or write.

The researcher took time to explore different areas and

establishments within the local government area, in order to

observe things for himself. This has put the project writer in a
better footing to assess the magnitude of the problems

involved.

Since it is believed that observation would bring to light some

of the small scale industries which have ceased operation due

to one problem or the other, the project writer decided to

employ mainly field investigation which enable him to get first

hand information concerning the problems of small scale

industries in the local government area.

3.2 SAMPLING PROCEDURE

available statistics show that there are one hundred and twenty

well established and registered small scale industries in

Ezinihitte local government Area.

The writer got the information from All Imo State Industrial

Association (AISIA) Ezinihitte Branch. From the list, the project

writer was able to collect information from twenty of such

industries. The remaining, one hundred of the sample

population who either refused to supply any meaningful

information or the Director/Manager was not available when

the writer called;

However, the writer tried as far as possible to collect

information from each community in the local government

except where no such industries exist. Such places like

Eziudo, Udo, Ezegbugo. Oboukwu etc. supplied more than one

of such industries.

3.3 SOURCES OF DATA

The project writer obtained the information contained mostly in

the literature aspect of this work from the following sources:

- Newspapers

- Journals
 - Textbooks

- Lecture series (seminal/workshop)

- Conversation with colleagues/people e.t.c.

Finally, the project writer took time to visit the industries at their

various location in Ezinihitte local government area, so as to

substantiate the view expressed by different writers and also to

observe things for herself.

3.4 STATISTICAL TREATMENT AND ANALYSIS OF DATA

The raw data collected from industrialists have been translated

into percentages so as to enable the researcher draw a

reasonable conclusion based on the information.

In translating of percentages, the writer used the following

formula; To determine the number of small scale industries

engaged in different classes of industrial activities:-

 Let the sample size be Y

Let the number of manufacturing industries be “a”

Let the number of service industries be “b”

Let the number of Agro � Based/processing industries be “C

The percentage of the industries engaged in manufacturing is:

a
/y x 100/1

The percentage of the industries engaged in Agro-Based

processing is; c/y x 100/1

The percentage of the industries engaged in service is;

b
/y x 100/1

CLASS NUMBER OF INDUSTRIES PERCENTAGE(%)

Manufacturing A X

Service B X

Agro- C X

Based/processing

Total 20 100
From the table, the writer would analyse the data, make some

comments where necessary and then draw conclusion based

on the table.
 CHAPTER FOUR

4.1 PRESENTATION AND ANALYSIS OF DATA

The data collected from Director and Managers of mall scale

industries in Ezinihitte local government area are presented

and analyzed as shown in the table below. Raw scores are

converted into percentage for easy analysis.

During the research, a total of twenty (20) small-scale

industries in Ezinihitte local government area were visited from

where the researcher collected the information presented.

TABLE I

Q1 What is the nature of your business?

CLASS NO OF RESPONDENTS PERCENTAGE (%)

Manufacturing 6 30
Service 10 50
Agro-Based / 4 20
processing
TOTAL 20 100%
 From the table 1 above, it was observes that out of 20 small

scale industries sampled, 6 of the total figure representing 30%

of the population are engaged in manufacturing activities, 50%

are service industries while 20% of the number are Agro-

Based /processing industries.

TABLE II

Q2 How long have you been in this business?

NUMBER OF YEARS NO. OF RESPONDENTS PERCENTAGE %

1�5 2 10

6 � 10 6 30

11�20 9 45

ABOVE 20 3 15

TOTAL 20 100%
From the table II above, it is observed that out of 20 small

scale industries in Ezinihitte local government area, visited the

last 5 years, 10% are set up within the last 5 years, 30% of the

number have been in existence between 6 - 10 years 9 of each

such industries representing 45% of the total figure have been

in operation above, 10 years and up to 20 years while only 15%

represented the industries which claimed that they have been in

operation above 20 years.

It is important to note that this table has a lot to tell about infant

mortality of small scale industries in the area under review. The

total show that only a negligible number of such industries

survive for a long time. There are number of factors

responsible for this as we are going to see.

 TABLE III

Q3: What is the educational attainment of the

Director/Manager of this establishment?

Class No. Of respondents Percentage%

Primary education 9 45

Secondary education 6 30

Tertiary education 5 25

Total 20 100%

From the table III above, we observed that 45% of the

Directors/Managers of small scale industries in Ezinihitte local

government area are those who have obtained only primary

education. Also include in this number are those who never see

the four � walls of classroom. 30% represents those who

obtained secondary education. It is also important to note that

out of this number, more than 40% are primary school teachers
and retried headmaster, while only 25% represent the number

who obtained tertiary education. TABLE IV

Q4 What is the number of person employed in the

establishment?

No. of members No. of respondents Percentage (%)

1�10 6 30

11-20 4 20

21-40 2 10

41-50 8 40

Total 20 100%

From the table vi above, it was discovered that 30% of the

small scale industries visited are employing a labor force

ranging from 1 - 10 employees. 20% of each industry

employed a labour force ranging from 11 - 20 employees while

10% and 40% of the industries and 41 - 50 respectively.

TABLE V

Q5 The number of employees with higher school certificate /

degree is:

No. of employees No. of industries Percentage (%)

None 9 45

1�5 5 25

6 � 10 1 5

Above 10 5 25

Total 20 100%

From the table V above, 74.2% of small scale industries in

Ezinihitte local government are indicated that they do not

employ any higher school graduate. 12.5% claim that they

employ higher school graduates ranging from 1 - 5 while 9.2%

and school graduates ranging from 6 - 10 and above

respectively.
TABLE VI

Q6: What is the nature of the ownership of this establishment?

Ownership Response Percentage (%)
Sole proprietorship 10 50
Partnership 10 50
Co-operative -
Total 20 1005

From table VI above, it shows that 10 small scale industries in

Ezinihitte local government area, represently 50% of the
population are owned by one person (sole proprietorship) while
10 of the other represents 50% are jointly owned (partnership)
while none indicated that it is a co-operative establishment.

TABLE VII
Q7: What class of labour force do you find most useful?
Class of worker No. of industries Percentage (%)
Skilled workers 9 45
Semi-skilled 10 50
workers
Unskilled workers 1 5
Total 20 100%
Table VII above shows that as large as 45% of the total

number of 20 small scale industries visited by the researcher

prefer and employ skilled workers while 50% and 5% of the

number employed semi-skilled and unskilled workers

respectively. TABLE VIII

Q8: Do your employees always co-operate with you?

Response No. of industries Percentage (%)

Yes 13 65

No 7 35

Total 20 100%

From the table above, it was discovered that only 13 small-

scale industries representing 65% of the population indicated

that their employees give them maximum co-operation. It is

important to note that these industries are mainly those

employing only one or two people. 7 of each industries

representing 35% showed that they are having one problem or

the other with their employees.

Asked to specify the problem(s) they encounter with them, the

following problems are specified:

i. Eye service

ii. Insubordination

iii. Inefficiency

iv. Constant demand for pay increment

v. Industrial espionage

vi. Economic sabotage

TABLE IX

Q9: The amount of capital employed in this business is

between;

Amount employed No. of industries Percentage (%)

N1, 000 - N10, 000 10 50
N10, 000 - N50, 000 4 20
N50, 000 - N250, 000 2 10
Above N250, 000 20 100%
 We discovered from the table IX above that out of the 20 small

scale industries in Ezinihitte local government area, 50%

employs capital ranging from N1,000 � 10,000, 20% has capital

employed from N10,000 - N50,000 while 10% and 20% of such

industries claim that they have capital employment ranging from

N50,000 � N250,000 and above N,250,000 respectively.

TABLE X

Q10: How was the initial capital with which to set up this

establishment secured?

Source of funds No. of industries Percentage (%)

Personal savings 5 25

Borrowing from friends 8 40

Borrowing savings 7 35

Bank / government loan - -

Total 20 100%
From the table X, 5 small scale industries in Ezinihitte local

government area, representing 25% indicated that they

acquired their initial capital through personal savings. 40%

borrowed from friends and relations while 35% got their capital

by both personal savings and borrowing from friends and

relations. None out of the 20 small scale industries admitted

ever received any bank or government loan. TABLE XI

Q11: Has this business ever received any grant from the

government?

Response No. of response Percentage (%)

Yes - -

No 20 100

Total 20 100%

From the table XI above, we discovered that there is no positive

response as regards government grant. All the industries visited

claimed that they have never smelt any government

subvention.

Q12: What books of account do you keep? As they are asked

to specify the books of account they keep, about 85% of such

industries stated that they only keep record of each transaction

while only 15% of the population indicated that they keep what

can be said to be a proper book of accounts. It was also

discovered that it was these few industries that keep proper

books of account that also prepare final accounts to determine

their annual profit. These are mainly partnership business. The

rest claim that since they own the business alone, they have

no need for final accounts. That they can always know when

they are making a profit or loss.

 TABLE XIII

Q13: Who keeps the book indicated in no. 12 above?

Personnel No. of industries Percentage (%)

Director / Manager 10 50

Director /Manager spouse an employee 5 25

Total 20 100%

From the table XII above we discovered that out of 20 small

scale industries in Ezinihitte local government area visited 10

of them representing 50% of the population have their account

kept by the Director / Manager, and that 5 of such industries

representing 25% have their accounts manned by Director /

Manager spouse while 25% claimed that they employ an

external person to take charge of their account.

TABLE XIV

Q14: What is the qualification of your accounting officer?

Qualification No. of response Percentage (%)

WASC / RSA I 2 10

OND / RSA II 10 50

HND / BSC 2 10

Others specified 6 30

Total 20 100%

From the table XIII above, we discovered that 2 representing

10% of the small scale industries in Ezinihitte local government

area have their accounts kept by a personnel holding WASC /

RSA I, 10 representing 50% of the industries employ either a

personnel with OND / RSA II to take charge of their books

while 10% and 30% employ HND / BSC holder others specified

respectively to take charge of their books.

TABLE XV

Q15: What method of book-keeping do you adopt?

Method adopted No. of industries Percentage (%)

Single entry 10 50

Double entry 10 50

Total 20 100%

The table XV above shows that 10 small scale industries in

Ezinihitte local government area adopted single entry method

of book-keeping. It is important to note that included in this

number are those who do not keep any book at all. Such

people claim that they can always know they are making a

profit or loss. In other words, they keep their own books in their

brain. We also discovered from the above table that 50% of

such industries claim that they adopt double entry method of

book-keeping.
TABLE XVI

Q16: Do you encounter any problem in marketing your

product(s) / service(s).

Response No. of response Percentage (%)

Yes 12 60

No 8 40

Total 20 100%

From the table XVI above, we can deduce that 60% of small

scale industries in Ezinihitte local government area encounter

some problems in making their product(s) while 40% of such

industries stated that they do not have any problem in

marketing their product(s) /service(s). However, most of these

industries lamented on high cost of raw materials which limit

their production.

As to specify such problems they encounter in marketing their

product(s) / service(s), those in the processing industries

especially the palm oil / palm kennel industries complain of

lack of buying agent. They also complain of exploitation by the

few agents who would always like to make 100% profit from

their business.

These in service industries like the hair dressing, motor

mechanics, tailoring e.t.c complain of low turnover probably

because of economic recession in the country.

On what problems they encounter in acquiring the necessary

raw materials. Most of them complained bitterly of high cost of

such of material in some cases like the bakery industries most

of whom are temporarily closed down, such raw materials may

not be available at all.

 Mr. J. U. Uwazie managing Director Uwazie and sons Block

industry Obizi Lamented on the high cost of tipper vehicle in

addition to high cost of cement.

Asked to state what they consider to be the major problems

militating against the establishment and development of small

scale industries in Ezinihitte local government area, the

following problems were enumerated:

- Inadequate infrastructure facilities

- High cost of pre-feasibility studies

- Government stringent policies

- Lack of technical service

- Lack of buying agents

- Outbreak of disease poultry

- Inadequate funds

- Lack of some basic raw materials

- Inadequate manpower

- Lack of co-operative work-force.

- Existence of fake industrialists

These problems will be discussed in details in the next chapter.

It is important to note that such problems which relate to the

decision making process like planning, management

accounting are never mentioned by the entrepreneurs. Such

problems are discovered by survey and observation.

On whether they have any possible solutions to the above

problems, their response were mainly directed to calling

government�s attention towards the provision of infrastructural

facilities, with much emphasis on the provision of electricity and

public water supply. Some also commented on government

stringent policies and stated that the earlier the government

releases these stringent policies the better for industrial

development in Imo state. The attention of the government is

also drawn to the need to have an industrial estate infrastructural

facilities.
On what advice they would like to give to prospective investors,

the response got were mainly in two directions. Some were

advising investors to make sure that they have acquired the

necessary capital and experience as well as ensuring that they

would have a steady supply of raw materials which is the major

disease currently plaguing many small scale industries, in the

area especially the Bakery and Block module industries.

On the other hand, some were advising in tending investors to

wait until such a time the government would provide some of

the basic industrial infrastructural facilities unless they would

be in a position to provide such basic infrastructure by

themselves and be sure that their production capacities would

covered overhead expenses.

 CHAPTER FIVE

5.1 DISCUSSION ON THE RESULT OF FINDING

During the period of investigation, questions were directed

towards ascertaining the authentic information sort by the

researcher. From the investigation, the researcher was able to

discover a number of working hypotheses.

In discussing the results of the investigation, the researcher

wishes to discuss the problems under two broad categories:

i. Type one problems,

ii. Type two problems

Type one problems are those problems, which lie largely

outside the control of the entrepreneur. These are the

problems to be solved by the government in the interest of

industrial development of the nation.

 While type two problems are those problems deriving from

the entrepreneur, his limitation and his decision making

process.

Type one problem

5.2 INADEQUATE IN FRACTURAL FACILITIES

One of the most basic problems that show down the pace of

industrialization in Ezinihitte local government area and

elsewhere is the absence of, or inadequate provision of

infrastructural facilities such as road, equipment and system.

In order to establish and successfully operate any industrial

venture, one requires a good location with enough land for

present activities and future expansion, adequately served

with access roads, electrical power, water and other utilities

such as gas or other fuel oils, and good communication

system. Unless these are somehow provided by government

or other agencies, a prospective industrialist who tries to

provide them himself may well find out that he cannot

finance both these and the industry which result is that

these problems push what should be a small industry

beyond that scale.

5.3 LACK OF GOVERNMENT INCENTIVES

As far as the project writer knows, there is no national or state

programme on industrialization to serve as a guide to potential

industrialists. As a result, we find that all lacks government in

the country is always harping on the need to industrialize the

rural areas in particular. All the same time, one finds that there

are no real incentives to encourage such a move. What is

done in an adhoe and fragmented fashion?

It is needless to mention here that lack of reasonable

government incentives has been identified as one of the

serious problems responsible for the slow pace of

industrialization in Ezinihitte local government area and

indeed elsewhere. During the course of this research, none

of the respondents to the interview admitted ever receiving

any encouragement from the government whether materials

moral or financial.

Most of them complained that their various attempts to

secure government loan proved abortive because of the

stringent measures involved as well as the corrupt practices

of the officials responsible for issuing such loan.

5.4 HIGH COST OF PRE � FEASIBILITY STUDIES

The benefits of pre � feasibility studies to the success of any

business understanding cannot be over emphasized.

Alas: the cost of these studies is beyond the reach of an

average industrialist. Consequently, a lot of business are

established in Nigeria on figment of imagination without first

finding out the financial and technical viability nor market

potential of the products.

It is note worthy that the success of any business depends

on the degree and quality of planning undertaking. Projects

that are not properly planned soon develop problem which

may be very costly to rectify.

5.5 GOVERNMENT STRINGENT POLICIES.

Certain government policies constitute a treat to the survival

of small scale industries. In the words of Dr. Ezeife,

�establishment of small scale industries in Imo state is like a

sack race� he stated that government constitutes itself into a

sack towards the establishment of small scale industries in

the state. The government asked the investors to establish

industries, the same government imposes stringent policy

towards the establishment of such industries. There are too

many institutions with which a small scale industrialists has

to cope only to set up an industry. For example, it takes

years to get certificate of occupancy if one finds land.

Thesame problem applies to locational approval or even

getting a loan from the government.

5.6 LACK OF TECHNICAL / MANAGEMENT SERVICE

There is vertically no place to go and obtained immediate

relief when there is a serious technical problem.

Most small-scale industrialists are not versed in

management and before they know it, already bankrupt.

5.6 LACK OF BUYING AGENTS

Virtually there is no co-coordinated marketing strategies for

scale industrialists need organized markets to dispose of

their goods. This problem becomes more serious when it

comes to export goods. Those in palm oil and palm kernel

industries complain of exploitation by government buying

agents.

5.8 OUTBREAK OF DISEASE

This problem was identified as being particular to only poultry

farmers complained of shortage of drugs and inability to get

the assistance of veterinary officers to help them

select disease free � birds.

They pointed the problem of water supply as another serious

problem threatening the efficient poultry management

because they spent much to provide fresh water to the birds.

 On the supply of feeds, they complained that most of the

feeds produced in this country are of poor quality and lack

the necessary concentrates and vitamins required by the

birds for increased egg production.

TYPE OF PROBLEMS

5.9 POOR FINANCIAL RECORDS

Looking at tables xii, xiii, xiv, under the presentation and analysis

of data, we can rightly conclude that most small scale industries

in Ezinihitte local government area maintain inadequate financial

records. From table xii, we discovered that 75% of the small

scale industries in Ezinihitter local government area have their

accounts kept by the manager / Directors.

Most of these managers / Directors do not understand the basic

principles of book � keeping. Even when the spouse is

employed in the same of division of labor of share of

responsibilities, the spouse may also lack this basic

knowledge. Consequently, many small-scale industries in

Ezinihitte local government area operate in confusion, unable

to distinguish between their personal entity vonvention is totally

lacking. Consequently, there is constant diversion of operating

funds to he private needs of the managing Director.

Again they cannot project future cash needs and do not have

enough financial records which their bankers may require in

the event of a loan application.

With due permission, the project writer stands to maintain that

this poor financial records is the major cause of infant mortality of

small scale industries in Ezinihitte local government area and

indeed Imo state and Nigeria in general. This is because

whenever a misfortune striker, the Director / manager tends to

utilize the business funds and since he does not keep adequate
financial records and also has no collateral security to obtain

loan from bank or from government, the business cease to

exist. From table ii we discovered that over 90% of small scale

industries set up in Ezinihitte local government area do not last

for more than ten years.

5.10 POOR MANAGEMENT

It would be hard to identify a human activity in which the quality

of management is not a primary factor in determining the degree

of success. In Ezinihitte local government area and Imo state in

general, most small scale industries are close unit family

business, unwilling to being outside talents into the organization

to run the affairs. However, in the early stages of these

organization, the entrepreneurs and their family members may

just be sufficient to manage the affairs of the organization. But as

it expands, the business may get too complex for the

family to manage done especially where they employ qualified

personnel, they find it difficult t give them free hand to operate.

5.11 INADEQUATE FUNDS

Insufficient sources of finance is one of the major problems

militating against the establishment and effective operation of

small scale industries in Imo State and Ezinihitte local

government area in particular. The attitude of banks and other

financial houses is immical to small scale industries.

Responding on this issue the managing Director Nack-jones

chemical industry umelagba explained that this attempts to

secure loan from the government was unsuccessful, and said

that he doubts his possibility of success if he make further

approaches the state�s credit guarantee scheme due to reports

of high rate of defaults in loan repayments by borrowers in the

past, most of whom he claimed are fake industrialists. On the

possibility of obtaining loan from commercial banks he said that

he was discouraged from borrowing from bank because of the

stringent measure involves as well as high rate of interest

charge coupled with the fact that such loans are not long term.

5.12 INADEQUATE PLANNING

The success of any business dependents on the adequately of

its planning. Experience has shown that many businessmen

when going to overseas would end up buying machinery and

equipment for small scales industries after being subjected to

some scale talk. Many times these machines arrive and remain

in crotes. Allied to this is the problem of emergency feasibility

studies prepared just so that the investor pays so as to make

the project have the look of bank ability.

5.13 LACK OF SOME BASIC RAW MATERIALS

Limited capital makes the small scale industrialists purchase at

much higher prices than larger industries and it equally affect

their sales.

In addition to this, there is total lack of some basic raw

materials in some small scale industries in Imo state. The

chronic nature of this problem in Ezxinihitte local government

area has resulted in retrenchment of workers and closure of

most industries.

The mostly affected are the bakery and block industries.

Expressing how this problems has affected their business,

they explained that it was not possible for them to obtain

direct supplies from flour mill and that the much with which

the industry is operating at moment were obtained from

distributors at cut throat prices.

 5.14 INADEQUATE MANPOWER

While some industries lay off their workers due to reason or the

other, those industries, which require highly skilled manpower

like printing press, hold that inadequate manpower is their

problem. Research has shown that this problem is rooted on

the continued exodus of people from rural to urban areas,

populary known as rural � urban migration. Research also

proved that higher school graduates do not like to work in the

rural areas. The resultant effect of this problem is that there is

high shortage of skilled labour for small-scale industries

operating in Ezinihitte local government area.

On the reason for this mass exodus to the urban centers, it

was equally discovered that the dull with nature of life in the

rural areas coupled with lack of basic amenities like, water,

electricity, good roads and recreational facilities has been the

reasons behind the exodus to the urban centers.

5.15 LACK OF CO-OPERATIVE WORK FORCES.

The research also proved that lack of a discipline and co-

operative work force constitutes a problem in some small scale

industries in Ezinihitte local government area. Table Viii in

chapter 4 proved that over 80% of the small scale industries in

Ezinihitte local government area are having one problems or

the other with their employees. From this we can conclude that

small scale industries in Ezinihitte local government area and

elsewhere find it difficult to control their staff. However, it was

discovered owner � managers tend to employ their son-in-law,

their relations and friends who may be very difficult to control.

5.16 IGNORANCE / INADEQUATE INFORMATION FLOW

It is noted that the most essential inputs into a modern

industries process include raw materials, machinery and

equipment, and the skill and knowledge of production and

maintenance personnel, unless one knows where these are

available and in what quantities and qualities, and plans for

and assembles then at the appropriate time and place, one

cannot be sure of successful or profitable operation of any

industrial establishment.

Many people are not aware of the range of services available to

them from governmental and private organization in this regard, it

is necessary to publicize to the right audiences the services

offered by the institutions already in place. During the course of

this research, the project writer discovered that well established

factories which fare very well in operations, only suddenly slow

down and some times even stop operation either because there

is no raw materials or some major competent of the installations

has broken down and could not be fixed. Quit often, too, the

operators of the factory are unaware that some raw materials

useable in their establishment are available not too far from

them or that there craftsmen, Technicians and Engineers

capable of repairing the faulty equipment in their locality.

Such a situation, based on ignorance of what is available in

ones immediate business environment can only contribute to

the slow pace of industrialization of the state.

5.17 OVER � RELIANCE ON THE MANUFACTURING OF

ONE PRODUCT.

The researcher discovered during the course of her study that

one of the problem contributing to slow pace of industrialization

in Ezinihitte local government area is the problem of having all

eggs in one basket. This is a situation � whereby a factory

produces only one product. The gravity of this problem can be

apparent when we look at the plight of so many industries

temporarily closed down.

Perhaps, this may be one of the reasons for high mortality of

small-scale industries in the locality. Thus, it is recommended

that wherever possible, more than one product should be

envisage so that the market and the other risks are reduced by

spreading.

5.18 LACK OF TRUST/CO-OPERATION AMONG

INDUSTRIALISTS

Another problem confronting industrial progress in the state is

lack of trust and cooperation among the businessmen.

Everyone wants to do it all alone probably to answer managing

director. But unfortunately the resources are not always there.

Perhaps if the business had not cultivated the spirit of joint

venture, the story would have been different. The problems of

human and economic resources would have been largely taken

care of in the words of professor Mr. O. Ijere �a business man

IN Imo State is a love ranger�.

However, it is discovered that one of the reasons for this lack

of trust and co-operations among our people is the joint

venture in the past. To this, partnership deed is highly

recommended. This is a situation whereby all the relationship

are put twin foes overnight.

5.19 EXISTING OF FAKE INDUSTRIALIST

It was also discovered that the existence of false industrialists

is one of the problems of small scale industries in the state.

Careful investigation have shown that loan defaulters are

mostly fake industrialist. Such people claim what is due to a

genuine farmer or industrialist due to their position in the

society.

5.20 POVERTY/SHORTAGE OF FOOD SUPPLY

Poverty and low standard of living of the people, resulting in

poor savings and low industrial investment is one of the

problems contributing to the fewer number of small scale

industries in Ezinnifite local government area and indeed in the

state and the nation. Poverty and unemployment are one and

the same thing. It is not just the problem of the poor. The local

government and indeed the state suffer, the country feels it

and mankind as a whole is played with greater problems.

Inadequate food production is a force to reckon with. According

to Dr. F. R. C. Ezemenari, former General Manager and chief

Executive Ajaokuta steel company limited, steel company

limited. �an improperly fed population can never be able to

proved what it takes to establish and operate viable industries�.

CONCLUSION AND RECOMMENDATION

We have to discussed in this chapter some of the major

problems militating against rapid industrialization of Ezinihitte

local government area and Imo state in general. The list is by

no means, exhaustive but the researcher has tried as far as

possible to discuss the major problems of such industries so as

to enable the reader of this research work form an informed

judgment of the problems of small-scale industries in Imo state.

This section wills proceed to draw a reasonable conclusion

based on the result of the investigation.

It was discovered from the research that small scale industries

in Imo state and Ezinihitte local government area in particular

are faced with mrgiads of problems ranging from:

? Inadequate infrastructural facilities

? Poor financial records

? Poor management

? Inadequate funds

? Lack of government incentive

? High cost of pre-feasibility studies

? Government astringents policies �

? Lack of technical / management service

? Lack of buying agents

? Inadequate planning

? Lack of co-operative work force

? Ignorance / inadequate information flow

? Existence of fake industrialists

? Poverty / shortage of food supply

? Lack of trust / co-operation among themselves

? Over � reliance on the manufacturing of one product.

Having discussed these problems, the project writer wishes to

conclude that both the government and the industrialists

themselves have their own share of blame towards slow pace

of industrialization of the state and Ezinihitte local government

area in particular.

On the part of government:

? Lack of government incentives,

? Lack of inadequate infrastructural facilities,

? Government stringent policies etc.

Are the factors of small scale industries in Ezinihtte local

government area. Lack of basic amenities in local government is

responsible for shortage of skilled manpower in the area.

Provision of basic amenities such as water, electricity and good

roads will reduce rural � urban migration and increase

manpower availability in the area thereby improving the

prospects of such industries in the local government in

question.

On the part of the industrialists:

? Poor financial records

? Operation do it alone

? Manufacturing of one product and a host of others are the

factors responsible for poor development and high rate of

infant mortality of small scale industries in Ezinihitte local

government are of Imo state.

RECOMMENDATION

The problems so high � lighted are not the problems of death

which eludes solution. Thus, one cannot claim to have done

justice to this research work without putting up some,

suggestions aimed at finding a lasting solution to the problems

militating against the establishment of small scale industries in

Imo state. Based on the results of the investigations, the

researcher wishes to offer the following suggestions towards

the solution of these problems as fore � mentioned.

INFRASTRUCTURES

Because of the critical importance of infrastructure facilities, it is

recommended that government should map out funds especially

for provision of infrastructral facilities if she really interested in

industrializing the state. Such funds should be used to contract

access roads, provide electricity to rural areas, provide public

water supply, telecommunication systems and to

equip industrial estate in each of the twenty � seven local

government of the state. Rentals for these facilities industrialists

using them.

GOVERNMENT STRINGENT POLICIES

The government should try to relax some of the stringent

policies which mostly affect small scale industries in the state.

To this, the project writer recommends that the government

should strive to make a properly designed and well organized

small scale industries policy in order to encourage the setting

of each industries.

TECHNICAL / MANAGEMENT SERVICE:

There should be a place where an industrialist can go to obtain

information of general nature or technical or manager nature.

In addition, extension services personnel should be visiting all

small scale industries in their areas for technical and

managerial advice. To this, the researcher wishes to

recommend for a unit in the central investment company or the

ministry of commerce and industry whose main function would

be to provide technical / management service to small scale

industrialists. This unit, if properly organized would eliminate

the existence of fake industrialists, since these personnel must

know whom the industrialists are and what their respective

fields are.

RAW MATERIALS
Considering the quantity of this problem, government agencies

should identify raw materials which are in bulk demand and

purchase them so that small scale industrialists with little

capital can individually purchase limited quantities to keep their

industries going. This will be more meaningful for raw materials

imported form abroad. Again government should look into the

provision / production of certain essential raw materials in

sufficient quantity.

MARKETING:

The product of small scale industries such as palm oil, palm

kernel, cocoa should be purchase by patriotic government

buying agencies and supported to government establishment

such as ministries and parastatals. The export of such

products can also be organized by government.

HIGH COST PRE � FEASIBILITY STUDIES

It is noted that there is no where in the world where the cost of

feasibility studies is low but the government through its

agencies can proved these services free where the ost of such

studies is below N200,000 and to capitalize these service if the

cost is above such amount.

INADEQUATE MANPOWER:

To this, the attention of government is drawn to the need of

producing basic amenities in rural areas to reduce the problems

of rural � urban migration which has been identified as being

the brain behind insufficient supply of skilled manpower in

Ezinihitte local government area and indeed any other rural

areas in the state.

LACK OF CO-OPERATIVE WORK FORCE:

This is probably the most difficult point to deal with. It has been

discussed that the entrepreneur exploited, the workers in

various ways. To this, writer suggests that the entrepreneurs

give their work force freer hand to act. They should provide

them with reasonable incentives so that they would be

encouraged to develop into a disciplined and dedicated work

force for the efficient production of goods and services which

our people would patronize.

EXISTENCE OF FAKE INDUSTRIALISTS:

Forming a very strong small-scale industrial association, which

should work very closely with government to identify genuine

small-scale industrialists and their respective fields, can solve

the problem of fake industrialist. With this association, every

benefit due to small-scale industrialists would be channeled to

the right people. The association should have a secretariat in

each of the twenty � seven local government area of the state

where the members could go when they require information of

general nature.

INADEQUATE ACCOUNTING INFORMATION FLOW /

IGNORANCE:

If the state is really interested in industrialization, it should work

in collaboration with the association of small-scale industries to

design a strong system, which must be developed and

implemented for collection, strong, retrieval and dissemination

of accounting information about crucial production, input; about

natural resources and raw material, about machinery and

equipment, their availability by categories, types and prince,

their service and maintenance schedules.

INADEQUATE FUNDS:

The research proved that inadequate fund is among the most

toothing problems of small-scale industries in Ezinihitte local

government area and indeed in the state as a whole. The

solution to these problems can come from two main angles:

i. FORMATION OF CO-OPERATIVE SOCIETY: It is

recommended that small scale industries should be co-

operatively organized to enjoy the numerous

advantages accruing to co-operative ventures. Through

co-operation, raising of funds would no longer impose

the greatest problems. The society can act as in

underwriter to loans extended to their members by the

Nigerian bank for commerce and industries (NBCI) on

other financial institutions. Through co-operative,

members could get to know each other and build trust

among them. Alternatively, the formation of partnership

could solve the problem of finance to a certain extent.

 However, the bitter experiences of people who have

tried joint venture in the past tends to discourage

people from going into partnership. Here, it is

suggested that every aspect of the relationship be put

down in writing so that friends do not turn goes

overnight.

ii. NON-INSTITUTIONALIZED SAVING METHODS:

One way these small scale industrialists could help

themselves to raise finance is through the process of

non-institutionalized saving method. this is a system

whereby a group of people mutually agree to come

together and pull their resources together in order to

assist themselves. They collect an agreed amount of

money each month and the total sum given to a

member of the group in twin in a pre-arranged order.

This goes on until all the members have collected.

There is of course no interest attached. The whole

 arrangement is based on mutual trust as common

bond. By this arrangement such groups assist in

mobilizing capital for their members.

Finally, the federal/state department of co-operatives should

gear their efforts to get credit unions established in all nook

and clammy of the state. Many developing countries rely

increasingly on such organization to mobilize income. Thus,

credit union could be a very effective tool for mobilizing

domestic savings among the people at the grassroots.

POOR FINANCIAL RECORDS / POOR MANAGEMENT

Poor financial records and poor management have been

identified as the chief cause of high rate of infant mortality of

small scale industries in Ezinihitte local government area and

also the main reason why most small scale industrialists are

unable to raise loans from industrialists should have a change

of attitude by trying as much as possible to employ persons

who have basic knowledge of book-keeping to keep their

books for them. Operation do it alone whereby the manage

would also be the Accountant, the supervisor etc. should stop.

Alternatively, the ministry of commerce and industries through

other government agencies like the central investment

company should try to establish a center in each of the local

government of the state to provide management services to

small scale industrialists, specifically on basic book-keeping

and management other management services to be provided

at the center would include:

i. Training of proprietary and supervisors in modern

management methods.

ii. Giving management advice and guidance including

the need for adequate planning.

 iii. Marketing counseling, including sales strategy

advertising etc.

iv. Feasibility studies

v. Identification of business opportunities.

To supplement this, seminars and workshops should be

organized periodically in each of the local government of the

state on book-keeping and basic management.

 BIBLIOGRAPHY

CHUKWUDIRE G.U: STRATEGIES FOR NIG.

ECONS, RECOVERY (The polytechnic press oko).

ENO L. INANGA : PRINCIPLE OF ACCOUNTING

(Heinennld Book Nig Ltd Ibadan 1985).

WESTON J. F. &

BRIGHAM E. F.: MANAGERIAL FINANCE (The

Dryden press USA 1977)

LAWAL .A. : A/LEVEL ECONOMICS OF

WEST AFRICA

(Onibaneje press & book industries

Ltd Ibadan 1975).

LOBBLEY .D. &

LAWAL .A.: SUCCESS IN ECONOMICS

(Africa universities press Ltd London).

LONGE .F.: MODERN ECONOMICS OF

WET AFRICA
 (Illesanmi press and sons Nig. Ltd press).

NNOLI OKWUDIBA: PATH TO NIGERIAN

DEVELOPMENT (Longman group Ltd London 1981).

LUCEY .T.: COSTING (Spohiswoode Ballantyne

Ltd colcheste

Essex Britian).

TERIBA .O.: CERTIFICATE ECONOMICS FOR

WEST AFRICA

(Longman Group Ltd London).

 APPENDIX

QUESTIONNAIRES

Department of Accountancy
.
Dear Respondent,
The researcher is a student of the above institute and is
conducting a research work on the �Accounting and
management problems of small scale industries in Imo state. A
case study of small-scale industries in Ezinihitte local
government area.

This questionnaire is designed as a tool with which to

extract the necessary information needed in carrying out a
project work.
The researcher would be pleases if you complete the
questionnaire for her as this will help make, this research work
a success. All information supplies will be treated confidently.

Yours faithfully,
Research Questionnaire for Managers / Directors of small

scale industrial establishments

Please tick (?) where applicable.

Name of establishment:

Name of Manager/ Director:

Sex: male ( ), female ( )

1. What is the nature of your business?

a. Manufacturing ()

b. Service ()

c. Agro-Based/processing ()

2. How long have you been in this business?

a. 1 � 5 years ()

b. 6 � 10 years ()

c. 11 � 20 years ()

d. Above 20 years ()

3. What is the education attainment of the Manager / Director

of this establishment
 a. Primary education b.
()
Secondary education
()

4. What is the number of persons employed in

this establishment?

a. 1 � 10 ()

b. 11 � 20 ()

c. 21 � 40 ()

d. 41 � 50 ()

5. The number of employees with higher school

certificate / Degree is

a. Name ()

b. 1 � 5 ()

c. 6 � 10 ()

d. above 10 ()
6. What is the nature of the ownership of this establishment?

a. Sole proprietorship ()

b. Partnership ()

c. Co-operative ()

7. What class of labour force do you find most useful?

a. Skilled ()

b. Semi � skilled ()

c. Unskilled ()

8. Do your employees always co-operate with you?

a. Yes ()

b. No ()

9. If no, specify the problems you encounter with them.

-------------------------------------------------------------------------------
.

10. The amount of capital employed in this business is between

a. N1000 � N10,000 ()

b. N10,000 � N50,000 ()

c. N50,000 � N250,000 ()

d. Above N250, 000 ()

11. How was the initial capital with to set up this establishment

secured?

a. Personal savings ()

b. Borrowing from friends ()

c. Savings / Borrowing from friends ()

d. Banks loan ()
12. Has this business ever received any grant from

the government?

a. Yes ()

b. No ()

13. What books of account do you keep?

Please specify.
-------------------------------------------------------

14. Who keeps the books indicated in (13) above?

a. Manager / Director ()

b. Director / Manager�s spouse ( )

c. An employee ()

15. Who is the qualification of your accounting officer?

a. WASC / RSA I ()

b. OND / RSAII ()

c. BSC / HND ()

d. Others specify ()
16. What method of bookkeeping do you adopt?

a. Single entry ()

b. Double entry ()

17. Do you encountered any problem in marketing your

product / service?

a. Yes ()

b. No ()

18. If yes what are they?

a. -----------------------------

b. -----------------------------
c. -----------------------------

19. What problems do you encountered if any in acquiring

the necessary raw materials?

a. -----------------------------

b. -----------------------------
c. -----------------------------

d. -----------------------------