ACCOUNTING AND MANAGEMENT PROBLEMS OF SMALL SCALE INDUSTRIES IN IMO STATE (A CASE STUDY PF SMALL SCALE INDUSTRIES IN EZINIHITTE LOCAL GOVERNMENT AREA
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.
- 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.
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