NAIRA EXCHANGE RATE DEPRECIATION AND DOMESTIC INFLATION IN NIGERIA

 

 

ABSTRACT

The research work critically examined the extent to which naira exchange rate depreciation had affected domestic inflationary rate in Nigeria between 1985 – 2000. Therefore, in this study, the researcher examined the trend of inflation and exchange and the relationship between the two variables.   A model was specified to show the relationship between both variables.  Also interest rate was included in the model as one of the variables that affect inflation.The model was then estimated using multiple regression method and variable statistical tests where carried out on the regression equation. The result was analyzed accordingly. Moreover, the result of the statistical test shows that exchange rate depreciation of Naira is significant in explaining variation in the rate of inflation.

Finally, the data for the project work was collected from most recent years in order to make finding, adequate in explaining the cause of inflation in recent times.

 

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TABLE OF CONTENTS

 

CHAPTER ONE

Introduction                                                                                                1

1.1            Background to the study                                                                   1

1.2            Statement of problem                                                              3

1.3            Significance of study                                                               5

1.4            Objective of the study                                                             5

1.5            Research hypothesis                                                                6

1.6            Scope of study                                                                        7

1.7            Definition of terms                                                                            7

Reference                                                                                 8

CHAPTER TWO                                     

Literature review                                                                               9

2.1            The concept of exchange rate                                                  9

2.2            Exchange rate management in Nigeria                                     19

2.3            Inflation – a concept                                                                28

2.4            Theories of inflation                                                                32

2.5            Inflation in Nigeria                                                                  37

2.6            Exchange rate depreciation and inflation in Nigeria                          41

2.7            Empirical evidence                                                                  43

Reference                                                                                 46

CHAPTER THREE

Research methodology                                                                      48

3.1            Method of data collection and analysis                                   48

3.2            Theoretical framework and model specification                      48

Reference                                                                                 53

CHAPTER FOUR      

Analysis of result                                                                    54

4.1            Presentation of result                                                              54

4.2            Analysis of result                                                                    55

CHAPTER FIVE

Summary, conclusion and recommendation                                               57

5.1            Summary                                                                                 57

5.2            Conclusion                                                                              58

5.3            Recommendation                                                                     58

 

 

 

CHAPTER ONE

 

INTRODUCTION

1.1            BACKGROUND TO THE STUDY

The naira exchange rate depreciation coupled with persist increase in the inflationary rate has been a major bane on economy of Nigeria.  To a layman inflation is a phenomena to embrace as his income increases daily without knowing the harmful side of such an increase.  Whether there is anything like depreciation or an improvement in the exchange or whether is income is nominal or real the layman do not know.

But this complementary problems so to say of naira exchange rate depreciation and inflation has been a thought of obesity in the hearts of Nigerians past and present governments and many patriotic Nigerians.

The pegging of, inflation in Nigeria can be said to be a direct result of the policies of the country’s governments to stimulate a fast rate of economic growth and development, since 1951 when the ministerial government was introduced between 1984 and 1986, the naira was quoted against dollar and pounds as the only intervening currencies which was in line with the International Monetary Fund (I.M.F) demand.  I.M.F had earlier complained that naira exchange rate was rising above the stipulated 2% limit.  The naira was then devalued at 1.000 4 US dollar.  The inflation rate in Nigeria was not serious problem before her independence.  But immediately after the civil war i.e. from 1970’s, the inflation rate in Nigeria took another dimension.  The value of naira as against dollar and pounds sterling started to deteriorate, in 1970, it was a naira to 1.400 dollar and 0.584 pounds sterling.  In 1971, it was 1.44 dollar and 0.582 pounds sterling to a naira.  In 1973, it was 1.519 dollar and 0.614 pounds sterling to a naira.  In 1974 it was 1.589 and 0.675 pounds sterling to naira which increased to 1.623 dollars and 0.734 pounds sterling in 1975 as a result of Udoji salary award of 1974 increased wage extensively.  Higher wages increased the purchasing power of consumers thus, leading to increase in their prices.

The introduction of Structural Adjustment Programme (SAP), and second-Tier Foreign Exchange (SFEM) in 1986 on one of government’s major policy packages, was aimed at making the over, valued naira exchange rate more realistic and responsive to market forces.  Regrettably, C. Anyanwu (1989) observed, the SAP/SEFEM was a disaster that was fast destroying the foundation of Nigeria economy.  There was consequent persistence of exchange rate depreciation of the naira (from 1.5691 naira to 1.0 dollar at the end of September 1986, 7.8950 naira to 1.0 dollar by mid February 1990).  Also by August 1998, the dollar was sold for 21.9960 naira at the Foreign Exchange Market (FEM) while at parallel market it was sold for 45 naira.  The value of naira continued to depreciate to the extent that the exchange rate was less than one dollar to a naira before 1990.  It was 0.119 US dollar to a naira in 1990.  This depreciated to 115.7 to a dollar by the 12 April, 2001 (CBN) 1994.  By 2003, it has risen N130 to the US dollar.

 

 

1.2            STATEMENT OF PROBLEM

The depreciation of naira persistently, has various inflationary effects on the economy of Nigeria.  The effects of this macro-economic problem can be highlighted in different stages.  In the first place, when a currency is depreciated, it is designed to reduced or discourage the excessive dependence on a particular foreign or some foreign commodities.

This will make domestic prices of such imports may be intermediate goods and as a result tends to push the cost of production of final goods up.

In another way, deteriorating exchange rate of naira could bring about inflation of increase in wage rate or demand, when the naira is devalued, the price of important raw materials increases domestic firms may be willing to increase production reduction on their competition as a result of like in prices of raw materials.

Consequently, the output of the firms will attract high prices, therefore for consumers to meet their provisions level of consumption or maintain their real income, calls for wages increase which according to Sotersten (1994) will worsen the whole situation.

Nigerians as one of the developing nations that heavily depend on imported inputs, implements and machinery, the cost of these are usually very high due to poor exchange rate of naira.

This will discourage potential investors, how investment will lead to reduced national product, which is an indicator of stagnancy or retrogression of the economy.

For this reason, Obasanjo (1999) noted that any thing could happen of regulatory authorities did not take steps to tidy up the situation, so the researcher wants to find out the problems and suggest ways of remedying the situation.

 

 

1.3            SIGNIFICANT OF THE STUDY

For the purpose of this study, the researcher took a step further to determine the possible significance.

(i)                To give other researchers who which to write on this topic the process to follow

(ii)             To check the inflationary of deflationary gap

(iii)           To determine the cumulative impact of broad money growth and the sizable devaluation of the naira

(iv)           To determine the fate of naira with other internal currencies.

(v)             To determine government policies.

1.4            OBJECTIVE OF THE STUDY

The objectives of this study include the following

(i)                To identify the causes of inflation and exchange rate depreciation.

(ii)             Examine the extent to which naira exchange rate depreciation heed affected domestic inflationary rate in Nation.

(iii)           Assess the effectiveness of government earlier introduced policies.

(iv)           Give suggestion and recommendation on appropriate policies for the future.

 

 

1.5            RESEARCH HYPOTHESIS

Since the research data was mainly from secondary sources, the hypothesis used will be in two forms to determine result.

The null hypothesis and the alternative hypothesis.  The null hypothesis (Ho) will be tested against the alternative hypothesis (Hi)

(a)     Ho:    There is no positive or significant relationship

between exchange rate depreciation and domestic inflation in Nigeria.

(b)     Hi:     There is significant or positive relationship between

exchange rate depreciation and domestic inflation in Nigeria.

 

 

1.6            SCOPE AND LIMITATION OF THE STUDY

The study covers the period from 1985 to 2000.  It concentrates on the trend of exchange rate depreciation and inflation in Nigeria.  The study is limited to the period because of the problems associated with the availability and collection of secondary data needed for the research work due partly to the level of development of the Nigeria economy.

 

 

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BUDGETING: A SYSTEMATIC APPROACH TO PROFIT PLANNING AND CONTROL

(A CASE STUDY OF MOBILE TELECOMMUNICATION NETWORK NIGERIA LIMITED’ (MTN), ENUGU STATE)

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PROPOSAL

         

Budgeting – A systematic approach to profit planning and control is a work that will be centered on the use of budgeting a tool for planning and control in order to maximize profit using mobile Telecommunication Network Nigeria Limited (MTN) Enugu, as a case study.

This research will be carried out through series of oral interviews and distribution of questionnaires in the collection of data and relevant information to the employees of mobile telecommunication Network Nigeria Limited Enugu.  The data that will be collected, will be analyzed as well as interpreted by the research from the testing and proofing of hypothesis.  The researcher will also source information from secondary data which includes text books, magazines, journals etc.

The researcher will be faced with the following constraints:

–                     Insufficient money to distribute as much questionnaires as possible.

–                     Poor response from the employees because they will be afraid of losing their job

–                     Insufficient time

In order for the company to achieve their objectives, the researcher will recommend that there should be budgetary control so that workers will be aware of the objective of the organization and subordinates opinion considered in the preparation of the departmental or company’s budget estimate.  This will help in encouraging goal congruence.

 

 

 

ABSTRACT

 

          Budgeting – A systematic approach to profit planning and control is a work centered on the use of budgeting as a tool for planning and control for profit maximization in a mobile telecommunication network Nigeria Limited Enugu as a case study.

The objective of the study is to show the importance of budgeting as a tool for systematic profit planning and control in the mobile telecommunication network Nigeria limited which has profit maximization as its principal objective.

The research is also aimed at identifying the steps adopted in the formulation of annual budget of MTN Nigeria.

Consequent upon this, the following hypothetical question were used for the study.

1. Managers use budgeting as a systematic approach to profit planning and control in attaining the goals of the business.
2. Decision making is performed in mobile telecommunication using budgeting
3. Utilization of resources is achieved with the use of budget and budgetary control

Following the investigation and analysis of data, the following findings were made

1. The organization uses budgeting in achieving the goals and objectives
2. The main objective of the organization is profit maximization
3. Efficiency and effectiveness of the organization is achieved through the use of budgeting.

From the findings, the conclusions were arrived that budgeting is very essential and indispensable tool for profit planning and control.  It helps management to be well structured in sustaining the growth and expansion of the organization.

TABLE OF CONTENT

 

 

Abstract                                                                                  v

Table of content                                                                      vi

 

 

 

CHAPTER ONE

1.0     Introduction                                                                            1

1.1     Historical Development of the Firm                              4

1.2     Background of mobile Telecommunication                    5

Network Nigeria Limited/Present state of Affairs

1.3     Statement of problem                                                    8

1.4     Objective of the study                                                    8

1.5     Research Question                                                                   9

1.6     Research Hypothesis                                                     10

1.7     Scope and limitation                                                      10

1.8     Significance of the study                                                         11

1.9     Definition of terms                                                                  12

 

CHAPTER TWO

2.0     Literature review                                                            14

2.1     Introduction                                                                            14

2.2     Definition of budget                                                       15

2.3     Types of Budget                                                            17

2.4     The Budget period                                                                   20

2.5     Administration of the Annual Budget                                     21

2.6     Stages in the Budget process                                         24

2.7     Appraisal of fixed, flexible and other budget                          43

2.8     Planning function                                                           45

2.9     Controlling function                                                      46

2.10   Budgeting control                                                          50

2.11   Variance analysis                                                           51

2.12       Additional Tool for Budgeting and Budgetary

control: Zero Base Budgeting (ZBB)                                       57

 

CHAPTER THREE

3.0     Research Design and methodology                                58

3.1     Research design                                                             58

3.2     sampling technique                                                        58

3.3     Sampling design and population size                                      58

3.4     Sources of data                                                              60

3.5     Interview questions                                                        60

3.6     Method of data analysis                                                60

 

CHAPTER FOUR

4.0     Presentation, Analysis and Interpretation of Data                  63

4.1     Analysis of questionnaires returned                              63

4.2     Hypothesis testing and proofing                                             71

 

CHAPTER FIVE

5.0     Summary of findings recommendations and conclusion         77

5.1            Summary of findings                                                     77

5.2            Recommendations                                                                   79

5.3            Conclusion                                                                     80

Bibliography                                                                  81

Appendix                                                                       83

 

 

CHAPTER ONE

 

1.0            INTRODUCTION

The growing complexity of the business environment and the ever increasing competition among firms in the modern time, make planning an invaluable tool for business success.  Successful management is no longer just a matter of flair, skill and determination, a conscious effort is needed to harness available resources towards the achievement of enterprise objectives.  Budgeting is one of the tools adopted by management for effective cost planning and control.

 

A budget is commonly understood  the forecast by a government, organization nor society of its expenditures and revenues for a specific period of time.  The  period covered  by a budget is usually a year known as financial year.  Budgeting is concerned with the utilization of financial resources to serve human needs.  Although a budget may be characterized by a series of goals with price tags attached.  It is mainly a mechanism for making choices among alternative expenditure.  When such are coordinated so as to achieve desired goals, the budget becomes a plan.  If there are specifications on how the goals are to be achieved, the budget becomes a psychological device to make administrators thin.  If however, the emphasis is placed on achieving the desired objective at the lowest possible cost, then the budget is an instrument for ensuring efficiency.

An enterprise which is effectively and efficiently managed produces good and rewarding result.  Management is efficient if it is able to accomplish the objectives with minimum efforts and costs.

Profit planning and control or budgeting is an integral part of management.  The financial manager has a particular interest in profits planning and control because he helps to regulate flows of funds which is his function.  The decision making process of management starts with planning.  ‘Planning is the design of a desired future and of effective ways of bringing it about.  In other words, planning involves the determination of the future course of action for accomplishing the objectives of the enterprise.  The basic purpose of planning is to provide guidelines for making decisions. It is a forward process to reducing uncertainty about the future.

Planning is a continuous process which would generally involve four fundamental steps.

1. Establishing the objectives
2. Determining the goals
3. Developing strategies
4. Formulating profits plans or budget.

 

Objectives are the statements of broad and long term desired state or position of the enterprise in the future. They are directional and motivational in nature and are generally the qualitative expressions of the desired future state.  For instance, the primary objective of an enterprise may be customers satisfaction, employee welfare, long-run- survival which depends upon the maximization of the long-run profit, that is wealth maximization.

 

Goals represent the operational specifications of the broad objective with time and quantity dimensions.  Goals are the quantified targets to be attained within a specific period e.g. long run profit maximization in order to increase the market value of the firm to shareholders is the broad objective of the firm.  But the goal for the next year may be to earn a 20% after tax profit on investment or a 5% profit on sales.

 

Strategies specify the ways of achieving the goal operationally.  For example, the strategies of a firm may include the use of retained earnings for expansion, keeping debt at a reasonable level, expanding sales through price reduction and aggressive advertisement.  Financial plans may take many forms, but any good plan must be related to the firm’s existing strength and weakness.  The strengths must understood, if they are to be used for proper advantage and the weakness must be recognized if corrective action is to be taken.

 

Finally, the formalization of objectives, goals and strategies for operational purposes is called the profit planning or budgeting.  It is called the profit plan or budget because it explicitly state the goals in terms of time expectations and expected financial results for each major segment of the entity.

 

 

 

1.1     HISTORICAL DEVELOPMENT OF THE FIRM

It is important at this point to review briefly the history of the company mobile telecommunication Network Nigeria Limited (MTN).  It was incorporated in Nigeria on November 8. 2000 as a private company.  It secured a license to operate digital (Global system for mobile telecommunications GSM) telephony on February 9 2001, from the Nigerian communications commission.  On May, 2001, MTN emerged as the first to make a call on its GSM network in the new dispensation. Thereafter, the company launched full commercial operations beginning with Lagos, Abuja and Port Harcourt in the company now provides coverage to 85 cities and well over 5,000 communities and villages, spanning every geo-political zone and 31 of Nigeria’s 36 states.

 

 

It is the first to erect a country wide microwave radio transmission backbone, offering unrivalled value for money evidenced by a loyal customer base attracted by MTN’s convenience, mobility, roaming on 30 international networks and economical Tarrifs.  MTN’s product and services are available at its friendship centres and a nationwide network of dealership, banks and convenience channels including entries, petrol stations and neighourhood stores.

 

 

1.2            BACKGROUND OF MOBILE ELECOMMUNICATION NETWORK NIGERIA LIMITED/PRESENT STATE OF AFFAIRS

The company through systematic planning and control represents several millions of Nara in investment.  The company as at May 31, 2004, had a total of 21 mobile switching centres and over 940 radio base stations across the country. Several more are in the process of being installed.  On January 20, 2003, MTN commissioned the first phase of its digital microwave transmission backbone, Y’ello Balm.  Constructed  at a cost of $120 million.  Y’elloBalm is Africa’s most extensive transmission infrastructure and has significantly helped to enhance call quality on MTN’s network.  Y’ello Balm spans 3,400 kilometers and traverses over 120 cities, villages and communities; while coverage has been extent to more than 90 major towns and a total of over 5,000 villages and communities across Nigeria.  The second phase of Ye’llo Balm is currently on going and will spand another 4,500 kilometers.

 

 

MTN subsists on the core brand values of leadership, integrity, innovation, relationships and a ‘can do’ attitude, a passionate optimistic focus on the future.  It prides itself on its ability to make the impossible possible – connecting people with friends, family and opportunities.  The ownership structure is currently as follows:  Mobile telephone Networks International Limited 76.44%

Nigerian partners                    20.56%

International finance corporation and infrastructure investment arm of the world bank                           3%

100%

TECHNICAL ASSISTANCE/COMEMRCIAL SERVICE AGREEMENT

          The company is technically supported by Nami Tech in south Africa who doe the prepaid voucher and supplier to MTN.

COMPAY’S CONTRIBUTION TO NIGERIA ECONOMY

          MTN currently employs more than 1,200 Nigerians.  In addition, more than 160 Nigerian companies are currently MTN distribution partners.  Of these, more htan 25 are banks, many of which have spun off subsidiary companies, many of the dealerships have branches nationwide and employ dozens of people.  Another 6,000 companies, including petrol statiosn, supermarkets and many others, serves as sub-dealerships.

Yet a great may other Nigerians earn a living as self-employed proprietors, recahrge card or mobile phone accessory vendors, many others operate the hundred of business centres scattred allover our cities.

VISION

–                     To improve telecommunications infrastructures and access throughout the countries in which we operate

–                     Quality service

–                     High profile distribution and accessibility of our services and products

–                     Setting up a good base for future expansion.

–                     Training and transferring skills to local staff.

–                     Becoming a good corporate citizen and becoming a major player in the Nigerian economy.

 

 

MISSION

–                     TO BE A CATALYST FOR Nigeira’s economic growth and development, helping to unleash Nigeira’s strong developmental potential not only through the provisionof world class communiations but also through innovative and impactful corporate social responsibility initiaties.

–                     We want the cals you make on our network to   be of the best quanlity in Nigeira

–                     We want our network to cover the broadest areas of Nigeira and athe continuous enhancing of convenience and value derived from using our network.

–                     Every call made shoukd  re-inforce your conviction that MTN is needed.

 

1.3            STATEMENT OF PROBLEM

 

 

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CONTRIBUTION OF SMALL-SCALE BUSINESS TO    NATIONAL ECONOMIC GROWTH AND DEVELOPMENT

 

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ABSTRACT

This paper analyzed the contribution of small-scale business to National Economic Growth and Development in the Country.  It also paid attention to the foundling of these enterprises. Where as failure of the large-scale import department assembly to propel the country into a satisfactory course of industrialization necessitate the demagnification of strategy to embrace the promotion of small-scale enterprises achievement under the new strategy has not been adequate with expectations of the stated objectives which were economic growth and development through the mobilization of available local resources, employment generation and industrial dispersal as well as mitigation of rural urban migration.

 

This paper identified this lack of list achievement with problems associated with severe lack of managerial and technical skills among Nigerian small-scale industrialists, inadequate of financial resources as well as infrastructural deficiencies.  Chapter one contains a general discussion of the contribution of small-scale business to economic growth and development as seen by different people.  It went further to state the problem to be studied and why this study was carried out, the scope and limitation of the study and finally the proposition and the definition of terms.

 

 

A number of past related literature examined by other studies as it relates to the contribution of small-scale business in Nigeria are highlighted in chapter two. Chapter three deals with the design of the study, the methods used in collecting relevant data.  It also deals with way the questionnaires were  distributed and the treatment of data, and statistical techniques used.

The data got from the research survey were analysed and interpreted.  Also similar questions on both questionnaires were compared in chapter four.

Finally, the summary of findings conclusion in the research and recommendation made by the researcher are all in chapter five.

If small-scale business will put the recommendation on how to achieve economic growth and development to use, such as increasing availability of credit by raising interest rate ceiling and permitting a “spread” that makes it worthwhile for banks to lend to small-scale business or by increasing the number and range of investment etc. problems of small-scale business will be a thing of the past.

 

 

TABLE OF CONTENTS

CHAPTER ONE

1.0            INTRODUCTION

1.1            Background to the study

1.2            Statement of problem

1.3            Need for the study

1.4            Purpose of study

1.5            Scope of the study

1.6            Limitation of the study

1.7            Hypothesis

1.8            Definition of terms

CHAPTER TWO

2.0            REVIEW OF RELATED LITERATURE

2.1            Nature and scope of small-scale business

2.2            Factors that effect small-scale business

2.3            The role of small-scale business in economic growth

2.4            Starting a small business

2.5            Government policies for promoting small-scale business

2.6            The economic imperative of small business development in Nigeria

2.7            Importance of small business enterprises

2.8            Advantages of small-scale business

2.9            Advantages of self employment

 

CHAPTER THREE

3.1            Design of the study/methodology

3.2            Population for the study

3.3            Development of research materials

3.4            Research procedure

3.5            Analysis of data

3.6            Statistical techniques.

 

CHAPTER FOUR

4.1            Presentation, analysis and interpretation of data

4.2            Test of hypothesis

 

CHAPTER FIVE

5.1            Summary of findings

5.2            Conclusion

5.3            Recommendation

5.4            Suggestion for further research

5.5            Bibliography

5.6            Appendix

 

 

 

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

The contribution of small –scale business in fostering economic growth and development has been well articulated in different areas of this study .the specific attention on them based on their expected impact and potential contribution on broad and diversified production base, as well as their accelerate effect in achieving macro objectives pertaining to full employment, income distribution and the development of local technology.  They are particularly most conducive for diffusion of management skills and emulation of indigenous entrepreneurship overtime.

 

Small business provides financial opportunity and a chance to develop wealth.  It is a place where creative, motivated individuals can use their talents and expertise to the fullest, because it provides satisfying carecrs  and job opportunities and its also the back bone of the market economy of the word.  Every big business starts as a small business, and it started with an entrepreneur (small business), who at first, earns little or no profit.  It was the new ideas of small business that brought about Ekene Dili Chwkwu Transport, the FAN Milk, Nnewi “Tokumbo” parts, and even the many commercial banks in Nigeria.  Untried ideas become annulations that become concepts that changed the business world. And so it goes.  Small business is the basis for the economic well being many developed nations including USA/Japan.

 

Entrepreneurship is what makes a small business successful.  Entrepreneurship occurs when an individual develops a new venture, a new approach to an old business or idea, or a unique way of giving the market place a product or service by using resources in a new way under conditions of risk.  Small business triumphs and entrepreneurship are closely related to it.  It is difficult to separate them.

 

The unemployment situation in the country coupled with the new government instinctive towards easing social tensions among unemployed youths, through the programme of the National Directorate of Employment (NDE), were intended to lure a lot of unemployed Nigerians, including graduates into self determination through self employment.  Graduates and school leavers are now realizing that government and the established private companies are not ready to come to their aid directly, through paid employment due to the dividing state of the economy.  Short of the alternatives, Nigerians including our graduates are therefore launching themselves into various small-scale business ventures, such as cottage soap and cosmetics production, fairing, restaurants, fast food, publishing, writing, block making, garri processing, food processing, refuse disposal, taxi driving, cleaning services, weaving, baking tailoring, advertising and other same business venture which depends mostly on local raw materials.  The determination to succeed is also fast becoming the order of the day.

Government has been playing appreciative tole in promoting the survival and growth of small-scale enterprise in recognition of them flexible and adaptive nature as well as their re-generative power in promoting economic growth and development.  Government also encourage people to establish their own small business so as to reduce the problem of unemployment in the country and also reduce the problem of importation of goods, more so, to produce exportation products.

Government in believing that a dynamic and growing small manufacturing sub-sector can contribute significantly to the implementation of a wide range development effective, has thus enunciated various policies to encourage their proliferation and make them veritable engines of growth and development.  In the third and for the development plans and the on-going three years rolling plan, priority has been accorded industrialization with greater emphasis on small-scale enterprises.  The basic activities of government policies as maintained in the monetary and fiscal policy measures, are to improve the financing and other supportive services of small-scale business by expanding and improving access to credit and infrastructural facilities, reducing their production costs, boosting their profitability, enhancing their survival and growth capacities as well as expanding their contributions to non-oil exports by making their products competitive in the export markets.

Hardly could any major industry succeed without the services of small-business enterprise. The major goals of any profit oriented business is to make profit.  A company will make more profit if statistics it’s customers need better them the competitors.  There fore in the contribution of small-scale business, bakeries would produce what the customers want and by so doing they maximize profit and only bakeries that are effective and efficient can satisfy customers needs.  In reality, it is possible to run a business without profit for a time, but it is not possible for to survive for one day without customers.  Customers are the central theme of any business.  Without a total commitment to them, contribution to economic growth and development will have limited and brief effects.

 

 

1.2     STATEMENT OF PROBLEM

          Bakery is in the production industry the quality of products rendered by our Bakeries have been attracting criticisms from people in all works of life.  The civil servants, business men and the general public are all very critical of production of cookies like bread, chi-chin, cake, meat pie, bons etc.  the  complaints ranges from those of poor quality of products, poor packages, high prices, poor delivery, shortage of skilled manpower which affects productivity and restrain expansivion the use of potassium bromated which National Agency for food and Drug Administration Commission (NAFDAC) banned for health purpose.

 

Most bakeries do not put their customers in the prime place as they supposed to be.  There is now keen competition and to compete means to contribute to economic growth and development.  Dickson (1971:4), agreed with this view when he said that small scale enterprises are ploughed by inadequacies and serious mis-uses of business records and business information.  The problem of poor or wrong location of an industry affects its production.  Such as nearness to raw materials, market, sources of power and access to supply of labour and transport facilities etc.

 

Government incentive in industries has previously directed to public investment neglecting private initiative.  But a diversified and self-sufficient economy must take into consideration the importance of private sector in capital formation.

 

 

1.3     NEED FOR THE STUDY

There have been criticisms about the bakery industries in the way they render services to their customers. i.e.  they do not see the customers as king lot in terms of national output and employment.  Moreover, Nigeria has various policies on small-scale enterprises in recent National development plan and also in the structural Adjustment programme (SAP).  The researcher wants to carryout a research on what bakeries do and the role they play in economic growth and development the resucher also wants to have an idea base either to support all the sources about the poor impression people have on how to improve their production so as to contribute effectively in national economic growth and development.

 

Bakeries can do a more individualized jobs for customers and thereby attract them on the basis of specialty product quality and personal services rather than on the impersonal of price or mass production of largely identical business.  Based on the above, the need for studying this topic is to show the effectiveness of small-scale business in national economic growth and development.

 

 

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