SMALL-SCALE INDUSTRIES AS A CATALYST TO RURAL ECONOMIC EMANCIPATION

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

Some time ago, Albert Hirschman (1958) said that development is like a jigsaw puzzle, it is easier to fit in a particular piece when the adjoining pieces are already in place; the pieces that are hard to find are those with only one neighbor in place. This clever analogy evokes two very important economic principles that both researchers and policymakers are rediscovering as Nigeria moves from a decade of adjustment to a new period of reform and growth.

The first one is that during the early phases of development, when an economy is no more than a collection of fragmented markers and regions, the establishment of government institutions, the construction of infrastructure, and the direct participation of the government in some areas of the economy are not only desirable but indispensable preconditions for the growth process.

The second principle is more in the line with the recent theories of endogenous economic growth (see Scott 1991),

Romer 1989; Lucas 1988; and Uzawa 1965). It reflects the notion that the opening-up of investment opportunities through changes in the environment where individuals work, save, and invest, both creates and reveals new investment opportunities.

In Hirschman’s example, once the difficult parts of the puzzle have been solved, the remaining pieces begin to fall into place almost automatically. What this means for the role of the government in economic development is that after an initial period of protection and government intervention, growth no longer responds as strongly to further involvement as it did during the very first stages of industrialization.

Furthermore, this analogy conveys the motion that once the basic institutional framework has been implemented, the public will be better served by indirect support of economic activity through deregulation, privatization, trade liberalization, and a competitive environment than by direct government participation in production activities.

Today, government participation in economic activity is very different from a decade ago. Growth policies are geared toward creating a propitious climate for the participation of small-scale industries of subsides and nationalization, the emphasis is on the elimination of institutional constraints on competition, the creation of new markets, and the generation of opportunities for all embers of the population.

Government growth and economic reform policies may not achieve sustainable results without rural development. There is a high concentration of large, medium, and even small-scale industrials in the urban areas of the country because of the availability of markets for their products, infrastructures, and social amenities.

Various administrations came with one program or other intended to liberate rural dwellers from perennial poverty, but unfortunately, some of these programs failed to achieve the expected results. Examples of such programs are, the Directorate of Foods Roads and Rural Infrastructures (DFRRI), MAMSER, the Better Life Programme for Rural Dwellers, etc.

The shift of emphasis to grassroots development is a matter of necessity at the present stage of our development, and small-scale industries have been identified as the catalyst toward rural economic emancipation. It is well known that at least 75 percent of the country’s resource endowment abounds in rural areas.

Thus development projects and programs cannot achieve only appreciable improvement or impact until they focus on these areas. In effect, it is imperative that we let up the rural low-income segment of the society of Nigeria will undergo the ideal economic transformation.

The ongoing reform agenda that has been carefully packaged as the National Economic Empowerment and Development Strategy (Needs) is to reposition Nigeria for stability, growth, and development: The reform agenda affects every sector of our society.

To the states, it is “State Economic Empowerment and Development Strategy (Seeds), whereas the local government develops its own as “Local Empowerment and Development Strategy (Leeds). It is however expected that

“Leeds” will create enabling background and facilities that will encourage small-scale industries in rural areas.

During the period 1960-1972, agriculture was the mainstay of the Nigerian economy, contributing about 54.0% share of the real GDP (table 1).

This is invariably a contribution from rural areas of the country to our aggregate economy. In spite of political upheavals, culminating in the civil war between 1967-1970. During the period, the economy as a whole witnessed a steady growth rate of about 11.97%, low inflation, a relatively healthy balance of payments, moderate public sector investments, and an emerging industrial sector, particularly the oil and gas industry. It was during the early 1970s and 1980 that the oil sector permanently displaced agriculture, accounting for about 24% of real GDP during the period between 1973 and 1985.

If this country must achieve a sustainable economy we must go back aggressively to agriculture. In order to achieve this, rural development projects should be modified to provoke actions necessary to improve rural life. For example, provision of modern farm equipment, tools pesticides, and soil supplements and educating the people on the usage to achieve

optimal results at subsidized costs if not free. The provision of electricity, rural water supply, a good communication network, and roads will lead to the proliferation of small-scale industries in rural areas, especially those that source their raw materials from agricultural produce. In a conducive environment where palm produce abounds, palm kernel oil processing industries, vegetable oil industries, soap industries, cosmetics industries, poultry farms, and poultry feed processing plants will undoubtedly thrive efficiently and effectively.

The basic structure of the economy is a hindrance to accelerated growth. Ours is an economy that is based on primary commodities traded on the international markets, and with little value added. Our law value-added means we are, on balance, import-dependent.

This double-edged disadvantage makes us vulnerable indeed because we only earn what the market pays for primary commodities, and have to pay prices determined by exporting countries. We then have no control over our margin stream. We need to restructure the economy towards more value-added products, and the presence of productive small-scale industries in our rural areas is the key.

Another underlying hindrance is our development model, which has neglected the development of human capital through high-quality education, health, and social security. No wonder there is such a death of managerial, executive, and leadership capacity everywhere.

Institutions are run down, and due process is swept aside. Instead, we have installed mediocrity, and come to accept the dictum of the Nigeria factor to represent everything as substandard and shoddy. Our young graduates should be sound enough to be self-employed through the commencement or establishment of small-scale industries at the grassroots level.

Their end products should also be of high quality and capable of competing favorably in international markets. When this happens, the standard of living of our rural populace will increase and the rate of development will also rise dramatically. When small-scale industries maximize their earnings, it exerts a multiplier effect on the immediate environment and overall economy.

We have recently heard that Nigeria had adopted an objective to earn $106 from cassava exports within five years. We will of course soon see a flurry of activities to encourage cassava production; seminars and conferences will be held

since somebody needs the contract to organize the conference, which will be, tagged “international conference on cassava” and some influential person will develop the great idea to ensure that they can get rich without doing much.

Thank God for the introduction of the due press. Nevertheless, if the government must achieve this targeted objective, the farmers in rural areas must be encouraged through subsidization of their overhead costs or mandating the Community Banks to grant credit facilities to enable them to expand production, cassava tuber is 80% water, and the crop has to be dehydrated before export since no one is willing to pay for cassava water. This means that government should also encourage cassava processing industries with locally fabricated machines to be sited at strategic places in our rural areas.

Perhaps the factor most consistently present in the East Asian economies was a sound and disciplined macroeconomic policy framework, characterized by fiscal discipline, strong investment performance- especially in the area of human capital, and small-scale industries targeted at aggressive export development. Their outward orientation and their success in penetrating international markets are well documented. The region has made remarkable progress in expanding trade, particularly in manufactured exports and small-scale industries being active players.

Different government regime in Nigeria has initiated laudable program aimed at rural development, but the impact of these programs are not significant in those areas.

The researcher has noticed the constant entry and exit rise and crumbing of small-scale industries and low standard of learning in our rural areas and sets out to identify the causes of the ugly phenomenon in view of highlighting possible solutions.

1.2 STATEMENT OF PROBLEM

Available statistics indicate that about 75% of our population lives in rural areas. These are predominantly present Famers whose modes of agricultural production are relatively still primitive.

One of the causes of backwardness in rural areas is the inadequacy of investment funds to finance small-scale industries. It is generally believed that rural small-scale industries can provide employment to the rural labor force and also enhance development.

There are many small-scale industries, which can thrive in rural areas but for the lack of rural infrastructure and social amenities. Funds for such small-scale industrial activities had been very difficult to come by and the efforts by the government in this direction have not yielded appreciable results.

Most of the proprietors or promoters of some of the rural small-scale industries are illiterate and lacked managerial and technical know-how. Their outputs are very inferior and substandard and very inferior and substandard and thus lose acceptability in the market arena. In the course of this study, other problems that have been militating against the existence of small-scale industries in our rural areas will be identified.

1.3 OBJECTIVE OF THE STUDY

The objectives of this research are as follows:

through the establishment of small-scale industries.

1.4 RESEARCH QUESTIONS

nationals who may source their raw materials from these small-scale industries?

1.5 RESEARCH HYPOTHESES

1.6 SIGNIFICANCE OF THE STUDY

1.7 SCOPE OF THE STUDY

The study was limited to 10 local government areas in Nigeria. It examined the performance of existing small-scale industries in those areas and their constraints. It also evaluated the basic infrastructures and their impact on business activities in those local areas.

The study demonstrated the multiplier effect of small-scale industries and how these can lead to economic emancipation in rural areas.

1.8 LIMITATION OF THE STUDY

The study was confined to 10 out of 774 Local government areas in Nigeria. This was due to limited resources such as ties and finances. The increase in petrol pump price has also increased the cost of transportation, which in turn induced an increase in the general price index. These have been the major constraints to this study.

It will lead to economic transformation and an increase in business activities in rural areas.
It will help to find a solution to the perennial unemployment that has bedeviled the social and economic status of the country.
It will enhance poverty alleviation in our rural areas.
The result will also encourage investors to promote the establishment of small-scale industries in our rural areas.
The findings will encourage the federal government to allocate more funds to the establishment of basic infrastructures in rural areas.
The presence of active small-scale industries in our rural areas cannot induce an increase in export propensity.
The economic emancipation of our rural dwellers is not a function of activities of small-scale industries in those areas.
The establishment of basic infrastructure and social amenities cannot attract small-scale industries to our rural areas.
Small-scale industries do not create employment opportunities in our rural areas.
There is no correlation between small-scale industries and a higher standard of living in our rural areas.
Do you think that influx of potential small-scale industries to our rural areas would also attract multi
What is the role of the local government authority in rural development?
Would Banks and other financial Institutions be willing to grant credit facilities to small-scale industries without collateral?
Do you think that the active presence of small-scale industries will ensure development in our rural areas?
Do you think that small-scale industries in rural areas will ensure a good profitability margin for the promoters?
How would you rate the presence of small-scale industries in our rural areas?
To encourage our young graduates to be self-employed
To offer some suggestions to encourage the influx of small-scale industries in our rural areas.
To identify the causes of why small-scale industries shun rural areas.
To analyze the contributions or benefits of small-scale industries as a catalyst to rural economic emancipation....

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