In the recent years, the experience has shown that it is a known fact that is both developing and developed nations, that small-scale business from the bedrock for rapid and sustainable growth and development of national economics.

Therefore, in reality, Nigeria is underdeveloped nation where small-scale business are not well developed to number of factors, improper finance and economy depression and the government has emphasized and encourage the development of large industries which are party owned by Nigeria and foreigners.

Small-scale business finance by an interested investors requires the business to be a sound management good business and long term survival.

It is understandable that the main objective behind the establishment of small-scale business is to make profit, and the continuous survival of the business but, in most cases, small-scale business to fail even with good ideals because of finance and economy depression.

In a depressed economy, careful finance planning is a continuing necessity. A current shortage of funds is see and agreed that finance is pillar of any small-scale business.

Finance constitute the major success factor if a small-scale business is financed in economy depression depends upon the yardstick and investor is using in lending, it’s money to the growth of business.

It must be categorically state that banking institution is not the only way of raising fund for a small-scale business, we also have individual financials and credit facilities granted by suppliers.

Some of the small-scale business ranges from sole-traders, wholesalers, retail business, partnership enterprises, co-operatives societies such as food processing, leather industries, garment industries, printing, candle making, soap and detergent making, agricultural processing and block industries.

As a catalyst to the economies the importance of small-scale business need not to be over emphasized especially in a less industrial state like, kwara state which has in recent times been given reasonable suitable incentives, mostly design to complement finance and management to these small-scale business so as to create employment opportunities and boost the economic activities of Kwara State, mobilization of resources and minimize rural-urban drift.

With above introduction, small-scale business is very important if the national economy will have to develop.


The small scale industry is acknowledged to have huge potential for employment generation and wealth creation is any economy yet in Nigeria, the sector has stagnated and remains relatively small in term of it contribution to GDP or to gainful employment. Activity mix in the sector is also quite limited-dominated by import dependent processes and factors. Although, there is no reliable data, imprecise indicators show that capacity utilization in the sector has improved perceptibly in the period since 1999. But the sector is still faced with a number of constraints (such as low patronage, low technical know, limited market, poor infrastructures, lack of incentives etc.) with lack of credit availability as the principal constraint. It is in the light that the main thrust of this research work will focus on the effect of structural rigidity which often characterize economic depression on the growth of small industries in Nigerians.


The objective of this study is to analyze and highlight the utmost relevance of small-scale business finance in Kwara State economy in a manner to find ways to improving areas that are below business expectation.

The predominance of small scale in kwara state coupled with the ineffectiveness of the banks in meeting the needs of small-scale business and economic depression which affect the while, which makes one presume that government should rise up to the task.

Furthermore, the objectives of this study are:

⦁ Examining the state of small-scale business in a depressed economy.

⦁ To examine the different alternative sources of finance opened to small-scale business in the development of less developed state as kwara state.

⦁ To examine the role of small-scale business in the development of less developed state as kwara state.


The project work will be of help to the owner of small-scale business and managers even the intending entrepreneur in their application of fund, it will also review the ability of a owner of small-scale business with respect to the economy and the available resources.

It is expected also to and the owners in planning and controlling of fund in a depressed economy. Also is the proper application of the available resources.

The study will also be useful as a guide to government agencies and policy makers on small-scale business in kwara state economy.

Finance particularly in kwara state and also in depressed economy, the business available sources of fund during economic depression, the role of entrepreneur of small-scale business in economic  depressed and kwara state as it geographical scope of the study.

More so, the research work would cover only four local government areas of the state as its population scope because the researcher belief that those areas are areas where business enterprises are well practice and managed. The areas are Offa, Ilorin west Kwara state.

Also, every important, the research work would cover certain which forms its industrial scope such as furniture works, fashion designers, block industries and leather work.

Because of time and financial constraint, the research work is limited some local government areas in the state with little or more business oriented activities on which this research as based upon.

Another area of limitation is the finance open to a business. The sources of fund available to an industries, the impact of a depressed economy on the state business.

Regardless of the constraints, believe that in this research work, the deduction will be useful for generation.


The research question, which would guide this study are as follows:

i. What factor hinder the growth of small scale enterprises during economic depression?

ii. To what extent has the government contributed to the promotion and growth of small scale enterprise in Nigeria.

iii. What are the economic potentials of small scale enterprises.

iv. How could the problem identified above be solved so that the growth of small scale enterprises could be enhanced in Nigeria.



Ho : That there is no relationship between economic depression and growth of small scale enterprises in Nigeria. 


Ha: That small scale enterprises are economically productive.


The reliability and validity of any survey depend as upon a number of factors.

Among these, are the method used in gathering and analyzing information for the survey. In recognization  of this, the method for this research are stated.

Two set of data collection would be used in the cause of this study. This are primary and secondary sources of data.

The primary data is a raw fact collected or gathered for the first time for the purpose of the study. The primary data are collected through the use of questionnaire and this would be design and said to the respondents.

The use of questionnaire would be supplement with personal interview with appropriate stratified sample selected business. Questionnaire to be used because of dispel areas to be covered. 

The secondary data are data originally or collected for purpose other than solution to the research problems that is research problem other than one question.

The secondary data were obtained from text books, newspaper and business journals which discuss the subject matter would be consulted for information.


This study shall focus on the operations small scale enterprises in Nigeria. The economic potential of small scale enterprise shall also be explored as well as their benefits examined. 

The scope shall cover all the small scale enterprise that is operating in Nigeria. However, the survey shall be conducted in a selected area in kwara to include Ifelodun study lies in the methodology to be adopted.

The empirical analysis would be base on the opinion of the respondent which might have some result of analysis may not be completely dependable. 

Also direct the relatively small effect of cloud seeding on top of this very large natural variation with any degree and distribution of the use of informal sources of finance for initial and improving lending.


A key step in starting a new business enterprise is to preparing a business plan. 

Business plan is a financial plan which given is reasonable forecast of expected cash flow a plan is also a statement of what is to be done in a future time period.

Plan always have alternative sets of assumptions as their inputs.

Planning processes should involve each operational unit but for the business plan as follow: 

i. Worst case: plan would require making the worst possible assumption about the business as a whole as well as the mighty investment to be processed.

ii. Financial requirement: the plan will include a section on the financing arrangement that are necessary the plan should discuss profit policy and debit policy and the amount of financing.

iii. Asset requirement: plan will describe projected capital spending. In addition, it will discuss the proposed use of the net working capital (current asset, current liabilities).

iv. Sale forecast: all financial plan require a sale forecast, perfect sale forecast are not possible because sale depend on the uncertain future of the mighty investment.

v. Best case: this plan would require making the most optimistic assumption. It could reflect new product.

vi. Normal case: plan would require making most likely assumption about the business as well as it competitors. 



There is no single criterion for classifying a business unit as small scale  enterprises. The term small scale business are differ from industry, country to country and there is no unique or universally accepted definition of these terms.

It is important also to recognize that definition changes over a period of time and depend to a large extent on a country’s level of development. What was regard large scale industry in fifty and sixty centuries may now be regarded as small scale  today.

As we all know that small scale  business constitute an important part of today’s business system, and there has been a lack of agreement in Nigeria and elsewhere as to what constitutes a small scale  business can be looked at from two definition put forward by different books, authors and those who area business inclined.

According to the advance learner’s dictionary, small is defined as “not large in degree or size” if went further to say “not doing things on a large scale” the same dictionary  defined industry as “branch of trade or manufacture contrasted with commerce and distribution” it is quite clear that, when the two definition are joined the meaning becomes “to undertake the manufacturing of things is not large scale.

The degree of deviation from the business and of meaning of small scale  business is quite different from that of dictionary meaning. As earlier on mentioned, small scale  differ country to country and among individuals. The operating capital, employed labour, economic and industrial development of the region concerned are often used in defining small scale business. This is because, a small scale  business in the developed countries like U.S.A France and Germany may be large scale business in the developing countries. 

In Nigeria alone, there are different definitions the central bank of Nigeria through its credit guidelines to commercial bank regards small scale  business as “any enterprise whose annual turnover is less than N500, 000.

According to Federal Ministry of Industries, small scale  business has been defined as “any manufacturing processing or services industry with capital investment not exceeding N150, 000.00 in machinery and equipment alone.”

Sule, E.I.A (1986) in his article small scale  industry in Nigeria defines small scale  business as “a concern that is independently owned and operated or manager of such business concern”.

The Obafemi Awolowo University, Industrial research unit defines small scale  business as “one whose total assets in capital management plant and working capital are less than N250, 000 and with a staff of 50 full time workers”

According to S. Ibitoye, he defined small scale  business in term of certain functional characteristics which make its problems and opportunities some what different from those of the medium and large scale industries.

It is noted from these definitions that no agreement the criteria for determining as small scale  business. This means that there is no specific definition. Any existing definition is subject to change in the current economy of a country. 

The small scale  industries business division of the federal ministry of industries defines small scale  business as “establishments with capital investment of not more than N250, 000 employed between 50 and 150 persons. 

Despite these differences, all the definition share the common idea, that small scale  business enterprise are generally low, interim of number of persons employed and in the amount of investment annual business turn-over.




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