The purpose of this study was to find the
problems and prospects of financing small scale business enterprises in Etsako
Local Government Area of Edo State. The study examined the finance constraints
to small scale farming. Data were obtained using research questionnaires from
hundred (100) farmers randomly selected from five (5) villages in Etsako East
Local Government Area of Edo State. However, the decision of this study was
prompted by the important role played by the small scale business enterprises,
the small scale business enterprise have been known to: Provide gainful
employment. Provide essential intermediate goods and services to most farmers
and also. Provide means of embryo to new entrepreneurial talent by helping to
groom future managers. The statistical method employed for analysis was the
simple percentage method. The analysis of the responses to the researcher
questionnaires yielded the following finding. Effect of neglecting funding on
productivity in agriculture. Effect of agricultural facilities on agricultural
produce productivity. Strategies of strengthening agricultural finance and
finance constraints and. The effect of planning on small scale business
enterprise Thus, the study therefore recommends that strategies that would
enhance agricultural financing with the aid of improving the standard of living
the farmers in the area be put in place.
Chapter One – introduction
Background of the study
Statement of problem
Purpose of study
Significance of the study
Scope of study
Definition of terms
Review of Related Literature
Administration of data collection
Method of data analysis
Analysis of data
Presentation, analysis and discussion of result
A small business is a business that privately owned and operated with a small
number of employees and relatively low volume of sales. Small businesses are
normally owned by corporations, partnership or proprietorship. The legal definition
of “small” varies historically by country and by industry, however a small
business is defined by fair work are 2009 as one with fewer than 15 employees.
Small businesses are common in many countries depending on the economic system
in operation. Typical examples include: convenience stores, other small shops
(such as bakery), tradesmen, photographers, farmers e.t.c. small business form
an integral part of a healthy national economy.
Agricultural business is vested mainly with small-scale farmers who are found
mostly in rural areas in Nigeria and are responsible for production of food
that is consumed both in rural and urban communities, and raw materials needed
by the industrial sector of the economy (Rehji, 1999). In discharging these
responsibilities they face a lot of problems that include inadequate or
restricted access to credit facilities (Ajakaye, 1985) FAO (1990), attributed
the downward trend in per capital food production in Nigeria to increase in
farming population which demands a continuous cropping on the soils without
adequate fallow periods resulting into infertile soil, nature of land tenure in
the country and restricted access to credit facilities to expand farm holdings.
According to Shepherd (1977), credit determines access to all of the resources
on which farmers depend on. Credit serves as a source of funds to farmers that
can be utilized in production process. Ogundeji (1998) stated that agricultural
business like any other business can be financed through personal savings,
friends or family assistance, partnership, bank loans, credit terms, private
placements, hire purchase and cooperative societies. Though the federal
government of Nigeria, in recognition of the need to finance agricultural business
directed all licensed banks through central bank of Nigeria (CBN) in 1977 to
open bank branches in the rural areas and also establishment of Agro-allied
bank. This is to encourage banking habit, provide agricultural credit with
minimal interest and redress the lopsidedness in the availability of banking
service in rural areas; farmers are still constrained in their access to credit
facilities from bank and other banking services.
STATEMENT OF THE PROBLEM
Small business often faces a variety of problems related to their size. A
frequent cause of bankruptcy is undercapitalization. This is often as a result
of poor planning rather than economic conditions. It is a common rule of thumb
that the entrepreneur should have access to a sum of money at least equal to
the projected revenue for the first year of business in addition to his
anticipated expenses. For example, if the prospective owner thinks that he will
generate #100,000 in revenue in the first year with #150,000 in start up
expenses, then he should have no less than #250,000 available. Failure to
provide this level of funding for the company could could leave the owner
liable for all the company’s debt, should he end up in bankruptcy court, under
the theory of undercapitalization.
The research questions for the study in null from are as follows.
- Would there be any significant relationship
between some selected socio-economic characteristic.
- Would there be any recommendations on strategies
of strengthening agricultural finance?
- Does the use of agricultural facilities such as
fertilizers, chemicals e.t.c. lead to low productivity of agricultural produce?
- Would there be any significant relationship
between source of finance and fiancé constraints?
- Does neglecting funding leads to how
productivity of agriculture?
- Would there be any source of finance available?
PURPOSE OF THE STUDY
The main purpose of this study is to appraise the finance constraints of small
scale farming in Etsako East local government area of Edo state; and
specifically, the study intends to.
- Identify the source of finance available for
- Make recommendations on strategies for
strengthening agricultural finance.
- Identify the constraints to finance of farm
SIGNIFICANCE OF THE STUDY
The importance of this study cannot be over emphasized as this research aims at
serving dual purpose, which is to the research and the society.
The research investigation will help broaden the researcher’s knowledge on the
topic and also acquaint the researcher with the practicability of the real
And also, it will enable the society to know or identify the problems and
prospects of financing small0scale business enterprises.
SCOPE OF THE
The scope of research is meant to investigate the existing factors that
militate against the methods of the effective appraisal of finance constraints
in small scale farming in Etsako local government area of Edo state.
DEFINITION OF TERMS
This is a type of loan made in business or corporate finance context. Specific
types of credit facilities are: term loans, revolving credit, committed
TERMS AND CONDITIONS APPLY
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