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EFFECT OF ENVIRONMENTAL FACTORS ON SMALL SCALE BUSINESSES PERFORMANCE

ABSTRACT

This is survey study carried out to investigate the SSBs performance and examine the impact of environmental factors on SSBs performance in Kano and Sokoto states. Questionnaire methods were mainly used to collect data from the sampled SSBs. The data was analyzed using multivaried discriminant analysis and multiple regression technique in order to assess the level of performance as well as establish the significance of the relationship. The findings of this study clearly show that SSBs record low performance within the period studied and environmental factors have significant impact on their performance in Kano and Sokoto states. The study recommends that government should create enabling environment for both existing and potential investors in the sector, through provision of adequate infrastructures, financial support and formulation of policies favorable to SSBs.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Small scale businesses (SSBs) constitute large population of businesses worldwide and they play a significant role in the economy. Consequently, the performance of small scale enterprises sub-sector is closely associated with the performance of the nation. SSBs play very important role towards fostering accelerated economic growth, development and stability within several economies. They play tremendous roles in employment generation, provision of goods and services, creating better standard of living, as well as contributing to the growth of Gross Domestic Product (GDP) of the nation, (OECD, 2000). Small firms create new jobs, open up opportunities for upward social mobility, foster economic flexibility, and contribute to competition and economic efficiency (Liao, Welsch, & Moutray, 2009). SSBs are the driving force for economic growth, job creation, and poverty reduction in developing countries. They have been the means through which accelerated economic growth and rapid industrialization have been achieved. Furthermore SSBs has been recognized as a feeder service to large- scale industries (Fabayo, 2009).

Studies have indicated that SSBs provide an effective means of stimulating indigenous enterprises, enhancing greater employment opportunities per unit of capital invested and aiding the development of local technology (Sule, 1986; and World Bank, 1995). SSBs help in mobilizing surplus income and resources through savings for investment. In similar vein they also encourage, as well as, promote the use of local raw materials. Their nationwide spread contributes to a more equitable income distribution among individuals and regions, as well as mitigating rural-urban migration. They also enhance the strengthening of industrial linkages and the integration of industry with other sectors.

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