This study examined the socio-economic factors affecting investment in small scale businesses. Small and medium scale enterprises have long believed to be catalysts for economic growth and National Development both in developed and developing countries. In Nigeria where private sector is not well developed SME is assumed to play the role of employment generation, facilitator of economic recovery and National Development. The researcher adopted a survey research design and the sample size was for the study was 45 respondents of GLT World (Superphones) Limited, Uyo. The study sourced it data from both primary and secondary sources. Chi-square method was used as the method of data analysis. the study  therefore recommended that Government at all levels need to put more effort on provision of infrastructure facilities such as good road, electricity, good water supply etc which has direct effect on the operation of small scale sector.



1.1    Background of the Study

The growth of the economy of a country depends on various economic variables, which they are created through socio-political situation of a country. The contribution of the various economy units to the main stream of the economy brings about growth. Growth in economy involves increasing the size of output of an economy. Small scale enterprise, most especially in Africa are the main economic agents that provide goods and services for meeting the need of and aspiration of the people. The importance of small scale enterprise to the industrial sector cannot be over emphasized.

The small scale enterprises solve the problem of industrialization that tends to propel growth and achievement of structural transformation and diversification of economy (Adekunle, 2002). It is also believed that without the expansion of export neither foreign aids nor import substitute can be seen as a final solution to economic development even after taken into consideration the problem of foreign and import substitute. Considering the vital role the small scale enterprises are playing in terms of economic development in less developed countries like creation of job opportunities, availability of consumer sovereignty ends to which tends to promote general welfare of people in less develop countries (including Nigeria) establishing of the small scale enterprises should be encourage so that they could constitute significantly to stimulating and developing a broad base culture to the state.


The important characteristics of all developing countries are their labour intensive nature (Bruton, 2000). Their impact will also mitigate rural-urban migration; they also have inability to respond to changing demand because of low capital intensive which allow product to be change at a relating low interval. Small scale enterprises aid the promotion of effective resources utilization in the economy. Substantial development can only be achieved in Nigeria if the socio-economic problems such as unemployment, immigration, religious and tribal crisis corruption, etc, are properly addressed. Small scale enterprises are part of the tools for addressing these problems.

The economy of the advanced nations started from the establishment of small scale enterprises that were managed by entrepreneurs. More so, they attained levels of industrialization and were aided by their nation’s sound economic policies and social development programmers’. As argued by Graham, 2009), small business enterprises constituted a large part of many economies of the world, including those of developed and advanced nations, numbering up to half to two- third of all business all over the world (Tuleja, 2001). Thus, many managerial practices, policies, strategies and government interventions have been put in place to encourage the establishment, survival and growth of various types of small scale enterprises in many economies of the world.

In Nigeria, small scale enterprises account for substantial part of the total industrial employment and production in Nigeria business concerns. In the same vein, small — scale enterprises generates the industrial wealth of Nigerian in addition to being a major agent in the economic, technological, social and political growth and development of Nigeria not minding the presence of multinational and other large firms in Nigeria, such as shell, Mobil. NNPC, NITEL, PHCN among others (Osuagwu, 2001).

As small business entrepreneurship is concerned with business innovation and exploitation of business opportunities, in addition to the efficient and effective running of business by individuals, its relevance to today’s economy cannot be overstated. The Nigeria economy, undoubtedly, is characterized by many economic ills among which are high levels of unemployment, low standard of living, high rate of crime etc. small scale enterprises assist in reducing the level of all these problems and disorder in Nigeria. The aftermath of the creation of jobs is also reducing the dependence of government to provide everybody with jobs. Furthermore, this creation of jobs in Nigerian economy by entrepreneurs would, to a large extend, reduce government expenditure, improve the standard of living of Nigerian, reduce social ills in the society and thus assist in creating a balanced society and economy.

It is as a result of role played by small-scale enterprises that motivate government to come out with many economic policies aimed at moving the country from its present position as a consuming and import oriented nation country to a nation of self-reliance and industrialization among which was the indigenization programme of 1972 known as the Nigerian Enterprises Promotion Degree enacted during the regime of General Yakubu Gowon (Rtd). Others include General Olusegun Obasanjo’s phase two of the indigenization programmed that came out with anti- inflation decision on Operation Feed the Nation (OFN 1976), Alhaji Shehu Shagari’s austerity measure and economic policy of reformation, General Ibrahim Babangida’s Structural Adjournment Programme (SAP, 1990) and General Sani Abacha’s vision 2010.

All of these were geared towards socio-economic development of the country in general and Akwa Ibom State in particular. Akwa Ibom has several small and medium enterprises operating all over the state especially in the metropolitan of Uyo, the state capital. Therefore, this research study tries to examine the impact of socio-economic factors on investment in small scale enterprises in Uyo metropolis.

1.2    Statement of the Problems

Small scale enterprises constitute the bedrock of the industrialization of the economy of any country. In Nigeria, small scale enterprises, which constitute the majority of the enterprises, have been contributing immensely to the socio-economic development and growth of the country. They provide employment to a lot of people, provide revenue to the government, contribute in reducing the rural-urban drift and hence contribute immensely to the standard of living and well-being of the people in the society. However, these type of businesses, that is the small scale industries are bedeviled by a lot of problems ranging from ineffective management, poor capital base, low sale, competition, personal use of business funds, over investment in fixed asset, poor location, poor record keeping system and lack of enough government support to carry out their activities. That may explain why they cannot discharge their role effectively and efficiently to the society and economy of the country.

In Akwa Ibom State, just like other states, the small- scale enterprises are facing the above named problems. Most small scale industries cannot operate in large scale because of inadequate capital at their disposal and lack of managerial and technical know- how. Generally, therefore, this study attempts to look at how effective and efficient these enterprises have been in impacting positively on the socio- economic development and growth of the society and economy.

1.3    Objectives of the Study

Generally, the aim of the study is to assess the contribution of socio-economic factors and investment in small scale enterprises in Uyo metropolis.  Specifically the study will focus on achieving the following objectives.

  1. To determine the relationship that exists between socio-economic factors and small scale enterprises?
  2. To examine the factors affecting the role of small scale enterprises?
  3. To identify the problems affecting the activities of small scale enterprises?

1.4     Research Questions

  1. Does socio-economic factors affect small scale enterprises?
  2. How does the role of small scale enterprises affect the socio-economic factors?
  3. What are the problems affecting the activities of small scale enterprises in Uyo metropolis

1.5   Research Hypothesis

The following are research hypotheses formulated to guide the study.

Ho: There is no relationship that exist between socio-economic factors and small scale enterprises

Ho:  Socio-economic factors does not have effect on small scale enterprises

1.6    Significance of the Study

The study is on the small-scale enterprises which constitute the bedrock for industrialization in any economy. This is true for Nigeria as elsewhere because they constitute the major industrial sector of the country. In addition, the study may be of benefit to the entrepreneurs, workers and management staff in small scale enterprises in particular and similar other business in general. Lastly, the study will no doubt contribute to knowledge for students and scholars who are interested in this area.

1.6 Scope of the Study

This study is conducted on socio economic factors and investment in small scale enterprises        in Uyo metropolis.

1.8    Limitations of the Study

For everything one does in life, there must be some limitations of which this study is not an exception. The problems faced in the course of the research include:

i).       Time factor: The limited time given by the department also affects the research because, necessary information required for the smooth take of the project could not be collected as planned.

  1. ii)       Accessibility of the research data: Due to unwillingness of providing accurate information by those concerned and also improper record keeping by some of the owners of the enterprises. The researcher had the problem of gathering enough data for the project.

iii)      Financial constraint: The researcher was not in possession of enough resources to carry out the study widely.

1.9    Definitions of key terms

The following terms are used in the write-up are hereby define for clarity sake.

Small Scale Enterprises (SSE):  Birch (2014), defines a small-scale business as any manufacturing, processing or service industry employing up to fifty (50) full time workers. A small-scale business has also been seen as that business with a turnover of half a million naira.

  1. Entrepreneurship:  Entrepreneurship is defined as the willingness and ability of the individual to seek out investment opportunity in and able to establish and run the enterprises successfully based on the identified opportunities.

iii.        Enterprises: This refers to an organization, the purpose which is to perform certain commercial activities aimed at producing, processing and providing something to the market for profit.

  1. Small Scale Industrial Credit Scheme (SSICS): This scheme was establish in 1971 as revolving grant by federal and state government to assist in meeting the credit needs of small scale enterprises on relatively more liberal conditions compare to commercial banks.
  2. Structural Adjustment Programme (SAP): This programme was developed by General Babangida with the aim of opening up an economy and use of market forces in determining the prices, factors of production and their efficient allocation.


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