THE ROLE OF SMALL SCALE INDUSTRIES IN RURAL DEVELOPMENT: A CASE STUDY OF CHIKUN LOCAL GOVERNMENT AREA OF KADUNA STATE

THE ROLE OF SMALL SCALE INDUSTRIES IN RURAL DEVELOPMENT: A CASE STUDY OF CHIKUN LOCAL GOVERNMENT AREA OF KADUNA STATE

ABSTRACT

This study researched “The Role of Small Scale Industries in Rural Development” with reference to Chikun Local Government Area as a case study. The design of the study is survey method. The population consists of 368,250 based on 2006 census and the sample is 100. The instrument used to generate data is the questionnaire and the data generated was analysed using frequency and simple percentage method. As a result of the analysis made, findings of the study include: employment opportunity for skill and unskilled workers; provision of social infrastructure; reduction in rural-urban migration. Based on the findings, recommendations were made such as: government should create a separate small scale industries unit within the banks to give special loans to industries and make provision for social infrastructure in the rural areas.

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Before, the various governments of this country – Local, State and Federal had directed attention on the establishment of gigantic industries in the urban centres of the country. This they believed, though erroneously, that large scale industry is the only yardstick of measuring the economic power of any country. This crave for large scale industry was dominant during the oil boom (Isemin, 1988:19). This resulted in the utter neglect of the nation’s rural areas which contain about 85% of the nation’s total population. However, with dwindling of the oil money coupled with the oil crisis in the mid 80s, there was a sudden awareness on the part of the Federal Government that rural development should be the centre piece for industrial transformation (Omorodion,1989:8).

In realization of this, and in pursuance of its attainment, the Nigerian Government created various agencies such as the directorate of food, roads and rural infrastructures (DFRRI) to work in partnership with the rural communities towards the provision of amenities such as rural roads, Pipe-born water and electricity which are essential for setting up small scale industry. In addition, the National Directorate of Employment was created to train and develop school leavers’ skills for independence. The directorate also provides financial and technical assistance to individuals wishing to start industries of their own. Also they provide credit/loan scheme to help provide financial assistance to individuals to set-up small-scale industries.

In spite all these efforts by the government, small scale industries are still faced with lot of problems. Under capitalization creates the problem of not buying merchandise independently at best price, in adequate quality and qualities. Poor industries accountability makes it difficulty to assess the operating results of the industries and at times starves the firms of its liquid resources. Some of the Government polices and Regulations brings distortions in the structure and management of these industries. Inadequate and poor maintenance of infrastructural facilities, inadequate capital/funding, lack of managerial skill and project counseling, misappropriation of funds by government officials, to mention but a few, it has helped to increase the problems small scale industries in Nigerian rural communities (Chukwujekwu, 1987:3).

1.2     Historical Background of Chikun Local Government

Chikun is a Local Government Area in Kaduna State, Nigeria. Its headquarters are in the town of Kujama. It has an area of 4,645 Km², and had a population of 368,250 at the 2006 census. Chikun Local Government derives its name from a Gbagyi village named Chikun in the southeastern part of Kujama. Chikun Local Government Council was created in May, 1989 from Kachia. The traditional administrator of the LGA as the time of writing this project is Sa Gbagyi and one of the area’s landmarks is the Olam Poultry Plant.

The Chikun Local Government Council is in charge of public administration in Chikun local government area. The Council is led by a chairman who is the executive head of the local government. The Chikun legislative council makes laws governing Chikun Local Government Area. It consists of 12 Councillors representing the 12 wards of the local government area. The wards are Chikun, Gwagwada, Kakau, Kujama, Kunai, Narayi, Nasarawa, Rido, S/Garin Arewa Tirkaniya, Sabon Tasha, and Ungwan Yelwa.

There are mosques, churches and temples in Chikun, so people there practice the two major religions which are Islam and Christianity. Chikun contains different tribes Yoruba, Hausa, Igbo, Gbagyi, Jaba, Ikilu, Kadara, most especially all the tribes in Nigeria live in Chikun local government.

Chikun Local Government has a number of primary and post primary schools, private and government owned, including federal higher institution e.g. CASSS Unit of Kaduna Polytechnic, Bye Pass, Sabon Tasha, and numbers of computer schools where the residents of the local government get it easy to further their education.

There are also health centres owned by government and private in the local government, e.g. one along Kachia Road, Sabon Tasha, the other one is along railway Sabon Tasha.

Agriculture is the economic mainstay of the dwellers of Chikun Local Government Area with a variety of crops grown in the area. Other important economic industrys in Chikun LGA include pottery, shoe making and cloth welding. The area also has a vibrant trade sector and is home to several markets.

1.3     Statement of the Problem

Small-scale industries in Chikun Local Government Area of Kaduna State play a lot of roles today just like their counter parts in other states of Nigeria. These roles go a long way to facilitate the growth and development in the country, thereby contribute to the development of the economy. (Chukwujekwu, 1987:1). Despite this contributions, they are faced with a lot of problems, Among such problems are insufficient of fund. Thus, money for both services and expansion is always a major handicap. There is no managerial acumen owing to the proprietor’s limited education and training.

Alongside this is the neglect of the nation’s rural areas visa-vise small-scale industry has left a serious hiatus (gap) in the economic development and progress of country. This gap has resulted in the scarcity of essential goods and services with a spiral effect of high inflation and general high price level and unequal distribution of income. Lack of rural development also resulted in the mass migration of people from rural areas to our urban centres and cities leading to rapid formation of ghettos and slums.

Most of the traditional skills possessed by people such as wood caving, cloth weaving and dyeing, mat making, iron smelting, etc have been deserted in search of white collar jobs. As a result, most of these skills which could have been improved upon through encouragement and assistance of individuals to set up modern small- scale industries have been left to die away.

Beside, large-scale industry which formed the bed rock of economic development have become white elephant projects, that do not serve what they are established to serve. Some of them are producing under capacity. Some have been shut down due to lack of spare parts and raw materials. Others become a breeding ground for embezzlement by their various boards of directors and top government officials.

Therefore, the inclusion of small-scale industrial policy in our economic plan in the rural areas has enhanced the rural development, growth and stability in the rural areas in particular and the Nigeria in general.

1.4     Objectives of the Study

                        The following are the objectives of the study:

1. To identify the role of small scale industries in rural development in Chikun Local Government Area.
2. To identify the challenges faced by small scale industries in Chikun Local Government Area.
3. To identify the effect of these challenges on the development of Chikun Local Government Area.
4. To find out how these challenges could be solved in Chikun Local Government Area.

1.5     Research Questions

The research questions for the study are postulated as follows:

1. What is the role of small scale industries in rural development in Chikun Local Government Area?
2. What are the challenges faced by small scale industries in Chikun Local Government Area?
3. What are the effects of these challenges on the development of Chikun Local Government Area?
4. How can these challenges be solved in Chikun Local Government Area?

1.6     Significance of the Study

The role of the small-scale industry in rural development cannot be over emphasized. The research is being conducted with a view to ascertaining the problems and the causes of the small scale industries failure in rural communities and suggested solutions to the problems. The study will be useful to the government, public and private institutions, entrepreneurs, individuals, students and above all, the nation.

The government will find it very useful in drawing up programmes and policies for rural development. Equally, economic planners in the government will take small-scale industry into consideration while planning for the developments and growth of the economy.

Public and private organisation will also benefit from this study through making them realize the problems and ways of solving them.

Entrepreneurs will also gain from the study by way of encouraging them to set up industries in our rural areas.

Young graduates will also be encouraged to go into industries without depending on government for employment, it will also serves as a driving force for developing entrepreneurship in people.

Finally, student will find it a very useful guide in the conduct of a research relating to small scale industry.

1.7     Scope and Limitations of the Study

            The scope of this research study will cover the Small Scale Industries in Chikun Local Government Area of Kaduna State which includes the following wards under Chikun Local Government, namely Kakau, Rido and Kujama; The study administer questionnaire to collate information. This will ensure the adequate information is gathered as regard the topic area before analysis and conclusion are made.

The researcher, in carrying out the study was constrained by:

1. Cost of transportation to the area of the study
2. Also there way the unwillingness of respondents to whole­heartedly give out information. There was also the constraint of time limit allotted for the research. However, all this not-withstanding, efforts were made to produce an objective document.

1.8     Definitions of Terms

Rural: areas which are not towns or cities. They are often farming or agricultural areas.

Development: This is a process that creates growth, progress, positive change or the addition of physical, economic, environmental, social and demographic components.

Rural Development: This is the process of improving the quality of life and economic well-being of people living in rural areas, often relatively isolated and sparsely populated areas. Rural development has traditionally centered on the exploitation of land-intensive natural resources such as agriculture and forestry.

Small scale industries, small scale industries and small scale entrepreneurship are used interchangeably to man a small scale industry firm. Its deliberation was to refer to the operational definition. In Nigeria and worldwide, there seems to be no specific definition of small industries. Different authors, scholars, and schools have different ideas as to the differences in capital outlay, number of employees, sales turnover, fixed capital investment, available plant and machinery, market share and the level of development, these features equally vary from one country to the other.

1. In Nigeria, the Third National Development plan defined a small scale industries as a manufacturing establishment employing less than ten people, or whose investment in machinery and equipment does not exceed six hundred thousand naira.
2. The Central Bank of Nigeria in its credit guidelines, classified small scale industries as these industries with an annual income/asset of less half a million nairas (N500, 000).
3. The Federal Government Small Scale Industry Development Plan of 1980 defined a small scale industries in Nigeria as any manufacturing process or service industry, with a capital not exceeding N150, 000 in manufacturing and equipment alone.
4. The small scale industries association of Nigeria (1973) defined small scale industries as those having investment (i.e. capital, land building and equipment of up to N60, 000 pre-SAP Value) and employing not more than fifty persons.
5. The Federal Ministry of Industries defined it as those industrys that cost not more than N500, 000 (pre-SAP Value) including working capital to set up.
6. The Centre for Management Development (CMD) definition of small industry in the policy proposal submitted to the federal government in 1982 defined small scale industry as, “a manufacturing processing, or servicing industry involved in a factory of production type of operation, employing up to 50 full-time workers.

1. Lastly, in the United States, the small industries administration defines a small industries as one that is independently owned and operated is not dominant in its field, and meets employment or sales standard develop by the agency. For most industries these standards are as follows. This also shows the same trend as in Nigeria, although the exchange value makes the financial criteria to be different.

1. Manufacturing: Number of employees range up to 1500, depending on the industry.
2. Retailing: Small if annual sales or receipts are not over 2 million to 7.5million dollars.
3. Wholesaling: Small if yearly sales are not over 9.5 to 22 million dollars
4. Services: Annual receipts not exceeding 2 million to 8 million dollars. Thus in general, the specific characteristics/criteria used in describing small scale industries are;
   1. 1. The Number of People/Persons Employed. It is usually a small industries, because small number of people are employed.
      2. Annual Industries Turnover: Because initial capital is low, then annual turnover will also be low.
      3. Local Operations: For most small firms, the area of operation is local. The employees live in the community in which the industries is located.
      4. The Sales Volume is minimal.
      5. Financial Strength is relatively minimal.
      6. Managers are independent, and they are responsible only to themselves.
      7. The managers are also the owners.
      8. The owners of the industries actually participate in all aspects of the management (i.e. the management of the industry is personalized)
      9. They have relatively small market when compared to their industries.
      10. The amount of employees is relatively small when compared to the biggest companies in a similar venture.
      11. The capital is mainly supplied by an individual or small group of individuals/persons or shareholders.
      12. They usually have one, but many have several shop locations all in the same city or metropolitan areas.
      13. There are many industries in Nigeria categorized as small industries. Most of them are in the commercial sector and there is also a trend now towards the service industry hotels, restaurants, fast foods, etc.

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Tagged with: Development, Industries, Rural, Rural Development, Small Scale Industries