CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Small and Medium scale enterprise remains one of the most outstanding employers of labor in Nigeria as it influences all aspect of economic activities. Ronney (2014) noted that Small and Medium scale enterprises have been considered as the engine of economic growth and for promoting equitable development. Its role in the economic and social development of the country is well established. It is considered the nursery of entrepreneurship, often driven by individual creativity and innovation. SMEs are also credited with generating the highest rate of employment growth and account for major share of industrial production and export.

The rapid expansion of SMEs in economics of developed countries in the 1980s and 1990s has created a widespread conviction that SMEs ventures are the most important source of entrepreneurship and as dynamic and innovative factor, they contribute directly to economic growth (Agar, 2010).The major advantage of the sector is its employment potential at low capital costs. The labour intensity of the small and medium scale enterprise sector is much higher than that of the larger enterprises.

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