Strategies For Enhancing And Promoting Capital Formation Among Small Scale Enterprises In Nigeria (a Case Study Of Heritage Company)

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This Project work titled STRATEGIES FOR ENHANCING AND PROMOTING CAPITAL FORMATION IN SMALL SCALE ENTERPRISES IN NIGERIA (A CASE STUDY OF HERITAGE COMPANY) has the objective of x-raying the reasons why there is slow increase in the quality of inventories due to high cost and low profit, and also to suggest adequate strategies for capital expansion, backed by compulsory savings by the company and management. In this study Descriptive survey was used. This method was adopted because of the field current information about the situation of the study, determining the sample size. 














1.1     Background of the study

The most outstanding characteristics of this era in which we live in is rapid change. More changes take place now, in span of a few years than our grand fathers saw in the course of a life time. Science, translated into technology has brought about at a constantly accelerated rate which has become one of the strategies for enhancing and promoting capital formation among small scale enterprise in Nigeria.

Robert H. Heywood, Bruce and Graham (1997), stated that, capital is the money used by expensive piece of heavy equipment such as bulldozer, Sawmill or tractor-trailer

According, to Abner (1990:21) capital is the most important of all the factors of production be it small or large enterprise.

He noted that the more an enterprise uses her capital, the higher the rate of industrialization.

The growth of small enterprise in Nigeria is being disturbed by inadequate supply of capital and consequently the poor usage of capital.

In Nigeria, many small-scale enterprise are bankrupt because of lack of capital which implies that there will be little or no further growth of that business organization (small-scale enterprise). With knowledge of these, the research is able to undertake this study.


1.2     Statement of Problems

It is in no doubt that the enhancement and promotion of capital formation in small-scale enterprise has to take certain steps and procedures.

It is therefore the concern of every curious researcher(s) to find out reason why capital formation among small-scale enterprise is difficult. The stated problems could be that the net profit generated in small scale enterprise is not enough to expand the business or the formation of capital even when plough back profit is practiced.

Most times, entrepreneurs of the small scale enterprise are not skeptical in the employment of workers and thereby unconsciously employing unqualified workers, this conduct will definitely hinder the operation of small-scale enterprise.

In addition, the Staff of Heritage Company do not earn adequate salaries when compared with their output, hence resulting in accumulating of high overhead cost.

Also inadequacy of machineries as well as equipment that should be used in production process or stages, even when these machineries are acquired, the counterfit are bought which often break down and require fund in order to put them back in place as a result affects the capital of the business.

On this note, the researcher would examine the strategies for enhancing and promoting small-scale in Nigeria.

1.3     Purpose of the study

No organization weather big or small is without an objective which they set up to achieve, in that same vein the objective of researchers in the area of the strategies for enhancing capital formation are as follows:

i.            To discuss these problems that hinder capital formation by the small scale enterprise in heritage company Enugu.

ii.          To emphasize and highlight on the causes of these problems.

iii.         To suggest the strategies for promoting capital formation among small-scale enterprise using Heritage Company Enugu as a case study.


1.4     Significance of the study

The rate of low capital formation among small-scale enterprise has raised questions as to weather managers in Heritage Company are really conscious of the low capital formation as it concerns their company. Hence the need for the study arises.

This study proves mangers that every management no matter the level, is always interested in result orientation and not activity orientation. And for management to accomplish results. They must work through with healthy worker and with sufficient capital.

However, the study is also designed to create awareness and ginger capital formation consciousness to mangers not only in heritage but also in the economy as a whole.

Again, change in a business as well as its increasing complexities does not mean that manger should be ignorant and inadaptable to the dynamism of the business.

Moreover, this study will establish and bring to the knowledge of manger the incompatibility of setting objectives as well as management actualization.

Finally, it is hoped that this work will increase the material available on this topic. Readers will appreciate other people’s view on the strategies for enhancing and promoting capital formation in small-scale enterprise and also see the workability of capital formation in real situation.


1.5     Research Questions

In order to achieve the purpose of this study the following research questions are formulated:

i.            What are the factors that hinder capital formation among small scale enterprise?

ii.          What strategies could promote and enhance capital formation among small scale enterprise?  

iii.         Can mangers of small-scale enterprise be the cause of poor formation of capital?

iv.        Are there enough incentive to save that will enhance capital formation?

v.          Do the government support capital formation of small-scale enterprise?



1.6     Scope of the study

The scope of the study is limited to the strategies for enhancing and promoting capital formation in small-scale enterprise in Nigeria a case study of Heritage Company Enugu.


1.7     Limitation of the study

In carrying out this research work, the following problems were encountered which prevented the researcher(s) from covering a wide area for a generalization of result.

i.        Finance: The high cost of material used in this research work constituted problem to the researcher, like the cost of stationary and printing of questionnaires.

ii.       Lack of transportation facilities: The high fee of public transportation greatly influenced this research work as the researchers are not mobile and this is limited to the scope of area covered by this study.


iii.     Time factor:     A lot of time were consumed by the researchers together the required information since most of the top management staff may simply inform the researchers to come back next time, not minding the limited time given to the researcher to complete the work.


iv.        The uncooperative attitude of some of the staff: Some of the staff’s misconduct limited the essence of the study, thereby they refuse to answer the questions in the questionnaire. Some were just unfriendly and thought that the information being gathered were to be used against them.


v.          Difficulties encountered in collecting of data from heritage company Enugu as used as the case study: Same of the questions in the questionnaire were not answered inspite of the explanation given to them on the need for the study. They still insisted that those information were strickly confidential and should not be released.


1.8     Definition of Terms

i.           Capital: Capital as stated in this work refers to fund or wealth invested for further production of goods. It also means a stock of wealth which exists at a particular time, set aside for the production of goods. These stock of wealth includes; money, machineries, buildings and stock of raw materials.

ii.         Capital formation: Capital formation as used in the work refers to the act of increasing the capital, stock or capital base of a company or firm.


iii.       Strategies:     Strategies can be defined as a plan designed to achieve a long term aim or objectives which would result in improvement.


iv.        Enhancing: Thismeans an increase in the quality and value of something.


v.          Promoting: As it concerns this work, it means to aid the progress of a cause or an aim.


vi.        Small-Scale: Small-scale as used in this work means, a young infant, unmatured.


vii.      Enterprise: Means a project or undertaken.


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Strategies For Enhancing And Promoting Capital Formation Among Small Scale Enterprises In Nigeria