THE STUDY OF FINANCIAL STRUCTURE OF A SMALL AND MEDIUM-SCALE ENTERPRISES
(A CASE STUDY OF NNEWI TOWN IN ANAMBRA STATE)
ABSTRACT
          The rate of which an economy progress is determine by the level of industry and human capital development.  Nigeria is one of such economy where Small and Medium-Scale Industries have the prospect in main-stream contribution in the growth and development process.  Ironically, this vital aspect of an economy faces obvious difficulty poor financing.  Small and Medium-Scale Enterprises act as a shock absorber to the economy in where heavy-duty/heavy machine industries are sparsely located.  These play the role of labour absorber and routine manufacturing for day-to-day consumption of the populace.  Thus, financing these industries will ensure employment of the ever-teaming population of both urban and rural sector as well as regular manufacturing to support the daily consumption characteristics of a developing economy.
          Small and Medium-Scale Enterprise do not get required support from the concerned government, department, Banking sector, financial institution and corporate sector, which is a handicap in becoming more competitive in National market.  Small and Medium-Scale Enterprises faces numbers of problems which includes absence of adequate and timely Banking finance, limited knowledge, low production capacity, inefficient marketing and identification of new markets, constraint on modernisation and expansion, non availability of highly skilled labour of affordable cost follow up with various agencies in solving regular activities and lack of interaction with government agencies on various matters.
          In carrying out this research work, the researcher will use primary and secondary data and also questionnaires, oral interviews and researcher’s experience will be observed.
TABLE OF CONTENTS     
CHAPTER ONE
1.0    Introduction                 
1.1    Background of the Study    
1.2    Statement of Problems                 
1.3    Objectives of the Study                 
1.4    Research Questions            
1.5    Research Hypothesis          
1.6    Scope of the Study              
1.7    Significance of the Study              
1.8    Limitations of Study                       
 1.9    Definition of Terms                        
          References                                              
CHAPTER TWO
2.0    Review of Related Literature                 
2.1    Theoretical Review                        
2.1.1  Definitions of Small and Medium-Scale Enterprises       
2.1.2 Causes of Failure of Small and Medium scale   Enterprises                                                                 
2.1.3   The Importance of Small and Medium   Enterprises in the Economy of Nigeria                           
2.1.4   Financial Structure of Small and Medium-Enterprises
2.1.5   Sources of Finance for Small and Medium-Scale   Enterprises                                                                        
2.1.6    Factors Influencing Financial Structures              
2.1.7    Government Policies for promoting Small and
             Medium-Scale Enterprises                                               
2.1.8    Monetary and Fiscal Policies Adopted by Government in Respect of Small and medium-Scale Enterprises     
 2.1.9    Effect of Government Policies on Small and Medium  Scale-Enterprises                                                                       
2.1.10   Problems of Small and Medium-Scale Enterprise                 
2.2        Empirical Review                                                             
             References                                                                        
CHAPTER THREE
3.0    Research Methodology                          
3.1    Research Design                                    
3.2    Area of the Study                           
3.3    Population of the Study                
3.4    Source of Data                              
3.5    Sampling Method                          
CHAPTER FOUR
4.1    Data Presentation and Analysis  
4.2    Test of Hypothesis                        
CHAPTER FIVE
5.0    Summary of Finding, conclusion and Recommendations
5.1    Summary of Findings                                                          
5.2    Conclusion                                                                                     
5.3    Recommendations                                                              
          Reference                                                                             
          Appendix  
CHAPTER ONE
1.0    INTRODUCTION
1.1    BACKGROUND OF THE STUDY
Small and medium scale industries equity investment scheme (2001) define SMEs as any Industry with a maximum asset base of N200 million, excluding land and working capital and with the number of staff employed by the enterprises, not less than 10 and not more than 300.  It deals with the achievement of improvement in rural infrastructive, living standard of the rural dweller, employment generation, utilization of local resources, transformation of indigenous technology and production of intermediate goods.
          One of the very noticeable characteristics of Nigeria is high rate of business acumen found among the citizen.  The average citizen when given an option would prefer to start a business of his own and remain self-employed, such tendencies must have given rise to the emergence of Nnewi as one of the biggest market in West Africa Sub-region, here and in many other commercial towns in Nigeria.  The streets display a high  proportion of the premises housing a business organization owned by citizens of Nigeria.  The Nigeria population is generally illiterate and such majority of the business units are unregistered with any government agency.  This makes impossible the compilation of any accurate statistics on the number of business unit in the country.
          Small and medium enterprise have one thing in common, it is their limitation to access to sources of funds.  This has greatly made impact on how the maps of their financial structure have been own.  And since most of the small and medium businesses especially in the developing countries, are generally individuals or family businesses operating in a low income economy, they are unable to generate sufficient funds through personal savings for the finance of huge capital equipment or other fixed assets.
          It is important to find out which of the sources of funds are available to the business, then the risk involves and whether the money is likely to recalled at short notice.  Also the respective cost of borrowing from each source, government restriction and institutional constraint are vital considerations.
1.2       STATEMENT OF PROBLEMS
Small and medium scale enterprise in the country with particular reference to Nnewi Town in Anambra State are finding it difficult to grow because of operational problem confronting them.  Finance as an economic force has been stated as a major impediment to the progress and survival of this class of enterprise as put by various opinions.  Other which is government interferance and ineffective management have also impact on its growth.
 1.3    OBJECTIVES OF THE STUDY
The objectives of this study are as follows:
1.           To examine if the financial structure made any impact on management efficiency of small and medium enterprise.
2.           To  find out the various methods and control used in the financial structure of small and medium business
 1.4    RESEARCH QUESTIONS
1.      What are the impact of financial structure in the management efficiency of a small and medium enterprise.
2.      What are the effective methods and control used in handling the financial structure of small and medium business.
1.5    RESEARCH HYPOTHESIS
The following hypothesis is used in this study.
1)      Ho:    Financial structure have a direct impact on the
management efficiency of small and medium enterprise.
Hi:     Financial structure does not have a direct impact on the management efficiency of small and medium enterprise.
2)      Ho:    The various methods of financial structure and control
used in small and medium businesses requires effective handling.
Hi:     The various methods of financial structure and control used in small and medium businesses does not require effective handling.
 1.6    SCOPE OF THE STUDY
This study covers the area of Nnewi Town in Anambra State as regards to the ways of improving funding to small and medium-scale enterprises and the ways in which these funds can be managed by the management of small and medium scale enterprises.
 1.7    SIGNIFICANCE OF THE STUDY
In view of discussions on the incidence of failure of small and medium scale enterprises, one can see the need for a study of a financial structure of such businesses.
 Academic Significance
It will be beneficially to those that are in the academic field.  The researcher, the student will find the project very useful.
 Practical Significance
This study is intended not only to educate the owner of the business on the proper source of finance available to them but also to educate them on how to choose between different types of financing with minimum cost.
          The result of the study will help small and medium enterprises in their effort to access to sources and management of funds.  Bank stands to benefit also because it will help improve the approach of these illiterate and semi illiterates owner of small businesses to bank when seeking for finance.  The government will also benefit because it will help to improve the nations economy.
1.9    DEFINITION OF TERMS
For the purpose of better understanding and clarify, the researcher used the following words, which are explained.
EQUITY:- This is the difference between the asset and liability.
FINANCE: An economic force, ability to obtain something of value.
FINANCIAL STRUCTURE: The way the firm’s assets are financed.  It is the entire left-hand side of the balance sheet.
GEARING: The ratio between the fixed interest borrowing and the ordinary shareholder whose dividend may vary with the earnings available for distribution.
WORKING CAPITAL:- Excess of current assets over current liabilities.