CHAPTER ONE
INTRODUCTION
1.1 Background of the study The economy is a complex dynamic factor, requiring greater attention in terms of its analysis and efficient management for productivity, stability growth and increased standard of living of people operating Nigeria.
Since 17th century efforts was made to promoting economic growth and have focused on the small and medium scale industries (SMIS) as the keys and the development of an economy and manufacturing sector in general. The role of small and medium scale industries in the overall growth and development of an economy‟s manufacturing sector in particular and the economy in general cannot be over emphasized. Small and medium scale industries are indeed high potentials for development in term of employment generation and wealth creation in any economy. Empirical studies have shown that the small and medium scale industries (SMIS) have in many state has enhanced greater employment opportunities per unit of capital in vested and aided the development of local technology. This explains the deep interest which developing nation has shown in the promotion of small and medium scale industries since the 1970s. Moreover, the potentials of small and medium scale industries in contributing substantially to the economic growth and development of Nigeria has been hampered by various constraints, inducing long term capital inadequate financing unavailability of information for potential investors, poor management practices and low entrepreneurial skill, over bearing regulatory and operational environmental, unfavorable tariff policy and infrastructural deficiencies such as inadequate power supply. These constraints also limit the performance of small and medium scale industries in Nigeria.
Although, it is a widely held view that the availability of credit as the most critical to the performance of small and medium scale industries (SMIS), but some studies have shown that a large number of small and medium scale industries fail because of non financial reasons such as infrastructural deficiencies (Liedhorm et al 1994). One of the infrastructual facility affecting the performance of the SMIS in Nigeria is power supply (electricity). Due to inadequate provision of power supply constitutes one of the greatest constraints in SMIS development. The current situation whereby each investor is too provide electricity is, to say the least, tasking to the SMIS investors who generally lacks adequate capital for the business and the result of this is low return on investment due to high operations cost. Therefore, adequate power supply is necessary to ensure cost effectives in vestments in small and medium scale industries (Charles Soludo, 2005). It is however, noteworthy, there is need to objectivity access the Nigeria and impact of power supply on the performance of the SMIS sub-sector of the Nigeria manufacturing sector.