2.1.5.3 Characteristics of SMEs in Nigeria
A major characteristic of Nigeria’s SMEs relates to ownership structure
or base> which largely revolves around a
key man or family. Hence, a preponderance of the SMEs is either sole
proprietorships or partnerships. Even where the registration status is
thus that of a limited liability company, the true ownership structure
is that of a one-man, family or partnership business. Other common
features of Nigeria’s SMEs include the following among others.
1. Labour-intensive production processes
2. Concentration of management on the key man
3. Limited access to long term funds
4. High cost of funds as a result of high interest rates and bank
charges
5. High mortality rate especially within their first two years
6. Over-dependence on imported raw materials and spare parts
7. Poor inter and intra- sectoral linkages - hence they hardly enjoy
economies of scale benefits
8. Poor managerial skills due to their inability to pay for skilled
labour
9. Poor product quality output
10) Absence of Research and Development
11) Little or no training and development for their staff
12) Poor documentations of policy, strategy, financials, plans, info,
systems
13) Low entrepreneurial skills, inadequate educational or technical
background
14) Lack of adequate financial record keeping
15) Poor Capital structure, i.e. low capitalisation
16) Poor management of financial resources and inability to distinguish
between personal and business finance
17) High production costs due to inadequate infrastructure and wastages.
18) Use of rather outdated and inefficient technology especially as it
relates to processing, preservation and storage.
19) Lack of access to international market
20) Lack of succession plan
21) Poor access to vital information