1.1 Background Information
Micro-enterprises are generally small–to–medium scale economic units, organizations, ventures or enterprises which activities are systematic and purposeful, with many usually distinctively specialized in scope, but effectively isolated in technological span and capacity (Osuala, 2004).
The Federal Government small-scale Business Development Programme (SBDP) also defines micro-enterprise as “any manufacturing, processing, trading and service industry with a capital investment not exceeding one hundred and fifty thousand naira (N150,000) in machinery, stores and other equipment and employing not more than fifty (50) workers.” The United States
Agency for International Development (USAID, 2003) also defines a microenterprise as one that comprises 10 or fewer employees, including unpaid family workers, in which the owner or operator is considered poor.
Micro-enterprises in Nigeria fall into four classes within which there are more than 35 identifiable categories or typologies (Olomola, 1991). They include the production, manufacturing, trading and service providing microenterprises. In Bayelsa state, all these categories of micro-enterprises are
found in the rural, peri-urban and urban centres. Topicion micro-enterprises (especially in the farming and fishing categories) are common in rural areas but are not exclusive to them. Micro-enterprises involved in activities like furnituremaking are typically more in urban, while those in firewood, tooth pick
production, garri processing and oil-milling are more common in rural areas.
Also the non-agriculture-based and trading micro-enterprises are about equally distributed between the three locations but with a higher volume concentrated in the Peri-urban and urban centres. However, this study was focused on agrobased micro enterprises.
Micro-enterprises in the informal sector of Bayelsa State Span the entire agricultural production (ie processing, distribution, marketing and consumption) spectrum. Most of these micro-enterprises are proprietorships with a single owner-operator. In more than 90 percent of the cases, they are usually not
officially registered with the Corporate Affairs Commission (Ikpi, 2001). They usually require very little initial investment and much less operating capital than do their larger corporate counterparts. These informal sector micro-enterprises are generally characterized by low-level technologies, low-to-medium level managerial capacity and low-level linkage with modern technology (Nwaka, 2005). Consequently, their output capacity is small and often limited.
However, Nwaka (2005) indicated that in spite of these constraints, micro-enterprises are estimated to contribute on the average between 40 and 70% to the gross domestic product (GDP) of Nigeria. They have acted as an important agent of economic and social transformation in the state. The economic contributions according to Ikpi (1995) relates to growth of the GDP, employment generation, domestic savings accumulation/capital formation, structural definition of the economy. The socio-political contributions include the satisfaction, peace, security and happiness they bring to the owner-operators
and the larger society they serve (Oladuntau, 1997). For instance in Nigeria, micro-enterprises account for about 50% of the employed workforce and about 45% of all goods sold (Osuala, 2004).
Furthermore, micro-enterprises have a good prospect to contribute more to society if encouraged by a suitable policy. Ogbonnaya (2003) defined policy as a clearly published statement by a national, state or local government authority with measurable goals, timeliness and commitment plus budgets for
action. USAID (2003) also referred policy to include appropriate legal, regulatory and administrative practices governing the business environment in which micro-enterprises operate. Although micro-enterprises might be seen as private sector concerns, but government action through its agencies is crucial to facilitating the smooth operation of these enterprises. Such policies are needed in the areas of infrastructural development, micro-credit, poverty alleviation, business development services policies and gender sensitive polices. Also an assessment of the efficiency and effectiveness of existing assistance and support services is crucial to the development of these microenterprises (CTA, 1997).
Therefore, an overall supportive policy including a favourable business and investment climate is critical to successful and sustainable microenterprises development in Nigeria as obtained in other countries. For instance USAID support reforms of laws, regulations and policies to facilitate the creation and operation of micro-enterprises and to expand access to financial and other support services by the underserved poor (Simmons, 2004).
In Nigeria, both the Federal, state and local government authorities have formulated policies and programmes at different periods to boost microenterprise development. The Federal government National Poverty Eradication Programme (NAPEP), the National Economic Empowerment and Development strategy (NEEDS), and the establishment of small and medium scale enterprises Development Agency of Nigeria (SMEDAN) are all microenterprise development initiatives. The Federal Government recent supply of fifty billion naira (N50bn) for the Agricultural Loan scheme is also a microenterprise development initiative (FGN, 2006)