Paper Title
Ugwuta Emmanuel Emeka & Ehiriudu Jude Alaoma
Management and Financial Studies

The study examines the issues and challenges involved in “leasing as a major financing device for small scale Enterprises in Enugu Urban”. Hapel Nigeria Limited and Feed Well Farms Enterprise were used as the study of the work. The importance of leasing as a major source of financing small scale enterprises in Nigeria cannot be over-emphasized. This is the reason why the researcher wants to investigate on the topic. The data utilized in this work consists of primary and secondary data, as survey and field work approach was adopted in this study. Out of 30 questionnaires distributed, 27 responded forming the targeted population. Taro Yamane formula was used to determined the sample size of 25 staff of the two firms. Tables and percentages were used to analyze the responses from the questionnaires. The work revealed that the two small scale farms are into production of feeds and other Agro-allied products. Also, that there is 72% of awareness among small scale enterprises over lease financing techniques. The study concludes that Government should create a good atmosphere and platforms for leasing to strive by granting loanable funds to small scale business in Nigeria. Finally, the recommendation states that leasing should be increasingly used by small scale enterprises in order to solve the problem of capital financing among small businesses.

Small-scale enterprises, leasing, financing techniques and economic growth


It is unquestionably true that the development of a nation’s industrial sector hinges greatly on the development of small scale enterprises operating in that economy. This is because small scale enterprises are significantly spring boards for the industrial base of any country. This has yielded fruits in economic empowerment of teeming youth in the country, provision of employment and promotion of indigenous technological development, utilization of local resources and low cost of inputs, and services for medium and large enterprises in Nigeria. Small scale enterprises have been defined as those industries whose fixed assets value do not exceed N10 million (Ani and Nwandu, 2009). Small scale enterprises are important not only because they account directly for significant proportion of investment, output and employment in a nation but also even more significantly because they provide vital links in the chain of the economy as a whole, motivating, energizing and connecting various sectors and subsector for greater output in area of employment and productivity of indigenous materials and products. It is an established fact that for a country to have a meaningful industrial development and economic growth, the small enterprises should not be relegated to the background and government should give a full support to its financing.

Small scale business generally have weak capital base since the majority of them are either sole proprietorship or partnerships. They have no opportunity to draw money from the financial institutions as big companies do. Consequently, they are lured into option of borrowing money at times with unfavorable terms. Small business operators rely primarily on own equity, bank loans and lease options to finance their business. However, in recent years, small scale industries in Nigeria are being given increasing policy attention and financial incentives. Other financing revenues such as owner’s capital retained earnings and direct government assistance are virtually ineffective. Before going into the sources of finance, it is important that the potential investor has an idea of an estimated level of fund needed for this particular type of business. He needs to count how much money of his own (equity) he is prepared to put into the business before he thinks of borrowing and other financial assistance. To this end, budgeting becomes an absolute necessity.

Adequate finance is indispensable for the successful operations of small scale business enterprises in Nigeria. The various institutions of finance has identified with the finance of small scale firms. The small and medium scale enterprises for growth purpose rely considerably on bank loans. In Nigeria, there have been various schemes meant to provide institutional finance for SMES, including the Nigeria Bank for Commerce and Industry (NBCI) finance. The bank is to administer loans to the small scale industries in Nigeria.

In the light of the above circumstances, the case of Hapel Nigeria Limited and Feedwell Farms were used to buttress how two enterprises had adequately finance the fixed capital needs under the present economic situation. Leasing appears to be a viable financing alternative. Lease has been defined as the financial arrangement or contract between lessor and leasee, of the right to use a tangible asset usually for a consideration called rent, Orjih (2008). Thus, this study will attempt to provide the rational for leasing as a major financing device for small scale enterprises.


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