ABSTRACT The study investigates the impact of small and medium scale industries on the Nigerian economy, spanning from 1986 to 2010. The study adopted Ordinary Least Square (OLS) Linear Specification model. Using unit root test, the work shows that small scale industries significantly contributed to the economic growth in Nigeria despite poor funding by commercial banks. The work recommends among others that government should improve its monetary policies so as to reduce to an acceptable level, the rate of interests charged by commercial banks as well as encouraging rural based industrialization, whereby investors are encouraged to establish small and medium scale industries that would be based entirely on local raw materials, machines and equipments.

CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY. In recent time, the fortune of small scale and medium scale Industries attracted the attention of government world-wide and thus has been the focus of general interest and research, especially in developing Countries due to the importance of small scale and medium scale Industries. Their importance cannot be over emphasized as they constitute a whole virile vehicle for the generation of vast production of outputs and job creation. They are also act as catalyst for restructuring and diversifying the productive base of an economy and for the Industrial economy and for the Industrial economy take-off and growth of such an economy. The small and medium scale Industries are seen to hold the key to future expansion of the Industrial sector.