At the 13th council meeting of the national council on Industry held in July, 2001 micro, Small and Medium Enterprises(MSMEs) were defined as follows:

MICRO/COTTAGE INDUSTRY

An industry with a labour size of not more than 10 workers, or total cost of not more thanN1.50million
including working capital but excluding land

SMALL SCALE INDUSTRY

An industry with labour size of 11-100 workers or a total cost of not more than N50 million including working capital but excluding cost of land.

FEATURES OF SMEs.

• Require relatively small capital investment to start.
• Offer relatively high labour to capital ratio.
• Improve forward and backward linkages between conomically, socially and geographically diverse sectors.
• Breeding ground for entrepreneurial talent.
• Act as ancillaries to large industries.
• Serve as training ground for local skills and entrepreneurs.
• Highly flexible operations.
• Positioned to absorb business shocks and adjust to business cycle.
  Usually sole proprietorships, partnerships entrepreneurs
• Labour intensive production processes
• Centralised management
• Limited access to long term capitalLimited assess to short term financing
• Finance when contrived is tethered to stringent conditionality
• Partnerships pursue individualistic goals at the expense of overall interest of SMEs
• Over dependence on imported raw materials and spare parts
• Highly flexible operations
• Positioned to absorb business shocks and adjust to business cycle.
• Poor inter and intra-sectoral linkages which results in the loss of benefits accruing from economies of large scale production
• Lack of management skills & technological advances resulting in low level of productivity and poor product quality