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THE ROLE OF SMALL AND MEDIUM SCALE ENTERPRISES IN UNEMPLOYMENT REDUCTION IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Many scholars have written widely on small scale industries and its potency to generate employment, thus, underscoring the quintessence, significance and relevance of this sub-sector in the development of any given economy. The experience of developed economies in relation to the roles played by small scale industries buttresses the fact that the importance of entrepreneurship cannot be over emphasized especially among the developing countries. In order to highlight its significance in relation to the growth and development of a given economy, small scale industries have been variously referred to as a “source of employment generation”. This is because small scale industrial activities have been found to be capable of making positive impacts on the economy of a nation and the quality of life of the people (Adejumo 2000). Studies have established its positive relationship with stimulation of economic growth; employment generation; and empowerment of the disadvantaged segments of the population, which include women and the poor (Olurermi and Gbenga, 2011; Thomas and Muller,2000; Reynolds, 1987).

Nigeria as a country has numerous business and investment potentials due to the abundant, vibrant and dynamic human and natural resources it possesses. Tapping these recourses requires the ability to indentify potentially useful and economically viable fields of endeavors. Nigerians have made their marks in diverse fields such as science, technology, academics, business and entertainment. Thus, small scale industries activities and innovative ingenuity in Nigeria have developed enterprises in the following areas, agricultural/agro-allied activities where there are foodstuffs, restaurants, fast food vending etc. in the area of information and telecom business, there are manufacturing and repairs of GSM accessories and the printing and setting of recharge cards. In hospitality and tourism business, there are hotels, accommodation, resorts centers, films and home video production; in oil and gas business, there are construction and maintenance of pipelines, drilling, refining bye products. In the area of environment and waste management business, there is refuse collection/disposal, recycle plant and drainage/sewage construction job. In the area of financial banking services, there are banking, insurance and stock trading.

In engineering and fabrication work, there are machines and tools fabrications there is also the building and construction, where there are plan and design services and material sourcing (Agbeze, 2012) These human and natural resources notwithstanding, Nigeria are still one of the poorest countries in the world and Africa despite its alleged strong economic growth. Chukwubuikem (2008) notes that youth’s full-time unemployment rate for 2006-2008 was 55.9 percent, 4 times higher (Salami, 2011). Many other industrial sub-sectors to such a vibrant one that they have been able to reduce to the barest minimum their unemployment and poverty level because of the immense contribution of the sub-sector to their economic growth and development but such cannot be said of Nigeria (Onugu, 2005). In respect of the above sad and deplorable situation, the government has done little to reduce the misery and frustrations of the citizen. This has foisted a state of hopelessness on majority of young people who have resorted to any means including crime to succeed in life. They resort to vices because they are not gainfully engaged. In other words, they are unemployed; unemployed, not because they lack the qualification but because the system has been crippled politically economically, socio-culturally and even religiously. People especially youths and graduates became displaced economically (Kuratko, 2009), a situation that clearly negates the millennium development goals for 2015, I and II: to halve the proportion of people living in extreme poverty and to halve the proportion of people suffering from hunger respectively.

The dexterity with which hunger and poverty have devastated lives and future ambition of youths especially graduates in Nigeria, have led to scholars prescribing small scale industries development as the permanent cure for extreme hunger and poverty necessitated as one of the external forces that influence the development of small scale industries. The great need for small scale industries development in Nigeria today, more than ever, is necessitated by the rate of unemployment and its effect on both the people and the nation and the need for small and medium enterprises. In spite of the fact that small scale industries development has been regarded as the bulwark for employment generation and technological development in Nigeria, the sector nevertheless has had its own fair share of neglect with concomitant unpleasant impacts on the economy against this backdrop. Entrepreneurship when and if gallantly developed in Nigeria will take its pride of place in fuelling unemployment and thus generating employment among Nigerian youths especially the graduates and once again, place the economy on a proper footing.

It is in this respect that this paper seeks to investigate the connection between small scale industries and employment generation in Nigeria; assessing the level of unemployment in Nigeria and how far entrepreneurship has thrived, and also examines the major problems of entrepreneurship and thus proposing some plausible strategies that can promote effective small scale industries that will help quell unemployment and thus generate employment for the Nigerians youths especially. Based on the above background, the study intends to investigate the role of entrepreneurial development in unemployment reduction in Nigeria with particular reference to Onitsha metropolis.

1.2     Statement of the Problem

Nigeria is a country with numerous business and investment potentials due to the abundant vibrant and dynamic human and natural resources it possesses. As good as the foregoing sounds, Nigeria continues to experience its share of social, economic and political upheavals which have often stunted its growth and development into the regional economic power that it strives to attain. Nigeria has a relative high rate of violent crimes (Onurubiko, 2009). The fact is that the Nigeria is becoming hostile to investment due especially to lack of steady and sustainable power supply/energy crises in spite of the various attempts are reviving this sector landing to firms depending on generators for their operation whose cost of buying, fueling and maintenance are high, thereby increasing the cost of operation in Nigeria.

Besides, high and multiple levies and taxations being paid by these companies, energy crises have combined to make the cost of doing business in Nigeria to be very exorbitant when the industries and factories closed shops or relocated to a friendlier economic environment, workers were laid off and prospects of recruiting new ones were dashed. All these exacerbated the crisis of youth unemployment in the labour market (Adeloye, 2010; Onifade, 2011). Therefore this research work intends to investigate the role of entrepreneurship development in unemployment reduction in Nigeria with particular reference to Awka, Anambra state.

1.3     Objectives of the Study

The study intends to achieve the following objectives:

To determine the role of small scale industries in unemployment reduction in Nigeria.

To determine if government has a key role to play in ensuring that small scale industries help in quelling unemployment.

1.4     Research Questions

The following research questions were formulated to guide the direction of this research work.

Does small scale industries development help in unemployment reduction in Nigeria?

Do government have a key role to play in ensuring that small scale industries development help in quelling unemployment.

1.5     Research Hypothesis

The hypothesis formulated for this research study include hypothesis one

H0: There is no significant relationship between small scale industries and unemployment reduction in Nigeria.

Hi: There is significant relationship between small scale industries and unemployment reduction in Nigeria.

Hypothesis Two

H0: Government has no key role to play in ensuring that small scale industries help in quelling unemployment.

Hi: Government has a key role to play in ensuring that small scale industries help in quelling unemployment.

1.6   Scope and Limitations of the Study

The study focuses on entrepreneurship development as a panacea for unemployment reduction in Nigeria. The economic potentials of entrepreneurship shall also be explained as well as the benefit explained with particular reference to residence of Onitsha metropolis. The limitations the researcher encountered during the survey are time constraint, lack of finance, respondent’s attitudes andtransportation constraints.Time Constraints: Research of this nature requires sufficient time for the execution. But in the case of this project, the allotted time was quite insufficient. In this regard, the researcher was under pressure throughout the while work in order to meet the deadline.

Respondents Attitude: Some of the respondents appeared to be biased in their response and the greater percentage of the bias is during peak sales periods when the respondents had little or no time for non business discussion.

Finance: Finance has always been the pilot around which the success of any research revolves. In this case, the researcher was constrained financially because the researcher had a little stipend from the guardian.

Transportation: Due to the bad roads the researcher find it difficult to access the respondents.

Bureaucracy: This is one of the impediments of this research when the researcher visited the enterprise under study to make certain investigations; the authorities involved never gave him a free hand to make such investigations. Finally, it is worthy to note that in spite of all these limitations, the researcher was able to cover meaningful the scope of the study.

1.7     Significance of the Study

It is worthwhile to lay great emphasis on the significance of this study target groups and potential recipients showing how it will add knowledge, contribute to knowledge or aid practice. Hence, this study will be indispensable to many. To the entire Nigerian populace, this study will broadly enlighten them on the concept of entrepreneurship and how small industries development brings about unemployment reduction in Nigeria scale. Also, the Nigerian government is not left out. This promising research piece will clearly show the public authorities and government officials how to effectively develop small scale industries as they have been identified as engine of economic growth and development hereby providing employment for the teeming unemployed youth. The study will help the policy makers to recognize the importance of small scale industries in the provision of employment to the labour force for economic development. This shall further guide them to make trade policies to enhance the performance of small scale industries as regards their activities to accommodate mushrooming population that is attributed to high birth and fertility rates as well as rural urban migration within the country. Also, to students and other scholars where intend to widen their knowledge in the study of the small scale industries development as a panacea for unemployment reduction, this study shall be a basis of reference since it focuses on the cause of the establishments, how the unique characteristics of the industries have facilitated their role in the provision of employment undertaken to harness their activities and how their activities contributes to economic growth and development.

1.8     Definition of Terms

Unemployment: Unemployment refers to a situation where people who are willing and capable of working are unable to find suitable paid employment.

Entrepreneurship: This is the willingness and ability of an individual to identify and successfully carry out investment opportunities in and environment.

Development: This means new stage or event, new product or invention. It is when a country is able to provide initially.

Economic Growth: This is a term that is generally refers to the sustained, concerted efforts of policy makers and living and economic health of a specific area or is a phenomenon of marked productivity and increase in gross domestic product (GDP).