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THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES DEVELOPMENT ON YOUTH EMPOWERMENT IN NIGERIA

CHAPTER ONE

INTRODUCTION

Background to the Study

Small and Medium Scale Enterprises are sub-sectors of the industrial sector which play crucial roles in industrial development (Ahmed, S. 2006). Following the adoption of Economic reform programme in Nigeria in 1981, there have been several decisions to switch from capital intensive and large scale industrial projects which was based on the philosophy of import development to Small and Medium Scale Enterprises which have better prospects for developing domestic economy, thereby generating the required goods and services that will propel the economy of Nigeria towards development. It is base on this premise that Ojo O. (2009), argued that one of the responses to the challenges of development in developing countries particularly, in Nigeria, is the encouragement of entrepreneurial development scheme. Despite the abundant natural resources, the country still finds it very difficult to discover her developmental bearing since independence.

Quality and adequate infrastructural provision has remained a nightmare, the real sector among others have witnessed downward performance while unemployment rate is on the increase. Most of the poor and unemployed Nigerians in order to better their lots have resorted to the establishment of their own businesses. Consequently, Entrepreneurship is fast becoming a household name in Nigeria. This is as a result of the fact that the so called white collar jobs that people clamor for are no longer there. Even, the touted sectors (Banks and companies) known to be the largest employer of labour are on the down-turn following the consolidation crisis and fraudulent practice of the high and mighty in the banking sector. The companies of course are folding up as a result of erratic power supply, insecurity and persistent increase in interest rate which has lead to high cost of production and undermines profit making potentials of companies operating in Nigeria. As a result of banking sector practices and continuous folding up of companies, a lot of Nigerians are thrown into unemployment which inevitably detriment the economic situation of the country.

Since the office jobs that people desire are no longer there for the teeming population, and few ones that succeeded in getting the jobs are thrown out as a result of the factors identified above, the need for the government and the people to have a rethink on the way-out of this mess became imperative. Hence, the need for Small and Medium Scale Enterprises (SMEs) became a reality as a means of ensuring self independent, employment creation, import substitution, effective and efficient utilization of local raw materials and contribution to the economic development of our dear nation (Nigeria). All the aforestated benefits of Small and Medium Scale Enterprises cannot be achieved without the direct intervention of the government and financial institutions. Over the years, a number of policies have been formulated by the government with a view to developing Small and Medium Scale Enterprises. The Nigerian government under the then leadership of Chief Olusegun Obasanjo promulgated micro-finance policy and other regulatory and supervisory framework in 2005. The research will therefore examine the impact of small and medium enterprise development on youth empowerment in Kaduna metropolis.

1.2  Statement of the Problem

There has been stunted growths and sluggish development in the small and medium enterprises (SMEs) regardless of increasing targeted government assistance streamlined to benefit firms operating in this sector. There were several policies in the past which gave priorities to entrepreneurship development, indicating the trust in government policy in support of SMEs. The government of Nigeria identified entrepreneurship development as a major thrust to achieve economic development through SMEs growth and development. This made Nigerian government both at National and State as well as local government to prioritize small and medium enterprises development initiatives by. As such the prioritization of the small and medium scale by government at different level is echoed in almost every policy document.

For example in the industrial development policy in vision 2020, the Nigeria aim is to promote and support small and medium enterprise as they are viewed as an important engine for employment creation and economic growth. Although the government of Nigeria has been advancing targeted support in marketing, management and finance and worse still others collapsed. Egbe (2004) in this regard rated Nigeria as having one of the lowest small and medium scale sector’s share of employment in the world, when “250 employees†was considered the yard stick in the definition of small and medium scale enterprise. Targeted government assistance has been observed to play a pivotal role in starting, growing and medium scale enterprise in Nigeria, (Beck, 2005; Zainab, 2008; Herbert 2008 and Atino, 2001). Although some entrepreneurs in SMEs have received both financial and non financial assistance, many are still small or are facing viability problems. In Nigeria, the SMEs sector is facing to contribute meaningfully to the national economy as was experienced elsewhere when governments advanced target support.

Targeted government support to SMEs was found to translate into economic development in countries like Indonesia where SMEs accounted for 98% of employment creation and growth with Japan and Thailand having their SMEs contributing 81% and 78% to gross domestic product (GDP) (Okoh, 2009). This contrast has promoted the researcher to carryout a study to investigate the impact of small and medium scale enterprise on youth empowerment in Kaduna. As well as to find out the forms of government support render to small and medium scale enterprises in Kaduna.

1.3  Objective of the Study

The central objective of the study is to examine the impact of small and medium scale enterprises development on youth empowerment in Kaduna Metropolis.  The specific objectives are:

To assess how small and medium scale enterprises development affect employment generation in Kaduna Metropolis.

To investigate the forms of targeted government support rendered to small and medium scale enterprise in Kaduna Metropolis.

To analyze the efficacy of government capacity building programmes and support to promote the development of SMEs among youth in Kaduna Metropolis.

To evaluate the sufficiency of youths empowerment through SMEs development initiatives in Kaduna and recommend possible policy adjustments.

1.4  Research Questions

In order to affectively investigate the problem of this research, the researcher formulated the following research questions:

What are the effects of small and medium scale enterprises development on employment generation in Kaduna Metropolis?

What kind of support does the government render to small and medium scale enterprise in Kaduna Metropolis?

How effective is government capacity building programmes and support in promoting the development of SMEs among youths in Kaduna Metropolis?

How sufficient is youth empowerment through SMEs development initiative in Kaduna Metropolis?

1.5 Statement of Hypothesis

In order to confirm the impact of SMEs development on youth empowernment in kaduna metropolis and fully appreciate their respective relevant significance, the following hypotheses is postulated:

H0: There is no significance relationship between SMEs development and youth empowerment in Kaduna metropolis.

H1: There is significant relationship between SMEs development and youth empowerment in Kaduna metropolis. 

1.6 Significance of the study

The study will be beneficial to entrepreneurship development; as such Kaduna state government can utilize the findings of the research as a basis for policy formulation as regard entrepreneurship development. The study will also contribute to the existing knowledge on entrepreneurship development. It is also worthy to note that the study can be use as a basis for further research, as the research can be use as a spring board for further research as well as a good reference material to students undertaking similar research.

1.8  Scope of the study

The study covers an empirical examination of the effect of small and medium scale development on youth empowerment in kaduna metropolis. The study also identifies the practical approaches use in developing entrepreneurship as well as the problems militating against entrepreneurship development. The study is limited to Kaduna metropolis.The study covers a time from 2006 - 2011.

1.7  Limitation of the study

The study is limited to Kaduna metropolis, as it will be difficult to cover other part of the state due to the duration of this study. For the fact that a survey study was used as the research design as well as the questionnaire as the research instrument, it is not certain if the same result would be obtained if other designs and instruments were used. Besides, another limitation is that the respondents could have either over exaggerated or understate their responses while scoring the items in the questionnaire. Also the nonchalant attitude of some of the respondents could affect the validity of their response to the questionnaire. This limitation should be taking cognizance of other researches conducting similar studies.

1.9  Definition of terms

-  Entrepreneurship: is an innovative act, which includes endowing existing resources for new wealth producing capacity (Afonja, B. 1999).

-  Entrepreneur: An individual that identifies develops and brings vision to life under condition of risk and a considerable uncertainty (Bashar, O. 2005)

- Entrepreneurial Characteristic: These are traits that make an individual an entrepreneur (Tonga, R. 2009).

-  Business Performance: The success or failure of an enterprise (Tonga, R. 2009).