Entrepreneurial Development And Employment Creation

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Entrepreneurial Development And Employment Creation


Abstract


Unemployment has been a major issue in the Nigerian economy since the mid-1980s. Consequently, the Federal government adopted several strategies and policies towards entrepreneurial development in Nigeria to combat the unemployment problem. All over the world, entrepreneurship has been adjudged to have the capacity to generate employment. Indeed, extant literature discloses that entrepreneurship has been linked with the creation of self-employment. This notwithstanding, literature reveal that only limited studies have been conducted on entrepreneurship in developing economies, especially Nigeria, hence the need for further research. Hence, this study investigated entrepreneurial development and employment creation in Oyo State, Nigeria. The study sought specifically to assess the capacity of small and medium scale enterprises (SMEs) to generate employment in Oyo State.

The study adopted a survey research design. The population of the study was all the 4,000 registered SMEs in Oyo State, provided by the National Association of Small and Medium Scale Enterprises. Stratified random sampling technique was utilised to select sixteen out of thirty-three local government areas in Oyo State as well as the sample size of 400 SMEs. The choice of the study area was based on size and concentration of SMEs. The research instrument was a self-developed and validated questionnaire. The reliability test of the major variables in the questionnaire yielded the following Cronbach’s alpha coefficients: Self Employment=0.86, Business Partnership=0.68, Business Inheritance=0.74, Government Employment Training Programme=0.67 and Entrepreneurship Development=0.93. A total of 455 copies of the questionnaire were administered with a response rate of 87.9%. Data were analysed using descriptive and inferential (multiple regression) statistics.

Findings revealed that there was a significant relationship between self-employment and acquisition of vocational skills (R2 =0.763; p=0.000). There was also a significant relationship between business partnership formation and acquisition of managerial skills (R2=0.754; p=0.001).Similarly, there was a significant relationship between family business formation and acquisition of technical skills through inheriting enterprises (R2=0.713; p=0.002). Moreover, there was a significant relationship between government employment training programme and self-employment (R2=0.693; p=0.000). In addition, among the SMEs in Oyo State, bakery (125) business center (76), petty trading (63) and barbing (61) generated more employment opportunities than others.

The study concluded that vocational skills and government training created employment opportunities through the SMEs in Oyo State, Nigeria. Also, formation of business organizations enhanced the acquisition of managerial and technical skills. The study recommended that government and SMEs should focus on the establishment of enterprises that generate employment most. In addition, government should provide adequate training for entrepreneurs while entrepreneurs in turn should provide adequate and continuous training for employees to enhance their technical skills.


Chapter One


Introduction

1.1 Background to the Study

The need for employment creation in Nigeria did not arise until the mid-1980s, when the economy of Nigeria collapsed and youth and graduate unemployment became a major issue of the economy of the country, particularly the latter (Arogundade, 2011). Prior to this period, the focus was in occupying positions created by the colonial masters for the smooth running of their colonial administration as well as filling the positions that the colonial masters were vacating which was occasioned by the political independence gained by the country. In this way, both graduates and non-graduates were occupying vacancies so created (Aladekomo 2004; Alarape, 2008).

However, by the mid – 1980s unemployment had reared its devastating effect on the Nigerian economy. This was occasioned by various factors such as economic recession, production of jobless educational institutions’ graduates, low labour absorbing capacity by companies, mass lay off of civil servants, embargo on employment in the civil service, unemployability of our educational institutions’ graduates for lack of relevant skills, irrelevance of curricula offered in educational institutions, closure and relocation of some business enterprises and infrastructural deficits (Idowu, 1987; Aladekomo, 2004; Adebisi & Oni, 2008; Olufemi & Adebola, 2008; Oviawe, 2010; Idogho&Aniabor, 2011; Joseph, 2011; Shadare& Tunde, 2012).

The general household survey conducted by the National Bureau of Statistics (NBS) in 2011 put the unemployment rate in Nigeria as 23.9 percent. This is a very worrisome development to all stakeholders: the society, the unemployed and the government. Particularly worrisome is the rising rate of graduate unemployment among the unemployed labour force in the country over the years (Akintoye, 2008). For instance, the graduate unemployment rate rose from about 1 percent in 1974 to 4 percent in 1984; and between 1992 and 1997, it rose to 32 percent (Akintoye, 2008). In 2008, Yoloye reported that graduate unemployment rate had risen to 71.4 percent (Egunsola, Dazala& Daniel, 2012).

Equally worrisome is also the alarming rate of unemployment among non-graduates. Oye, Ibrahim and Ahmad (2011) putthe largest proportions (31-50%) of the unemployed in the country as being secondary school graduates with 40% of them representing urban youth ranging between 20 and 24 years. Another 31% of them fall within the age rangeof15 – 19 years.

The resultant effect of this high rate of unemployment in Nigeria is youth restiveness of all kinds such as blowing off of crude oil pipes, kidnapping (Onwubiko, 2011) as well as these youth organizing themselves into militant groups in the form of Egbesu Boys, Oodua

People’s Congress, Bakassi Boys, Almajiris, “area boys” and Boko Haram to target the very society that alienated them (Awogbenle&Iwuamadi, 2010; Liolio, 2013).

In view of the above, the Federal government adopted several strategies and policies towards entrepreneurial development in Nigeria by establishing institutions and agencies, which provide variety of support services to entrepreneurs. The implication of these policies is the emergence of entrepreneurial development programmes (EDP) in different parts of Nigeria with the aim of combating unemployment problem in the country (Aladekomo, 2004; Alarape, 2008; Arogundade, 2011; Ekpoh&Edet, 2011).

Entrepreneurial development in itself is conceived as a programme of activities to enhance the knowledge, skills, behaviour and attitudes of individuals and groups to assume the role of entrepreneurs. Entrepreneurial development programmes, therefore, are targeted at owner managers of small business firms as well as those identified to possess potentials for self – employment (Owualah, 1999). The aim is to allow individuals and groups to acquire these skills, knowledge and attitudes to enable them take the role of entrepreneurs thereby creating jobs for themselves, since creation of employment also requires the establishment of new ventures (Aladekomo, 2004; Alarape, 2008; Ekpoh&Edet, 2011).

Some of the entrepreneurial development programmes aimed at combating unemployment problem in the country are run by various government agencies which include national economic empowerment and development strategy (NEEDS), small and medium scale development agency (SMEDAN), student industrial work experience scheme (SIWES), national directorate of employment (NDE) which provides vocational training for participants to acquire vocational skills in different trades, among other things;, youth enterprises with innovation in Nigeria (YouWin) and subsidy reinvestment and empowerment programme (SURE-P).

In order to inculcate entrepreneurial behaviour in the minds of students while in school and by extension, reduce the rate of unemployment further in the economy, the federal government of Nigeria through National University Commission (NUC) directed the introduction of entrepreneurship education in tertiary education institutions during the 2007/2008 academic session(Nzelibe, Yusuf, Ozigbo, Mohammed&Ayuba, 2010).

Entrepreneurship is adjudged as being capable of generating employment, among other things, as it is considered to be labour intensive and therefore capable of providing employment for our teeming youths and graduates (Aladekomo, 2004; Ahmad, Baharun & Rahman, 2004; Onugu, 2009; Deakins and Feel, 2009; Oviawe 2010; Idogho&Ainabor, 2011; Arogundale, 2011; Akhunemomkhan, Raimi &Sofoluwe 2013; Aziz, Friedman & Boprieva, 2013; Ohachosin, Onwuchewa& Ifeanyi, 2013). However, in spite of the various numbers of these programmes established in different parts of the country, the rate of unemployment keeps on increasing unabated.

The importance of entrepreneurship cannot be overemphasized. Deakins and Feel (2009) making reference to the statement credited to Jean – Philippe Cotis, the Chief Economist of Organization for Economic Conglomeration and Development (OECD), confirms the importance of entrepreneurship among policy makers and academic researchers by saying that it has scientifically been proved that entrepreneurship activities create employment, productivity and ultimately economic growth.

Government employment training programmes are generally meant as interventionist programmes to alleviate unemployment situation in an economy. These programmes usually translate to small business ventures. Previous studies have shown that these entrepreneurship/SMEs, though provide employment, usually have a short life span. Though, (Fatunla, 1989; Edet, 1991; Owualah, 1999; Emeh, Nwanguma & Aborah, 2012) have confirmed that some of the entrepreneurship programmes initiated by Federal government have recorded appreciable success.
There has been emphasis on entrepreneurship leading to self–employment. Frimpong(2014) reveals that there is lack of empirical studies testing the relationship between participation in entrepreneurship education and partnership business ventures. Frimpong (2014) further reports that there are a lot of advantages of entrepreneurship leading to business partnership. He says sole proprietors need to generate enough funding to remain operational and to capitalize upon market developments and obtaining such capital can be a very difficult task because lenders are often reluctant to finance this type of one man business. Rather these lenders prefer business organizations corporately owned as a security for their funds.


1.2 Statement of the Problem

In the past, high unemployment rate was alien to graduates in Nigeria. Where this high rate of unemployment was prevalent then was among people without basic education (Akintoye, 2008). The study put persons with and without primary school education as people who were largely affected by unemployment in the 1970s. The study put people with this educational status at between 76.8 and 80.6 percent of the unemployment in 1974 and 1978 respectively among the unemployed labour force; showing that non-graduates do experience unemployment problem.At this same period, graduate unemployment accounted for less than 1 percent of the employed labour force in 1974 but rose to 4 percent in 1984 (Akintoye, 2008). This trend, however, has since changed. Graduate unemployment rate has been rising astronomically from that time onwards. For instance, between 1992 and 1997, it rose to 32 percent; that is about 700 percent above and over the figure of 1984(Akintoye, 2008). By 2008, Yoloye reported that the graduate unemployment rate had risen to 71.4 percent (Yoloye cited in Egunsola, Dazala& Daniel, 2012). The implication of this is that for every 10 graduates in Nigeria, 7 of them are unemployed among the unemployed labour force.

In order to get jobs, therefore,relevant skills must be acquired to carry out such jobs. However, Akutson and Udeh (2015) drew attention of how relevant skills acquired lead to the creation of millions of small businesses which create employment. From the foregoing, it is discovered that the unemployment rate is high among both non – graduates and graduates. It is in view of this rising rate of unemployment that this study seeks to find out if vocational skills actually lead to self-employment.

Public-finance theory allows government to spend public funds to address a peculiar situation (Wolk, 2007). Consequently, in the face of this enormous unemployment problem, the government of Nigeria decided to put in place entrepreneurship programmes, as employment training programmes, financed by it, aimed at combating unemployment in the country (Owualah, 1999; Adebisi & Oni, 2008; Akintoye, 2008;Awogbenle &Iwuamadi, 2010; Oghojafor, Aduloju, Olowokudejo, 2011; Emeh, Nwanguma & Abaroh, 2012).

Furthermore, a self-employed business seems to have a short life span. Most die with their founders. However, with business partnership, the death of a partner does not necessarily lead to the collapse of the business entity. Therefore when individuals come together to start a business partnership, the business will have access to credit from financial institutions to run the business, get the talents of partners- managerial, marketing and sales acumen of partners-for the effective running of the business. When synergy is obtained from partners, and capital is available for the business and with the guarantee of long life span, such business will employ production resources, including labour.

However, inspite of these advantages of business partnership, it still fails for a number of reasons. Some of these reasons could include unresolved conflict, where values, career or life goal are misaligned, lack of effective decision making process, lack of team work as well as lack of well-defined financial structure. There are a number of businesses that have been inherited from older generations through which employment is being generated. Hoy (2007) reveals that when intrapreneurs work under the tutelage of entrepreneurs, they acquire necessary skills to run such businesses. This guarantees the continuity of such businesses. When this happens, such businesses have the ability to retain their employees as well as the ability to employ more people.

However, in spite of these programmes specifically put in place by government to address the high rate of unemployment among the unemployed labour force, the unemployment rate keeps on increasing unabated, especially graduate unemployment. It is in view of this rising rate of unemployment that this study seeks to find out if these programmes actually have effect in providing employment for these teeming applicants.


1.3 Objective of the Study

The general objective of this study is to determine the effect of entrepreneurial development programme on employment generation in Oyo state, Nigeria.

The specific objectives are to:

  1. Determine how acquired vocational skills provide self-employment;
  2. Determine how government employment training programme leads to self-employment;
  3. Determine how acquired managerial skills lead to business partnership formations and
  4. Determine the effect of technical skills acquired from family business on business formation.

1.4 Research Questions

In view of the above, the following research questions generated to guide this study.

  1. In what way do acquired vocational skills provide self – employment?
  2. How does government employment training programme lead to self-employment?
  3. How do acquired managerial skills lead to business partnership formations?
  4. To what extent do acquired technical skills inherited from family business have effect on business formations?

1.5 Significance of the Study

This study is significant in many ways. When our teeming unemployed non-graduates and graduates are employed through entrepreneurial development programmes the rate of unemployment in the country might reduce significantly as against the rate of 23.9 percent (NBS, 2011). Also, the employment of these applicants through entrepreneurship programmes would not only reduce unemployment rate, it would also increase aggregate demand in the economy and also improve their standard of living (Sotunde, Obasan, Saleko, Oni & Oduwole, 2011). With increase in aggregate demand in the economy, the need for supply to meet the increase in demand might arise requiring the employment of factors of production, including labour. Findings of a study of this nature should have the capacity to trigger additional research work and provide guidelines to policy makers.


1.6 Scope of the Study

The scope of this study is restricted to small and medium scale enterprises (SMEs) in Oyo state, Nigeria. The target population of this study is 4000 SMEs. These are the registered small and medium scale enterprises in Oyo state (NASMEs). The stratified sampling technique was used for the selection of the local government areas of the study. Primary source of data was used through the use of questionnaire. The study covered 26 years (19872012). This study considered Oyo state; being an old established state in Nigeria. Also, the selection of these local government areas was based on their urban nature as well as their spread across the three senatorial districts study in Oyo state (Adeoti, 2009; www.Oyostate.gov.ng 2015).


1.7 Operational Definition of Terms

It is necessary to define the key words used in this study with a view of understanding the subject matter under consideration.

For this study, the following definitions have been adopted.

Entrepreneurial Development:

Is considered as a programme of activities to enhance the knowledge, skills, behaviour and attitudes of individuals and groups to assume the role of entrepreneurs.

Employment Creation:

Is employment generated by the establishment of new firms.

Entrepreneurship:

Is the act of identifying opportunities with willingness and ability to transform these opportunities to business activities.

Graduate:

Is any individual that has any form of educational qualification from any tertiary institution.

Non – Graduate:

Is an individual who has a lower qualification than received from tertiary institution.

Business Partnership:

Is the business formation involving two or more persons using their talents or pooling their resources together for the purpose of the business.

Family Business Inheritance:

Is the business venture inherited from a parent or a benefactor.

Business Organization:

Is the formation of business activities which can be in the form of one man business, partnership, family business and limited liability companies.

Government Employment Training Programme:

Is an interventionist programme put in place by government to reduce unemployment

Self-Employment:

Is a form of employment where an individual engages in productive activities for a reward.

Unemployment:

Is the inability of labour to be engaged in productive activities for a period of time.


Chapter Five


Summary, Conclusion and Recommendations

This chapter presents summary of the findings, conclusion and recommendations for further improvement in the entrepreneurial development.


5.1 Summary

This study comprised of five chapters in all. The first chapter introduced the study and contained the background of the study, the problem statement, research objectives, questions, hypotheses and other introductory aspect of the research. This was immediately followed by the review of related literature in the second chapter. The conceptual, theoretical and empirical reviews of the variables of the study were considered. The methodology for the study was spelt out in the third chapter. This included the design of the study, population, sampling procedures and the method of data analysis. Meanwhile, in chapter four, the results of the data analysis were presented. In this chapter, the details of the findings were given with discussions following. This last chapter of the study contains the summary of the findings, conclusion, implications of the findings, recommendations, contributions to knowledge and suggestions for further studies.

The summary of the findings from the preceding sections are highlighted as follows:

The importance of small and medium scale enterprises (SMEs) in Nigeria is enormous as they are found in both formal and informal sectors of the economy. SMEs/Entrepreneurship has created employment for their owners and their workers. In this way, SMEs/entrepreneurship has helped to reduce the rate of unemployment in the country. In this study there is a significant relationship between government entrepreneurship training programme and self-employment. There is also a significant relationship between managerial skills and business partnership. This means that entrepreneurs can form partnership together to establish business enterprises. There is a significant relationship between entrepreneurship/technical skills and business partnership formation. The continuity of family business allows younger generations to inherit such businesses as the young generation makes use of the technical skills so acquired to continue with these businesses so as to offer employment to the citizens of Nigeria.

There is a significant relationship between vocational skills and self-employment. It means that there is an impact of vocational skills on self-employment. Therefore vocational skills generate employment. The vocational skills that generate employment most in this study are those for bakery, business center, petty trading and barbing. The study reveals that business partnership also generates employment.


5.2 Conclusion

Following the findings from this study, it can be reasonably concluded that entrepreneurship has the capacity of generating employment. In all the factors considered in this study, entrepreneurship has an impact on them. Government entrepreneurial employment training programme has impact on self-employment; so also technical skills acquired from inherited family business have significant influence on business formation that leads to employment creation. Similarly, managerial skills derived from business partnership have significant influence on business partnership formation which leads to employment creation. Also vocational skills do have significant influence on self-employment.


5.3 Recommendations

There are some recommendations from the findings of this research which will now be discussed under the following sub-heading:

5.3.1 Recommendation for Management

Generation of employment requires the training of labour (personnel)to effectively use other factors of production for optimal result. This study was conducted using skills such as vocational skills, managerial skills, technical skills and government employment training programmes to assess the employability of the recipients of such skills. The findings of the study revealed that skilled labour found employment suitable for such skills. The study therefore showed that acquisition of skills has a long way to providing employment for unemployed people. The need to train the unemployed to acquire relevant skills for various occupations is very important in order to address unemployment problems.

5.3.2 Recommendation for Policy Decision Makers

The study confirmed that entrepreneurship generates employment. It also established that entrepreneurial development creates self-employment and business partnership formation. Entrepreneurial development allows for acquisition of necessary skills for the establishment of small and medium scale enterprises. Therefore policy makers should provide means by which skills can be acquired easily by individuals so that such individuals can setup small and medium scale enterprises asthe establishment of business ventures leads to employment of various categories of people in an economy. The employment of various categories of people leads to the reduction of unemployment in the country.


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