Evaluation Of The Contribution Of Entrepreneurial Development Of The Nigerian Economy
Evaluation Of The Contribution Of Entrepreneurial Development Of The Nigerian Economy
Abstract
With the current trend in Nigeria micro and macro-economics policies towards a dynamic private sector led economy. The indispensability of entrepreneurial development thus becomes of paramount importance. This study assesses the contribution of entrepreneurial activities to the growth and development of the Nigerian Economy. Questionnaires and ministration and interviews have been carried out on entrepreneurs to obtain primary data and related literatures have also been used. Data have been analyses using tables and percentages and hypothesis have been tested using chi-square. Based on the findings, entrepreneurs were found to be innovative but still find the growth of their company difficult to handle because of inadequate capital, high costs of input and government policies. To this end the study recommended that Government should establish specialise banks that will offer loan to entrepreneurs, develop industrial estate with adequate and reliable infrastructure and provide subsidy on vital raw materials for industrial growth which inturn develops the economy.
Chapter One
Introduction
1.1 Background of the Study
The word entrepreneur was first used in the early 18th century by an Irish man named Cantillon who was then living in France. The word therefore originated from the French word, entrepreneur, which means to start a business. It was used broadly in connection with the innovative modern individual business leaders. The entrepreneur has been described as the person who perceives business opportunities and takes advantage of the scarce resources to use them. He bears the non-insurable risk in his enterprise and directs human business.
According to Ndechukwu (2001), an entrepreneur is an individual who takes upon him-self the risk of going into business with the expectation of earning all the profits or losses. He is, in economics, regarded as a special type of labour that assembles all the other factors of production namely, capital, land and labour and endeavor to ensure optimal combination of these resources to maximize profit. The world as we know is becoming a global village; great forces are pursuing the nations to have a dynamic and sound economy. Economic competition and intimidation has become the era of the day, so one is justified if one becomes interested in one of the important factors of a strong and virile economy, the entrepreneur and the entrepreneurship.
Many societies placed great values on the entrepreneur. To encourage their activity, they may be offered access to in-expensive capital, tax exception and management advice. An entrepreneur has the greatest chance of success by focusing on a market niche either too small or too new to have been noticed by established business. The practice of entrepreneurship promotes self-reliance. Entrepreneurial skills are translated into practical business activities in the form of both small and medium scale enterprises in private and public enterprises. With this close relationship, entrepreneurial development relates to and also embraces the activities and role of small and medium scale entreprises particularly in the area of reducing the level of unemployment, provision of goods and services and their combination of national economic welfare.
The dynamic role of private and public enterprises in Nigerian economy as a mechanism for growth has recognized its effect in achieving macro economic objective such as full employment, income distribution, development of local technology as well as diffusion of management skills and stimulation of indigenous entrepreneurship cannot be over emphasized. At the emerging of a modern day Nigeria in the early 60’s and 70’s, white collar jobs were at the disposal of every fresh graduate, with this idea in mind, the issue of self resourcefulness tending towards entrepreneurial development was at the ebb.
The introduction of Structural Adjustment Programme (SAP) in 1986 has a lot of effects in the private and public enterprises of the Nigerian economy which lay off a large number of their work force. This consequently led to economic hardship coupled with unemployment. For this reason, the need for self reliance and resourcefulness and development of new initiative for economic survival has led individuals to set up enterprises of various sizes and structure to meet up with the trend in the economy and to earn a living. This has indeed led to entrepreneurship development in Nigeria.
To qualify as an entrepreneur, it is not sufficient to be just managing an enterprise; one has to be an originator of profitable business ideas. According to Schumpeter (1911), the single function, which constitute entrepreneurship is innovation and indeed it creates a resource (the business entrepreneur). It should be noted that, nothing should be considered as resource until man finds a use for it. These resources must be combined, recognized and efficiently utilized by entrepreneurship to achieve a desirable satisfaction for human needs which entrepreneurship readily provides. Entrepreneurial development hold a lot for economic growth and development. A typical example of what it has to offer is seen in the case of Dangote Group of Companies, which grew from a small enterprise into a large conglomerate. Today, it is with several lines of business and diverse product, it is making a tremendous contribution to the development and growth of the Nigerian economy.
For a nation to say it is independent, it must be economically independent and these is based upon the development of entrepreneurship spirit. The establishment of a new business involves a thorough understanding of entrepreneurial process. This process does not just involve problem solving but also an entrepreneur must find, evaluate and develop opportunity by overcoming the strong forces that every new ventures faces.
Entrepreneurial process has four distinct phases which include ability to identify business opportunities, ability to be able to harness the necessary resources to utilize opportunities identified, ability and the willingness to initiate and sustain appropriate actions towards the actualization of business objectives and managing the resulting enterprise. Some useful sources of business opportunity are consumers existing companies, distribution channels, research and development, as well as the Federal government involvement in promoting entrepreneurship.
1.2 Statement of the Problem
The developments of entrepreneurial skills in Nigeria have been affected by various factors. One of this is the issue of entrepreneurial education. The graduates of our educational system are ill prepared to meet challenges of the global economy. Our educational system prides it-self as producers of businessmen and women rather than entrepreneurs.
Lack of adequate financing is another factor especially for small business enterprises operating in developing economies, such as Nigeria. Every small business is concerned about financing policies and strategies for efficient and effective business management decision. It takes the resource of money to make money in small business enterprises in Nigeria are many, and many include payroll, taxes, insurance, rent, office supplies, inventory and telephone bills among others.
The commercial banks and financial houses, which are expected to be a source of finance for the growth and development of business enterprises, have been too rigid in providing adequate collateral in order to make funds available for entrepreneurs. It is against this background that the study evaluates the contribution of entrepreneurial development to the Nigerian economy.
1.3 Objectives of the Study
The main objective of the study is to assess the contribution of entrepreneurial activities to the Nigerian economy.
Other objectives are:
- To examine the extent to which the existing financial institutions have been able to meet the needs of entrepreneurs.
- To examine the role of government in providing supportive facilities to entrepreneurs an the short-coming in the working of these institutions.
- To examine those self made problems of the entrepreneurs themselves in stifling entrepreneurial development in Nigeria.
- Finally, to make recommendations based on the problem identified in the course of this study.
1.4 Research Questions
For this study, the following research questions are proffered with answers:
- What are the contributions of entrepreneurial development to the Nigerian economy?
- How can the contribution of entrepreneurial development be enhanced in Nigeria?
- What problem affects entrepreneurial development in Nigeria?
1.5 Statement of the Hypothesis
To achieve the major objective of this study, the hypothesis below is tested:
- HO1 Entrepreneurial development has made no significant contribution in GDP and provision of employment in the country.
- HA1 Entrepreneurial development has made a significant to GDP and provision of employment in the country.
1.6 Significance of the Study
Government has declared that there is an urgent need to tap into the potentials of entrepreneurs; hence, it became absolutely to work into the approaches and their involvement. It is in line with this guest that the study of entrepreneurship became necessary in order to undertake proper analysis. Understanding in this case will help in bringing under control, personal, social and economic variables such as employment, income distribution, and price and wealth creation in the most desired manner.
This research work intends to be beneficiary to the followings:
1. Banks:
The existence of many entrepreneurs creates a wider market in any economy thereby expanding the market/banking activities and creating avenue for more banking transactions.
2. Businessmen:
This study however directs businessmen in acquiring the necessary capitals, the requisite knowledge and the essential managerial know-how.
3. Government:
The quest to provide employment to all Nigerians as the government stands a greater chance to benefit from this research work if they carefully study the content of this work. The problem with Nigeria is not initiatives but the inability of the government to provide enabling environment for entrepreneurship.
4. Producers:
Entrepreneurial development aims at making more creative innovation; this however, brought ideas to the producers in proving the quality of their product for consumer satisfaction.
5. Individuals:
Nigeria on yearly basis is producing lots and lots of graduates each looking forward for a white-collar job but the government’s inability to provide enough employment to this set of individuals lead to unemployment. Graduates of all levels of education will benefit much from this study if they lay their hands on this project, because it will broaden their knowledge on entrepreneurship.
6. Researcher:
It will serve as a guide to more competent researcher to carry out investigation on the field.
1.7 Scope of the Study
The study is based on evaluating the contributory role of entrepreneurship to the development of the Nigerian economy.
However, evaluating entrepreneurship as a tool in the growth and development of Nigerian economy seems too broad for the time frame of this research work. Hence, the scope of this work is framed towards the contribution of small and medium scale enterprise to the development of Nigerian economy.
1.8 Definition of Key Terms
The following key terms are used in this study:
Capital:
This is that part of wealth used for further production of wealth.
Economy Development:
This is when the real per capital income of a country increases over time.
Employment:
This involves taking an occupation or trade or business.
Enterprises:
This is accepting as an established system of political administration by which a nation is governed.
Gross Domestic Product (GDP):
This is the monetary values of all the goods and services produced by an economy over a specified period.
Innovation:
This is the ability of the entrepreneur to develop new ideas.
Investment:
This is placing of money, capital or other resources to make profit.
Production:
This is the creation of utility for the satisfaction of human wants.
Small Scale Industry:
This is an enterprise with capital base not exceeding N 75,000 to N 3.0 million.
Profit:
The financial gain made in a transaction.
Economy:
Any specified collection of interrelated marketed and non-marketed productive activities.
Labour:
All productive human resources, mental and physical, both inherited and acquired.
Market:
An area over which buyers and sellers negotiate the exchange of a well-defined commodity.
Equilibrium Price:
The price at which quantity demanded equals quantity supplied.
Collateral:
Property used to secure a loan
Chapter Five
Summary, Conclusion and Recommendations
5.1 Summary
The research work focuses on evaluation of the contributions of Entrepreneurial Development to the Nigerian economy and the attempts that could be made to encourage entrepreneurial development in the economy.
To achieve this aim, the research work was approached on a systematic basis. The first chapter introduces the project topics, it state the objective of the study, formulate research questions on how the contributions of entrepreneurial development can be enhanced in Nigeria, and the problems that affect entrepreneurial development.
This was followed by an attempt to review existing literature in the field of study, with much focus on the concept, role, effect and legal issues of entrepreneurial development and its contribution to the Nigerian economy. It also looked at the entrepreneur in the public and private sector of the Nigerian economy. After reviewing relevant literature, an attempt was made to state the method used in conducting the research work. The method of data collection such as personal interview and questionnaire were discussed, techniques of data analysis and justification of the technique used in the study were also discussed.
Lastly, the research covered the presentation of data, analysis of data interpretation. The major research work was done here. The appraisal of the enterprise was made and summary of the finding.
5.2. Conclusion
From the hypothesis tested, it was discovered that entrepreneurial development has made a significant contribution to the GDP and provision of employment in the country. Therefore for an economy to survive and thrive on healthy ground, entrepreneurs must develop a sense of imagination, they must take risks, find and create opportunities for production. This will lead to increase in employment level, increase market demand for products and consequently increased production. The development of local small scale industries into viable production outfit seems to be the only way-out for the problem of industrial backwardness, unemployment and mass poverty.
Government should show more commitment in promoting entrepreneurship by activating existing policies and introducing new modalities such as fiscal and monetary policies incentives. Financial support and technical assistance programme. Entrepreneurs should organize in a manner that will make it easier for the government to reach out to them both in the areas of identifying and meeting their needs appropriately.
Also, the government should be concerned on what should assist small scale business with their major inputs. Relevant business management skills must be obtained on a regular and continuous basis to meet changing situation through symposia, workshops and exhibitions to broaden frontiers of practicing entrepreneur’s exposition and experience gained from such avenues will have tremendous impact both on the entrepreneurs as individuals and their business.
In spite of all the problems mentioned earlier, most entrepreneurs have been able to record increased net profits in their business.
5.3 Limitations of the Study
This study does not assume to be free from defects that are normal and inherent in these types of research study in details, the following constraints limited the research work.
(1) Inadequacy of Data:
Because the methods of data collection were not exhaustive, the data available seems to be inadequate and there is also the problem of non co-operation from respondents, for instance, 25 questionnaires were administered but only 10 were returned although it did not alter analysis.
(2) Time Constraint:
The time available for the conduct of this study was equally occupied with other important academic work such as daily military activities that deserve adequate attention. These made it impossible to contact other entrepreneurs to enrich the researched work.
(3) Financial Constraint:
The cost of obtaining materials for the project work was very high and the distance between the school and the source of information for this study is another area of concern.
5.4 Recommendations
For this research work, it is evident that economic activities in most developed countries revolve around the government largely because of economic and potential power. From the research findings, we proffer the following recommendations:
Establishment of Specialized Institutions
The government should established banks that would offer loans to entrepreneurs. This is to enhance the survival of any infant enterprises that is financed through such loans. Repayment of these loans should be guaranteed by at least three prominent personalities of reputable standing in Nigeria.
Provisions of Infrastructural Facilities
Government at all levels should complement the bank’s effort by developing industrial estates with adequate and reliable infrastructure including road, security, water, energy and communication such intervention would spare the entrepreneurs from incurring extra cost of providing these facilities which would otherwise render them uncompetitive.
Compliance With Credit Guidelines
Other financial or lending houses should strictly comply with the credit guidelines of the Central Bank of Nigeria, to make funds available for the development of entrepreneurship in Nigeria.
Re-Introducing Subsidy on Some Vital Rawmaterial
Subsidy on vital raw materials for industries especially the agro-allied industries and those engaged in agriculture should continue to be granted by government, this would facilitate mass production of food, thereby generating employment.
Provision of Educational Facilities
Qualitative education should be given in the nation’s institution of higher learning so that graduates could be self reliant for positive development rather than depending on government for employment.
Setting Up Credit Unions
Entrepreneurs must find alternatives rather than depending on government subsidies for sourcing their needed raw material cheaply. They may come together and set up credit unions and financial institutions to finance the sourcing of their raw material requirement. They may also set up or acquire establishment to provide for the materials.
Establishing of Enterprises by Individuals
Wealthy Nigerians must be more willing to set up enterprises that will offer better services and more manufacture goods for home consumption and for export in order to discourage over dependence on imported goods.
Setting Up Policies With Positive Impact
It must be recognized that no business whether large scale or small scale can operate to succeed without money (fund), material and men with competent skills and adequate knowledge. Since these are major determinations of the success of any types of business, it is very essential that specific policies be formed to address these aspects of business.
Reduction of Taxes
Government should reduce import charges on essential raw materials that cannot be soured locally.
Control of Inflation
Government should bring about policies to control inflation tendencies in the economy.
5.5 Prospect for Further Development in Nigeria
Most entrepreneurs are of the option that if their needs are being properly and adequately met, there will be a more rapid growth. It generally accepted that for a country to be truly industrialized it must be able to make machines.
The quality of human resources should be increased by improvement in education and training we should remind ourselves that Rome was not built in one day, where there is a will, there will be a way that necessity is the mother of invention. Our problem is that of the will to grow and not lack of potential where many of our graduates are littering the streets.
It has been observed that lack of finance is a major hindrance in entrepreneur pursuits: this is why we are calling on financial institutions and government and its agencies to come to the aid of entrepreneurs. Entrepreneurs are believed to have potentials for growth and hence reliable for promotion with their undeniable advantages, which are real, they justify the need to strengthen position.
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