The Impact And Role Of Entrepreneurship On The Economic Growth Of Nigeria

Project and Seminar Material for Entrepreneurship

Abstract

This study was carried out to examine the impact and role of entrepreneurship on the economic growth of Nigeria using selected SMEs in Gashua, Yobe State as a case study. Specifically, the study was aimed at investigating the prevalence of entrepreneurship on the Nigeria economic, assess the contributions of entrepreneurs to the economic development in Nigeria, and inquire the factors that influence entrepreneurs to economic development the Nigerian economic development. The study employed the survey descriptive research design. A total of 259 responses were validated from the survey. From the responses obtained and analysed, the findings revealed that there is a significant relationship between entrepreneurship and economic growth of Nigeria. This is as the Pearson correlation test showed a positive significant relationship (.821**) between entrepreneurship and economic growth. Also, the findings revealed that Low entrepreneurial activities does have a negative significant correlation with economic growth in Nigeria. The study therefore recommend Government should strengthen the policies that would improve entrepreneurship framework conditions. Hence, policy makers should be able to face the question of how to create and/or improve framework conditions conducive to entrepreneurial activities and how to ensure that entrepreneurial skills are allocated to activities adding to the social product. Moreso, Government should priorities the SME sector giving it devoted practical and Visible attention with the a view to making it virile, vibrant, focused and productive. SMEDAN should be readily and freely assist prospective entrepreneurs to have access to necessary information relating to business opportunity, modern technology, raw materials, market, plant, and machinery, good and services etc which will enable them to reduce their operating cost and be more efficient and competitive.

Chapter One

Introduction

1.1 Background to the Study

The role of entrepreneurship in the growth and development of our dear nation cannot be overlooked and as a result of the consistent rise in the level of unemployment and the upward increase in the level of poverty in Nigeria, it has become crucial for Nigerians to quit searching for white collar jobs that are not available and start creating employment for themselves. The forces of entrepreneur are strong in Nigeria because most people see entrepreneurial activities as what is primarily based on essential due to the poor economic situation. We do not seem to realise the fact that entrepreneurship development is the base of all economic evolution of any nation. The current Nigerian economy is largely dominated by the oil industry. The labour force is radically growing, as is the unemployment rate currently at 20%, with millions of workers underemployed. Nigeria is endowed with the largest domestic market in Africa a wide range of natural resources coupled with a diversely skilled labour pool. Given these economic realities, the country must constantly create new jobs, and diversify the industrial and commercial sector to take advantage of human and natural resources.

The activities of entrepreneurs have been found to be capable of making impact on the economy of a nation and quality of life of the people through economic growth; employment generation and empowerment of the disadvantaged segment of the population, which include women and the poor. Small and Medium Enterprises (SMEs) is perceived as a pride of basically every country or state. Because of SMEs’ significant roles in the development and growth of various economies, they have appropriately been termed as the engine of growth and catalysts for socio-economic transformation of any country. SMEs are perceived as a real instrument for the achievement of national economic objectives of employment generation and poverty reduction at low investment cost. Other central benefits of vibrant SMEs are the access to the infrastructural facilities the stimulation of economic activities such as providers of various items and distributive trades for items produced and needed by the SMEs, stemming from rural urban migration, enhancement of standard of living of the employees of the SMEs and their dependents as well as those who are directly or indirectly associated with them.

Various government of the nation have begun to find solutions on how to involve the private sector in the developmental process of their country’s economy which is one of the responses to the challenges of development of entrepreneurial in developing countries. Nigeria had even taken a bold step by including entrepreneurial studies in the academic curriculum of her education system and with the introduction of National Directorate of Employment (NDE) scheme. The belief of such policy makers is that such decision will inculcate entrepreneurial spirit in the mind of people so as to prepare them for wealth creation through entrepreneurship (Fasua, 2006). Entrepreneurship is very crucial to the development of a country’s economy, especially countries like Nigeria. Entrepreneurship is sine qua non to national development poverty eradication and employment generation it is the bed rock of any nation’s industrialization.

The essential of entrepreneurship for productivity was originally credited to Alfred Marshall in 1990. In his famous book; Practice Principle of Economics, Marshall ascertained that there are four factors of production; Land, Labour Capital and organization. These factors are properly utilized by an entrepreneur. Thus entrepreneur creates new commodities or improves the plan of producing an old commodity. (Marshall, 1994). Therefore, early entrepreneurs were characterized with production and manufacturing. In a situation like this, the producers often started with small capital. Early entrepreneurship began with trade by barter even before the advent of money. Therefore most of the modern entrepreneurs were engaged in retail trade and also sole proprietorship.

1.2 Statement of the Problem

With current challenges in the global economy, new and innovative strategies are emerging in the bid to stimulate and sustain growth in national economies. Entrepreneurship is one model that is deemed critical to the formulation and implementation of these strategies. According to a research by The Global Entrepreneurship and Development Institute, it was found that USA is a world leader when it comes to supporting its entrepreneurs in respect to business formation, expansion, and growth. They also finance new businesses through venture capital. This type of financial capital is provided to early-stage, high-potential and riskier start-up companies. Countries like Australia and Sweden came second and third respectively according to the 2014 statistics. Some of these countries’ economies are ranking very high because they understand the effects entrepreneurs play in the growth of their economy. Their GDP are always on the increase thereby increase in their economy.

In spite of this, little is known about the profile of the Nigerian entrepreneur and how they engage with the constantly evolving policy context. This study therefore aimed at better understanding their characteristics the impact and role of entrepreneurship on the Nigeria economic growth.

1.3 Research Questions

The following are some of the questions which this study intends to answer:

What is the prevalence of entrepreneurship on the Nigeria economic growth?
What are the contributions of entrepreneurs to the economic development in Nigeria?
What are the factors that influence entrepreneurs to economic development the Nigerian economic development?

1.4 Objectives of the Study

The objective of the study is critically study the role and impact of entrepreneurship on the development of the Nigerian economy. However, the specific objectives are to:

To investigate the prevalence of entrepreneurship on the Nigeria economic growth
To assess out the contributions of entrepreneurs to the economic development in Nigeria
To inquire are the factors that influence entrepreneurs to economic development the Nigerian economic development

1.5 Research Hypothesis

The research hypotheses to be tested include:

There is a significant relationship between entrepreneurship and economic growth of Nigeria
Low entrepreneurial activities does not have any significant correlation with economic growth in Nigeria

1.6 Significance of the Study

Findings from the study will be of immeasurable importance to the Nigerian government all and aspiring entrepreneurs in Nigeria. It will serve as a manual that will guide them on how to about using entrepreneurship to economically develop the country and raise their standard of living. It will as well help to bridge the gap that might have existed in the entrepreneurial activities.

1.7 Scope of the Study

This study investigated the roles and impacts entrepreneurship has on the economic growth and how economic growth will be improved through entrepreneurship. Evaluating entrepreneurship as a tool in the growth and development of Nigerian economy seems too broad for the time frame of this research work therefore, the scope of this work was confined towards the contribution of small and medium scale enterprise to the development of Nigerian economy.

1.8 Limitation of the study

This research worked on the impact and role of entrepreneurship on the Nigeria economic growth was not an exception to the usual problems associated with research in Nigeria. The researcher was faced with the problem of finance as the researcher did not have enough funds to get the required stationery for the work. Also, the timeframe for the work to be carried out was too short.

1.9 Definitions of Terms

The following terms were used in the course of this study:

Economy Growth:

This is when the real per capital income of a country increases over time.

Entrepreneur:

This is a person who starts or organizes a business that has a financial risk.

N.D.E.

National Directorate of Employment

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

In this study, our focus was to examine the the impact and role of entrepreneurship on the economic growth of Nigeria using selected SMEs in Gashua, Yobe State as a case study. The study specifically was aimed at investigating the prevalence of entrepreneurship on the Nigeria economic, assess the contributions of entrepreneurs to the economic development in Nigeria, and inquire the factors that influence entrepreneurs to economic development the Nigerian economic development.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 259 responses were validated from the enrolled participants where all respondent are drawn from SMEs in Gashua, Yobe State..

5.2 Conclusion

Despite the massive benefits entrepreneurship can proffer to the Nigerian economy. The government policies and dominant factors in a business environment can impede the significant impact of entrepreneurship on economic growth. Hence, observation during this study connotes that government should assess and ensure proper economic policy coordination throughout each fiscal year to achieve policy stability. Secondly, reforms in institutions such as the education system’s curriculum are necessary to encourage self reliance and vocational skills. Also, there is a need to revitalise infrastructure such as the country’s power sector owing to its enormous impact on primary activities that can enhance growth.

More importantly, there should be a drastic reduction in tax and lending interest rate for SMEs to encourage large-scale industrial investor’s interest. Diversifying the economy is apparently another thing to be considered because the country’s economy is monotonous. Much emphasis based on oil exploration being the primary source of revenue. The economy needs diversification in a manner that other areas such as agriculture, manufacturing, information technology and fashion thrive. Nonetheless, it is advisable that government consider reduction on import duties for essential raw materials.

Above all, This study on entrepreneurship and economic growth reflected the fact that entrepreneurship is the key to propel expected economic growth in a short-term or long-term period. Hence, further research is recommended and focus towards benefits of using SMEs as a stimulator for economic growth.

The findings of this study also showed that there is a significant relationship between entrepreneurship and economic growth of Nigeria

Low entrepreneurial activities does have a negative significant correlation with economic growth in Nigeria

5.3 Recommendation

Based on the responses obtained, the researcher proffers the following recommendations:

Government should strengthen the policies that would improve entrepreneurship framework conditions. Hence, policy makers should be able to face the question of how to create and/or improve framework conditions conducive to entrepreneurial activities and how to ensure that entrepreneurial skills are allocated to activities adding to the social product.
There should be a strict policy framework that can enhance entrepreneurs government partnership in area of finance, skill development and alliance. The Government should establish fiscal incentives and support such as tax rebate for SMEs which have demonstrated capacities in local source of raw Materials ,value addition to commodities for export as well as other business ethics.
Government should come up with a new pragmatic and realistic industrial policy that will address the current globalisation challenges as well as the emergent domestic challenges in order to make the Nigerian SMEs globally competitive.
Government should priorities the SME sector giving it devoted practical and Visible attention with the a view to making it virile, vibrant, focused and productive. SMEDAN should be readily and freely assist prospective entrepreneurs to have access to necessary information relating to business opportunity, modern technology, raw materials, market, plant, and machinery, good and services etc which will enable them to reduce their operating cost and be more efficient and competitive.
In order to complement governments efforts and realize the objective of revamping SMEs in Nigeria, SME promoters and entrepreneurs should brace up the challenges posit by environment and also maintain quality in their good and services and ensure quality control in all product activities at all levels.

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