Impact Of Foreign Direct Investment On Employment Generation

Project and Seminar Material for Economics

Impact Of Foreign Direct Investment On Employment Generation


The focus of this study is on effect of entrepreneurship development on employment Generation in lafia metropolis in Nassarawa State. The survey research method was employed and questionnaires were used to collect the necessary data from respondents.

To achieve these objectives, a 5 point Likert Scale was developed and validated to collect information from a sample of 50 respondents. Representing employees from the selected business. the findings from the result obtained showed that entrepreneurship development has positive impacts on employment creations in Nassarawa State and the availability of infrastructural provision on entrepreneurship development have impacts on employment creation in Nassarawa State.

Chapter One


1.1 Background to Study

There is no country in the modern world where an improvement in the material level of living is not regarded as a desirable goal by rulers and citizens alike. The growing acceptance of the need to do something for the poor, can be noticed in the numerous poverty alleviation programmes in Nigeria, the average Nigerian still lives subsist below the absolute poverty line. Amongst the challenges that confront Nigeria, a major contributory factor was the style and expectations of the development strategy that was pursued and faced with this failure; the need for a meaningful national development is not only necessary but also imperative. To this end, a lot of economic reform programmes or strategies have evolved but recently special emphasis is being made on self-reliance via entrepreneur and its numerous small and medium enterprises. The economic success of the countries of south east, Asia, and America is traceable to the contributions made by self-reliant individuals (entrepreneurs), through their numerous small medium development depend on the entrepreneur who makes a living by creating new business new jobs and new ideas.

Entrepreneur means different things to different people. In other to appreciate this study more, some concepts that are associated with this study will be explained. According to Oxford advanced Learner’s dictionary it defines entrepreneur as a person who starts or organizes a commercial enterprises, especially one involving financial risk. To an economist, entrepreneur is one who brings resources, labour, materials and other assets into combination that make their value greater than before and who introduce changes, innovations and a new order. Entrepreneurs are the risk takers who create businesses; they assemble all the factors of production in an effort to start and operate a business and to make a profit. For Schumpeter “the whole process of economic change hung ultimately on the person who makes it happen–the entrepreneurs”. Entrepreneurship involves combining to initiate changes in production hence it is essentially the promotion of economic change, it is a process involving the entrepreneur and an entrepreneurial career. Hirsch and Peters in their text entitled entrepreneurship: describes this process as one of creating something difficult with value by devoting the necessary time and assuming the accompanying financial, psychic and social risks and receiving the resulting, the rewards of monetary and personal satisfaction.

In Nigeria, many policies are constantly being implemented to ensure their survival which will in turn enable them contribute maximally to economic development but there challenges were intensified more by the perennial energy crisis, weak infrastructure, poor import and export policies, tariff structure among others, which have prevailed in the country for some time now. These have, inevitably led to the near collapse and failure of the small scale enterprises. The government of this country should look into the modalities of solving these challenges. It is therefore against this background that this work sets out to evaluate entrepreneurship development in Lafia Metropolis, Nassarawa State, considering some small scale enterprises.

1.2 Statement of the Problem

It has been observed that some of the problems associated with entrepreneurship development and job creation in Nassarawa state include but not limited to:

Incompetence of Management:

The major hazard of an entrepreneurship business is the incompetence of management. A small business owner may know all the management principles and theories; his management practice may jeopardize his business. He may not possess the leadership qualities, be unwilling to delegate authority, lack of appropriate human relations ability and may not possess the appropriate skills of management; such a business operated by this business owner is likely to fail.

Inadequacy of Infrastructural Facilities:

Water, electricity, accessible roads, and other means of communication are sine quanon to the efficient performance of entrepreneurship enterprise. Their absence or inadequacy affects negatively the efficient performance of entrepreneurial businesses.


There are certain circumstances over which small scale business owner may have little or no control. Natural disaster such as thunder, product or accident or sudden death of the owner may adversely affect the operation of the small scale business enterprise.

High Rate of Loan Diversion and Defaults:

Loans obtained from government, banks and individual persons are used to promote personal aggrandizement instead of the corporate objective of the business and hence failure to repay the loan plus interest affects the business.

Inadequate Credit Control:

A common problem facing entrepreneurial business owner is whether or not to extend credit. Some small scale business enterprise possesses credit granting practices, credits extended to friends and relations are often times too hard to collect in times of need. This therefore, increases the financial predicament of the business owner.

Inadequate Planning:

Planning a business begins with gathering and evaluating data on resources requirements, operating costs, potential markets and sales, competition, supplies, relevant government regulations, etc. Unfortunately, however, many eager business owners push ahead impulsively, without paining attention to planning, and thus business failure sets in. Lack of the use of modern method of gathering and analysing data constituted a weak point in the small business strategies planning effort.

Poor Business Accountability:

The financial problem of small scale enterprises is rarely only financial. Often it is only a symptom, the diagnosis of which reveals other weaknesses. Business finance and stress are mixed up with personal finance and stacks required for personal needs cash and slacks are taken at will for personal use whenever the need arises without accounting for such withdrawals. This makes is difficult to assess the operating results of the business and at times starves the forms of its liquid resources.

Hence, the need for this study on the effect of entrepreneurship development on employment generation in Lafia Metropolis, Nassarawa State.

1.3 Objectives of the Study

The aim of this topic is to recall the pivotal role, which entrepreneurs and the small medium enterprises are expected to play in modern economics. Therefore the study will make every effort to reveal the various ways to encourage entrepreneurship development geared towards employment generation in Lafia Metropolis, Nassarawa State.

The specific objectives of this study are as follows;

  1. To identify the constraints encountered by entrepreneurs as a sole operator or as a bigger organization and how their challenges can be overcome.
  2. To determine the level of awareness of people towards entrepreneurship development as a tool for employment generation in Lafia Metropolis.
  3. To examine various ways that will be employed to develop entrepreneurship in order to get the desired result of employment creation and development.
  4. By extension and implication, the study shall provide how the government both state and national and also the society will influence positively on entrepreneurship and its development.

1.4 Research Questions

The questions guiding this research work are stated below;

  1. What are the major constraints inhibiting entrepreneurs in Lafia Metropolis from carrying out their roles as catalysts of economic growth via employment generation and how these challenges can be overcome?
  2. What is the level of awareness of people concerning entrepreneurial development as a tool employment generation?
  3. What identifiable and specific roles (Financial, economic, social, motivational, and psychological) do entrepreneurs in Lafia Metropolis play in order to get the desired result (employment creation and development).
  4. In what ways can both the government and also society influence entrepreneurship development?

1.5 Significance of the Study

The research work will be of great significance to students, prospective and practicing entrepreneurs, co-operators, chief executives and other practicing managers of business and non–business organizations. The research work will serve as a background and catalyst to any future researchers and scholars who may wish to venture into the areas of promoting employment creation and entrepreneurship development in Lafia Metropolis. Again the outcome of the research could be significance to the people with different occupations and professions. The conclusion which this research may expose, could lead to improvement and efficiency in Lafia Metropolis, Nassarawa as regard to entrepreneurship. The confidence level on embarking on entrepreneurship development in Nigeria will improve, and more people or the general public will agree to venture in that business.

1.6 Scope of the Study

The study focuses on the effects of entrepreneurship development on employment generation in Lafia Metropolis; a case study of small scale enterprises.

1.7 Limitations of the Study

The researcher however, encountered series of challenges in the course of carrying out this study, such challenges include:

Time Constraints:

The research was faced with time intensive activities which were unable to undertake in combination with academic course works. Accessibility to adequate and reliable data for analysis was one of the limitations of this study. An-in depth study and analysis of the subject would not be possible since the study was restricted to just one state (Lafia Metropolis). Lastly, some of the materials (literature) required for the sourcing of secondary data relevant to the study were not handy even though a concerted effort was made to secure from a valuable sources.

1.8 Definitions of Terms


Stone and freeman (1992:156) defined it as either the originator of a new business venture or a manager who tries to improve an organizational unit by initiating productive changes. In other words, it is an individual or group of individuals, who sees environmental change as an opportunity and uses the factors of production to produce new goods and service.


Hisrich, (1995:17) Defines Entrepreneurship as a process of creating something different with the value by devoting the necessary time and effort assuming the accompanying financial, psychic and social risks and receiving the resulting rewards of monetary and personal satisfaction.

Small Scale Enterprise:

Onuoha (1994:322), citing Osaze (1996), sees small business as one which is owned, managed and controlled by one or two persons, is family influenced in decision makings, has a differentiated organizational structure has a relatively small share of the market and employs less than 50 people.

Entrepreneurship Development:

This is the coming into existence in society of the class of individuals, who are not limited to pace odds.

Employment Generation:

This refers simply to creation of job opportunities either through entrepreneurial ventures or government empowerment schemes etc.

Chapter Five

Conclusions and Recommendations

5.0 Introduction

This chapter involves a summary of the findings, discussions, and recommendations that are based on the objectives, the problem statement, and well as the recommendations are based on the findings.

5.1 Conclusions of the Study

Findings revealed that majority of the different classifications and activities of the businesses were tied shop businesses that operated at a small scale, were managed by own boss and support staffs, had their source of startup capital from own savings, and do not provide opportunities to a great number of the people since they mostly employ less than 5 people compared to the labor force available.

The study revealed that most business owners had challenges that hindered their business operations, taxes and other regulations. Problems in the context acquisition of licenses for registration, duplication of products have been attributed to competition. This has culminated into the widening of markets, emphasizing of the Traditional Guarantee Associations as KACITA, PSF, 360 Network and USSIA so as to focus on the issues that hinder trade and business operations.

That small scale business mostly improve incomes and welfare of individuals, from their businesses knowledge or skills and business partners, competition for jobs associated with social responsibilities encouraged most business people to start businesses, the kind of activities engaged in by the businesses have enabled them to absorb labor force through the provision of employment opportunities.

The study revealed that most people owners used own savings as a startup capital for their businesses hence operating at a small level with a structural hierarchy of own boss and support staffs thus leading most businesses to be tied shop businesses with less than 5 employees. Despite the challenges faced by the entrepreneurship development as taxes and other regulations, competition from similar operations, transportation costs, efforts have been undertaken to increase the role of such businesses in the provision of employment to the labor force.

5.2 Recommendations

Entrepreneurship development need to employ professionals to manage their businesses this will improve on their performance since these will establish and strengthen the internal controls as regards financial resources to reduce on mismanagement and misappropriations. It is through this that small businesses whose startup capital is based on own savings will easily access financial institutions for loans to enhance their business operations towards employment provision.

Small scale business operators should widen their markets so as to reduce competition this should be done by integrating market information into the planning process because marketing is the life blood of a competitive marketplace as it is driven towards the needs and desires of customers in the production decisions. This should be done with the help of the Government through tax exemption strategies for investment and direct financial support to entrepreneurship development.

Government should introduce motivation incentives in support of the small scale business operations for examples increased salaries, wage tax holidays and other non-monetary rewards. This would improve on the performance of businesses towards development and employment provision.

The decision makers of the entrepreneurship development should adopt the best form of organization that can address the following issues with help of updated technology;

  1. The life and continuity of the business
  2. The operating flexibility of the employees
  3. The ease and expense of making the business recognized
  4. The ease with which capital can be acquired to support business operations
  5. The ability to control the business without jeopardizing other activities in which they are involved

Government should involve draft policy frameworks for entrepreneurship development that focus on the legal and regulatory conditions, capacity building in support of improving the business environment to increase competition and promote the private sector. Emphasis should be on enabling accessibility through the development of better infrastructure in form of roads for transportation, administrations buildings as well as communication systems.

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