The Impact Of Small And Medium Scale Enterprise Development On Youth Empowerment In Nigeria

Project and Seminar Material for Entrepreneurship

The Impact Of Small And Medium Scale Enterprise Development On Youth Empowerment In Nigeria


Abstract


The study examines the impact of small and medium scale enterprises development on youth empowerment in Kaduna metropolis. A cross sectional approach was used to get the data. A total of 180 persons were selected as the sample size. The analysis of data reveals the following results: Employment generation through the development of SMEs facilitate capacity building, self-reliance as well as attracting government support to finance SMEs. The study also identifies the practical approaches use in developing entrepreneurship and the problems militating against entrepreneurship development.


Chapter One


Introduction

1.1 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:

  1. To assess how small and medium scale enterprises development affect employment generation in Kaduna Metropolis.
  2. To investigate the forms of targeted government support rendered to small and medium scale enterprise in Kaduna Metropolis.
  3. To analyze the efficacy of government capacity building programmes and support to promote the development of SMEs among youth in Kaduna Metropolis.
  4. 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:

  1. What are the effects of small and medium scale enterprises development on employment generation in Kaduna Metropolis?
  2. What kind of support does the government render to small and medium scale enterprise in Kaduna Metropolis?
  3. How effective is government capacity building programmes and support in promoting the development of SMEs among youths in Kaduna Metropolis?
  4. 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 empowerment 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).


Chapter Five


Summary, Conclusion and Recommendations

5.1 Summary

The study examines the impact of SMEs development on youth empowerment in Kaduna metropolis. The research questions that guided the study were: What are the effect of SMEs on employment generation in Kaduna? What kind of support does the government render to SMEs in Kaduna metropolis? How effective is government capacity building programmes and support in promoting SMEs among youth in Kaduna metropolis.

A survey method was used for this study. The population consist of 300 beneficiaries of the youth empowerment programme in Kaduna metropolis. Their list is obtained from National directorate of employment Kaduna. Out of 300 persons, 180 persons were selected as the sample size. A questionnaire developed in five Likert scale was used to obtain data. Mean scores was used to analyze the data obtained from the field. The result of the analysis indicates that The analysis of data reveals the following results: Employment generation through the development of SMEs facilitate capacity building, self-reliance as well as attracting government support to finance SMEs. Government support SMEs through entrepreneurship development and skill acquisition as well as funding, collaboration with financial institution, entrepreneurship education in schools, and formulation of policies that supports SMEs. The finding equally shows that government support to SMEs among youths in Kaduna is not too effective because it is constraint with problems of poor access to loan due to high interest rate and the requirement of big collateral security and poor infrastructural facilities especially electricity all constitute a big hindrance and impediment to entrepreneur and affect their performance negatively. However, the respondents agreed that lack of holistic approach to industrial development a challenge militating against the performance of entrepreneurship in Kaduna metropolis. The challenges militating against the effective performance of entrepreneurship in Kaduna metropolis are basically unconducive business environment due to constant political crisis as well as poor access to loan and poor infrastructural facilities especially electricity.


5.2 Conclusion

There is absolutely no doubt that small and medium scale Enterprises contribute tremendously to the nation’s economic development.

Harnessing the economic potentials of SMEs in Nigeria is still a mirage since several policies aimed at small and medium scale Enterprises development did not stand the test of time due to poor implementation, erratic financing of schemes initiate by the government and other administrative bottle-necks. These have made it difficult to existing and prospective SMEs operators to have easy access to funds set aside for SMEs development. Bank which are suppose to complement and implement government policies also clamour for huge collaterals which prospective poor borrowers usually do not have even borrowers who could afford to provide benefiting collateral are further discouraged by continuous increase in interest rate which make borrowers vulnerable to the risk of continuous indebtedness to rich lenders. The recent development by committee of bankers in Nigeria (SMIEIS) remains a vibrant scheme if the objective for which it was established is implemented to the letter. Of course SMEs will never thrive if government and financial institutions continue to pay lip services to schemes initiated by them.


5.3 Recommendations

In order to facilitate the effectiveness of small and medium scale enterprises development on youth empowerment in Kaduna metropolis, the following recommendations are proffered:

  1. Commercial Bank should make fund available to small scale entrepreneur through soft loans that can be repaid periodically through the proper monitoring and supervision of the investment funded by such bank to ensure repayment.
  2. Infrastructure such as electricity should be put in good shape to ensure the survival of business enterprise and the creation of new business venture. Inline with this, the federal government should take seriously the issue of privatizing power holding plc to make it more effective.
  3. The issue of security should be taken more serious. All stakeholders should go to the drawing board and design security strategy that will help reduce the situation in order to have a conducive and peaceful environment that would encourage local investors as well as direct foreign investment. This will foster entrepreneurship development in no small ways.
  4. Practical entrepreneurship approach should be adopted in teaching entrepreneurship in school this will help in building the character of students into future entrepreneur with great entrepreneurial trait with good flair for creation of business enterprise.
  5. Government and financial institution should develop a holistic approach to schemes initiated by them.
  6. The Central Bank of Nigeria (CBN) and other financial institutions should embark on extensive sensitization of entrepreneurs on the operations of the banks.
  7. Interest which deters people with genuine business ideas should be reduced to a bearable level so as to make borrowing cheaper.
  8. All administrative bottle necks which make funds inaccessible to small and medium scale Enterprises operators should be mitigated.
  9. The Central Bank of Nigeria should as a matter of urgency compel all other commercial banks to adhere strictly to banking policies and regulations.
  10. Government should engage professionally in the formulation of policies that will stand the test of time.
  11. Government should develop a lasting solution to the state of infrastructural deterioration especially electricity.
  12. The security situation of the country needs to be improved so as to make business doable in the country.
  13. Policies initiated by the government should be funded efficiently.
  14. Policies which are aimed at rural development should top the lists of policies aimed at developing the already or semi-developed urban centers so as to reduce rural-urban migration.
  15. Prospective business operators should conduct extensive feasibility studies to evaluate the viability of any proposed business to avoid investment in unprofitable ventures.
  16. Finally, for entrepreneurs that may find it difficult to choose a line of business, the following have been recommended. Meat Retailing, Restaurant (“Buka”) Service, Growing vegetable during dry season, Backyard Poultry Raising, Operating a Nursery for Children, Home Laundry Service, Arranging Foods for Parties, Raising of Pets, Charcoal Making, Sing Writing, Writing of Book for Publication, Portrait of Flowers, Landscaping, Making Baskets and Cages from Palm Fronds, Making Brooms, Sand Blocks/Cocktail Sticks, Selling Food at Building Sites, Home Made Bread Cakes, Refuse Packing, Car Washing, Collecting Research Materials, Speech Writing, Editorial Work, Driving School, Clearing and Forwarding, Operating Grating and Grinding Machines, Coaching Classes, Renting Generator Sets, Operating a Barbing Saloon, Hair Weaving, Telephone Operation, Running a Catering Institute, Tailoring, Bricklaying, Plumbing, Rearing of Day Old Chicks to Three or Four Weeks, Weaving Traditional Clothes, GSM Business: Selling Recharge Cards and phone accessories, Palm Kernel oil Production, Soap Production, Aquaculture/fish farming, Chalk making, Nylon production, Concrete block production, Garri production/Cassava chips, Ice block production, Hair/ Body cream production, Big time rental services, professional practices etc.

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