Impacts Of Small Business On Enterprises On Employment Creations

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Impacts Of Small Business On Enterprises On Employment Creations


The focus of this study is on “Impacts of small business enterprises on employment creation in Lagos State. Small Business Enterprises are the vocal discuss and objective of this research is to ascertain the role of SBEs assumed to have played in terms of employment creation among others.

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 SBEs. the findings from the result obtained showed that small business enterprises has positive impacts on employment creations in Lagos State and the availability of infrastructural provision on small business enterprises have impacts on employment creation in Lagos State.

It was however recommended that government should encourage small business enterprises with the provisions of basic requirements, financial supports, enable environment and stability in the polity so as to minimize unemployment in Nigeria.

Chapter One


1.0 Background of the Study

Small business enterprise plays a key role in expanding and diversifying industrial production and also contributes to such objectives as employment generation, poverty eradication, improved income distribution and fulfilling basic needs of most developing countries.

Small business enterprises was defined by the Central bank of Nigeria in it’s guideline that it is any business organization with an annual turnover of less than five hundred thousand naira. (CBN Guide (2002).

Small business enterprise may be seen as a business which is independently owned and managed and which does not dominate its relevant market segment of interest (Griffin and Ebert, 1999) Unemployment is undoubtedly a big challenge to any government, development planner the private sector and society at large. This is why it is very important to pay particular attention to the creation of employment because according to Tomori (1998), the consequence of unemployment (whether prolonged or short-term), leaves a scar on every individual, family or country that is faced with the problem.

In the first instance, the degree of frustration and poverty experienced by the unemployed person who is willing to work but cannot find a job is considerable. His or her frustration could be transformed into violence or crime, which in-turn whether collective or individual can shake up any political system and cause instability. Second, the loss of income to individuals and households is equally great; the under-utilization of labour resources create poses a difficult problem for society in terms of the wastage in manpower resources which may have probably been expensively trained. Small business enterprises have been favored as institutions that are capable of providing solutions to the high level of unemployment menacing the country. Small business enterprises is an independent business which is managed and which does not dominate its relevant market segment of interest, managed by its owner or part owner and has a small market share (Bolton Report, 2006).

Today, the unemployment problem has eaten even deeper into fabrics of the Nigeria society and threatened her economic growth, much more than was bargained for and has left little to be desired indeed, the situation has deteriorated to the level that graduates of higher institution spend up to three to four years at home after graduation without any sign of “white-collar” jobs coming their ways, thus, it has been argued that people who lose their jobs or are prematurely relieved from active civil service, pensioners delinquent youths, unemployed graduates even suffers of HIV/AIDS, all of these groups, and many others, could solve their problems of unemployment by starting a business of their own in the small business enterprises (SBEs).

Small business enterprises believed to be the engine room for the development of any economy because they form the bulk of business activities in a growing economy like that of Lagos State.

This is manifested in the following ways.

  1. Employment generation capacity of about fifty percentage of global working population
  2. Small business enterprises constitute major avenues for income generation and participation in economic activities in the lower income and developing societies.
  3. National economic development prospects hangs on entrepreneurial energy of vibrant small business as most big business concern grew from small scale to become big icons.
  4. As they grow they protect nations from the geographical cost benefit permutations of a few multinational who are ever prepared to close up their business and relocate at the slightest provocation or appearance of economic downturn.

1.1 Statement of the Problem

For any economy to be developed, people must be prepared to place their money or resources on short-term and long term investment and bear business risks. In Nigeria, there was lack of authentic up to date information on the role played by small Business Enterprises towards economic growth and development and most especially through creation of job opportunities for the people (AJALA E.M 1999)

The irregular government policies, poor financial aid and poor infrastructural problems that ginger the cost of production, make the small business enterprises to be baffling with survival rather than creation of employment as expected. As a result the researcher intends to find out at what rate has SBEs in Nigeria create employment.

1.2 Objectives of Study

The major objective of this study is to determine the role played by small business enterprises in generating employment opportunities for the people of Lagos State in order to enhance the growth and development of the economy.

  1. To examine the extent to which small business enterprises creates employment opportunities in Lagos State.
  2. To study the mechanism that assists and support small business enterprises and their contribution to employment generation.
  3. To examine how small business enterprises create employment opportunity in the manufacturing sector.
  4. To know if financial institutions encourages small business enterprises to achieve its predetermined objective.
  5. To study if infrastructural provision helps small business enterprises to grow in Lagos State.

1.3 Research Questions

  1. To what extent has Small Business Enterprises create employment opportunity in Lagos State?
  2. How does Small Business Enterprises improve the standard of living of average Nigerians?
  3. Does financial institution help Small Business Enterprises to achieve it predetermined objectives?
  4. To what extent has Small Business Enterprises help to reduce unemployment rate in Lagos State?
  5. How does infrastructural provision help small business enterprise to grow in Lagos State?

1.4 Research Hypotheses

  1. Ho; Small Business enterprises have no positive impact on employment creations in Lagos State.
    Hi; Small Business Enterprises have positive impact on employment creations in Lagos State
  2. Ho; The availability of infrastructural provision on Small Business Enterprises would not have any impact on employment generation in Lagos State.
    Hi; The availability of infrastructural provision on Small Business Enterprises would have impact on employment generation in Lagos State.

1.5 Significance of the Study

The significance of this study is very important to individual or groups, firms, and the nation at large.

The following were some of the importance of this study?

  1. The study would assist as to know how small business enterprise aid in creating employment opportunities in Lagos State.
  2. The study would assist individual, firm and the nation in planning business by revealing all aspects of the intended business.
  3. The study would also aid prospective investors to fulfill the requirements of small business establishment.

1.6 Scope and De-Limitation of Work

The research would be limited to a few selected Small Business Enterprises in Ojo and Amuwo Odofin area of Lagos State.

1.7 Outline of Chapters

Chapter One; Introduced us to the body of research work, in this chapter various textbooks and journals will be reviews to ascertain various thoughts on small business enterprises on employment creations in Lagos State.

Chapter Two; The means of literature review will be majorly through textbooks and journals to get a grasp of what small business enterprises is all about and how it leads to employment opportunities.

Chapter Three; research methodology is the term on how research will be carried out the primary and secondary data, research design will be adopted, and this will involves acquisition of various and relevant information concerning small business enterprises and employment creations in Lagos State.

Chapter Four; Data Analysis and interpretation is based on presentation of data, analyses and results testing of hypotheses and discussion for results. It explains how facts will be analyzed using statistical framework.

Chapter Five; Summary and conclusion of main findings and recommendations will take place after completion

1.8 Definition of Terms

Small Business:

These are enterprises that are locally owned and managed often with very few workers. Small business enterprises have simple structure they often show attitudes and behaviours.


It means a situation where able men and women have not job to do.

Economic Development:

It means maturity of the quality and quantity of a goods produced in a county.

Economic Growth:

It means quantitative increase in country’s input and output over a particular period of time.

Working Capital:

This means fund for acquiring and running small business.

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 small scale businesses 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

Small scale businesses 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 small scale businesses.

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 small scale businesses 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 small scale businesses 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.

5.3 Areas for Further Research

Further research should be carried out on the following;

  1. The effect of information technology on the performance of Small scale businesses
  2. The role of financial and non financial Institutions in the development of Small scale businesses
  3. The effect of procurement ethics on the performance of Small scale businesses

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