The Role Of Small Business In Poverty Alleviation

Project and Seminar Material for Economics

The Role Of Small Business In Poverty Alleviation


The main objective of the study is to empirically evaluate the critical roles of small businesses in economic growth and poverty alleviation in Nigeria. The researcher issued questionnaire to the respondent, and data extracted from the questionnaire was adequately analyzed us a positive relationship exists between small business and economic growth. A strong inverse relationship also exists between the incidence of poverty and small business and economic growth. Thus, the empirical result establishes the linkage between small business, economic growth and the incidence of poverty.

Table Of Content

Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgment
  • Abstract
  • Table of content

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of problem
  • 1.3 Objective of the study
  • 1.4 Research Hypotheses
  • 1.5 Significance of the study
  • 1.6 Scope and limitation of the study
  • 1.7 Definition of terms
  • 1.8 Organization of the study

Chapter Two

2.0 Literature Review

Chapter Three

3.0 Research Methodology

  • 3.1 sources of data collection
  • 3.3 Population of the study
  • 3.4 Sampling and sampling distribution
  • 3.5 Validation of research instrument
  • 3.6 Method of data analysis

Chapter Four

4.0 Data Presentation, Analysis And Interpretation

  • 4.1 Introductions
  • 4.2 Data analysis

Chapter Five

5.0 Summary Conclusion and Recommendation

  • 5.1 Introduction
  • 5.2 Summary
  • 5.3 Conclusion
  • 5.4 Recommendation
  • Appendix

Chapter One


1.1 Background of the study

Urban and rural economic structure in Nigeria has changed significantly over the past two decades (Dissart and Deller, 2000). After a decade of unprecedented expansion of the economy of the nation, many regions in West Virginia are still suffering from high unemployment, shrinking economic base, deeply rooted poverty, low human capital formation, and out migration (Deavers and Hope, 1992). West Africa ranks second to last in per capita income and lags the nation and the rest of the Appalachian region in almost any other indicators measuring income, wealth, and health, making a classic example of persistent poverty (Dilger and Witt, 1994; Haynes, 1997; Maggar, 1990).

Nigeria is one of the nation’s most rural states and economic restructuring across the nation has affected it in ways that are significantly different from the experience of urbanized regions. For example, while the decline of employment opportunities in extractive industries has had little direct impact in urban areas, Nigeria has lost direct mining jobs, even while production remained high. The slow growth of income and employment in the state, out-migration and the disappearance of rural households are both causes and effects of persistent high rates of poverty.

This lagging economic development negatively affect the economic and social well-being of West Virginia’s rural population, the health of its local businesses, and the ability of its local government to provide basic human services (Cushing and Rogers, 1996). 2 Widely dispersed small communities with relatively small local and regional markets dominate Nigeria. The businesses that serve these markets also tend to be small. Thus, considering one-by-one count, it is therefore tempting to dismiss small businesses as unimportant. Collectively, however, they make a large contribution to the economic diversity of small communities. In fact, small business is a big business in Nigeria. Through their capital investments they create jobs and new opportunities to promote community-building and social activities. They also contribute to the development of a diversified economy by absorbing surplus labor resulting from economic restructuring. Improving the state’s economic basis requires an economic environment where business can prosper.

Nigeria, however, despite efforts of multilateral, national and local policy programs to induce economic prosperity and ameliorate poverty, has many economically depressed areas and regions. To strengthen and diversify the economy, policy makers and local leaders need to know the characteristics and impact of small businesses on the local economy. Understanding the characteristics of poverty and the contribution of small businesses to economic growth of the local economy is crucial in designing specific and appropriate development policies. The targets of such policies are to improve and expand community-based capabilities and initiatives in order to assist small communities to retain and expand local small businesses.

Understanding the relationship between small businesses, economic growth and the incidence of poverty has been the interest of many researchers and there have been many attempts to establish statistical relationships between poverty rates and overall macroeconomic performance on the basis of aggregate time-series data. However, some 3 studies have not only indicated contradictory evidence about the role of small businesses but also produced results that rejected the view that small business are the engines of job creation and economic growth (Rosenzweig, 1988; Brown et al., 1990; Liedholm and Mead, 1987). Nigeria is predominantly rural with more than 80 % of the total population living in rural areas (Joseph, 2005).

The economy is basically agrarian with most of the people living in squalor and poor level of living which is attributed to poverty. (Ajayi, 2009). Poverty has diverse economic on social dimensions that express its manifestation in lack of income and insufficient productive resources to ensure sustainable livelihood. Poverty indicators include: hunger and malnutrition, or lack of access to quality education and basic services, increased molidity and mortality which occur as a result of illness in adequate housing homelessness, unsafe environment and social dissemination. As a matter of fact the concept of poverty does not subject itself to any straight Jacket definition (Agumagu, 2000), all these indicators are the attribute of poverty in the rural areas of Sokoto state.

Since mid-seventies, successive governments in Nigeria have come up with a lot of laudable initiatives or programmes geared toward poverty alleviation (Idachaba, 2006). Such programmes include, Operation Feed the Nation (OFN) 1976, the Green Revolution (GR) 1980, The Structural Adjustment Programme (SAP) 1986, Family Economic Advancement Programme (FEAP) 1993, and National Poverty Eradication Programme (NAPEP) 2000. The National Poverty Eradication Programme (NAPEP), which has it main objectives to improve the socio economic welfare of rural people, with a properly structured organizational frame work for its achievement is an offshoot of poverty alleviation programme (PAP) and it was established in 2001 (Aliu, 2001 Joseph, 2005; Gumwa, 2009).

Similarly, in 2007 Sokoto state government launched the state poverty reduction (SPORA) to run the youth skills acquisition, especially among women. It also aim to boost the agricultural sector by providing 300 tractors, 50,000 irrigation pumps and 200 rice threshing machines. The programme has so far graduated over 17,000 youth on various skills acquisition in 2012. The government recently earmarked N90, 000,000 for the purchase of 300 tricycles popularly known as Keke NAPEP as a strategy in poverty reduction. Despite all the above programmes, little has change in the rural areas; all these failed to bring the number in absolute poverty down.

This is to the fact that, most of the programmes are urban based, they are politically tailored and most benefits went to few party members, no emphasis on sustainable small scale enterprises and there is no proper coordination between the tiers of government and the targeted members (poor people).It has been observe that all the effort made were not concern with the idea of establishing small scale enterprises in order to promote economic growth and supplement income from farming activities during the dry season as well as controlling mass migration especially to the southern part of Nigeria

1.2 Statement Of The Problem

The level of poverty that this country is in now demands that this poverty alleviation mechanism intended to be an emergency, to address some of the most urgent social concerns of the Nigeria’s vulnerable groups, such as the poor, widows, orphans, the disabled, the urban poor, the urban displaced (like the 300,000 Lagos Maroko inhabitants that that were forcibly removed by the military, and the victims of the previous and the present religious disturbances.)

The rural poor, the environmental refugees of he Niger-Delta people and the erosion prone Akwa Ibom people, the old age people and the retrenched civil –servants and others who are affected due to the economic down-turn occasioned by mis-management and the subsequent economic reforms. These groups of people need urgent attention. They should not be left to their fate for their fate is in Nigeria. Infect, poverty makes people compromise on moral values or abandon moral values completely. Poverty has created frustration, loss of hope, prospects of living, something to live for and disillusionment about morality because criminals are living best. In order words, poverty is a cause of corruption while corruption is a cause of quench of poverty and loss of moral values.

1.3 Objective Of The Study

The objectives of these studies are:

  1. To access the role of small business in the Nigeria economy
  2. To access the impact of small business in poverty alleviation in Nigeria especially in Ubotex Nigeria Limited.
  3. The study will also assess the extent of awareness on the part of the poor towards the role of small business as a mechanism in alleviating poverty.
  4. Also, whether business has help to change the problems hitter to plagued the poor in Ubotex Nigeria Limited and the country at large or not.
  5. To ascertain whether there is any positive and significant relationship between business and poverty alleviation in Ubotex Nigeria Limited.

1.4 Research Questions

These questions are:

  1. What is poverty alleviation all about?
  2. Why is the role of small business necessary on poverty alleviation in Nigeria and Ubotex Nigeria Limited in particular?
  3. Has small business impact on the poor positively or negatively?
  4. How has this poverty alleviation programmes been implemented?
  5. Is there areas where this poverty alleviation programme can be strengthen?
  6. How sure are we that small business do help in alleviating poverty in Nigeria and in Ubotex Nigeria Limited?

1.5 Research Hypotheses

  1. H0: Small business has no positive impact on poverty alleviation in Nigeria and in Ubotex Nigeria Limited
    H1: Small business has a positive impact on poverty alleviation in Nigeria and in Ubotex Nigeria Limited in particular.
  2. H02: There is no significant relationship between small business and poverty alleviation in Ubotex Nigeria Limited and Nigeria as a whole.
    H2: There is a significant relationship between business and poverty alleviation in Ubotex Nigeria Limited and Nigeria as a whole.

1.6 Scope And Limitation Of The Study

This research is aimed at assessing the role of small business in alleviating poverty in Nigeria, a case study of Ubotex Nigeria Limited is one disease that has left Ubotex Nigeria Limited people designed and under-develop and Nigerian in general, for it to be eradicated successfully, people business or the other so as to improve their standards of living.

Therefore, the scope of these study will not go beyond Ubotex Nigeria and Nigeria in general.

(a) Availability of research material:

The research material available to the researcher is insufficient, thereby limiting the study.

(b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

(c) Finance:

The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

1.7 Significance Of The Study

The importance of this study cannot be over emphasized. Business on it own plays significant role in the social by making goods and services available within the Nigerian economy. Therefore, an economy is made up of business activities that are consciously set up and directed at providing want satisfying goods and services, thereby help to reduce poverty in the lives of those who engaged in the activities.

Any research is always beneficial to various interest groups within the economy. This research will be beneficial to government can help the poor by granting loans and subsides so that they can start small scale business to better their lives. It will also help the government in formulating economic policies. This research will also help the poor to identify the class of business activities they should embark upon. The study will create awareness among Ubotex Nigeria by engaging in economic activities.

This research will by extension enable the micro-finance institutions to realize the need to provide loans to the people at grass root for investment. Above all, this research will be of immense benefit to the reading public and researching students who will wish to carry out further study on this topic and related ones a sit will form a reference point for them

1.8 Definition Of Terms


Poverty is the scarcity or the lack of a certain amount of material possessions or money. Poverty is a multifaceted concept, which may include social, economic, and political elements.

Poverty alleviation

Poverty reduction, or poverty alleviation, is a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty


Small and medium-sized enterprises or small and medium-sized businesses are businesses whose personnel numbers fall below certain limits

1.8 Organization Of The Study

This research work is organized in five chapters, for easy understanding, as follows

  1. Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  2. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  3. Chapter three deals on the research design and methodology adopted in the study.
  4. Chapter four concentrate on the data collection and analysis and presentation of finding.
  5. Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

5.0 Summary Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to investigate the role of small businesses in poverty alleviation.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the role of small businesses in poverty alleviation in Nigeria.

5.2 Summary

This study has shown that there are so many lucrative business you can start small in rural areas and yet make it big and interesting as well as running away from poverty and increasing the economic growth of your locality. Staying in rural areas is no reason why you will not be able to succeed if you want to. All you just need is a determined mined set and a good business strategy. It has shown that corruption and political interference are the detrimental factor of achieving the goal of National poverty Eradication programme (NAPEP). The paper thoroughly touches the challenges by poverty and the ways of tackling the challenges by improving small scale business;

5.3 Conclusion

This study investigated the role of small scale businesses on poverty alleviation in Nigeria. In specific terms, the study examined if small businesses has significant effect on poverty alleviation in Nigeria; the socio-economic characteristics of small businesses in Nigeria; and the major challenges faced by small businesses in Nigeria. The results indicate that small businesses has significant positive impact on poverty alleviation, job creation, and income generation in, Nigeria. The results further indicate that average annual incomes, number of children sponsored in school and health facility patronized significantly influence the poverty status of the respondents. Besides, the key challenges faced by small businesses in Nigeria were highlighted to include poor infrastructure, low prices of raw materials.

5.4 Recommendation

In view of the above, the paper suggests the following;

The need for the government to empower the efficiency of poverty reduction agencies with a view to fight corruption and promote the integrity and accountability with the institutions.

There is need for an effective and efficient enlightenment and awareness campaign in the rural areas on the importance of small scale enterprises as a tool of becoming self reliant and improve standard of living.
Improving the level of literacy in the rural areas in accepting bank loan and avoid the wrong perception that loan posed a threat to their future.

Promoting the efficiency of basic human needs, infrastructural facilities and social amenities such as good roads in order to ease the transport.

There should be well equipped acquisition centers in every local government area of Akwa Ibom State in order to enhance the training of youths, by engaging them in skills like weaving, carpentry in reducing the rate of unemployment.

In the implementation of the millennium development goals (MDG’s) emphasis should be given to community empowerment of boosting the small scale business.

Community empowerment efforts leading to poverty reduction should be based on community driven development (CDD) in which rural individuals will be involve in decision making on matters affecting them so as to have accurate sustainable development.

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