ABSTRACT
Unemployment
has been a major issue in the Nigerian economy since the mid-1980s.
Consequently, the Federal government adopted several strategies and policies
towards entrepreneurial development in Nigeria to combat the unemployment
problem. All over the world, entrepreneurship has been adjudged to have the
capacity to generate employment. Indeed, extant literature discloses that
entrepreneurship has been linked with the creation of self-employment. This
notwithstanding, literature reveal that only limited studies have been
conducted on entrepreneurship in developing economies, especially Nigeria,
hence the need for further research. Hence, this study investigated
entrepreneurial development and employment creation in Oyo State, Nigeria. The
study sought specifically to assess the capacity of small and medium scale
enterprises (SMEs) to generate employment in Oyo State.
The
study adopted a survey research design. The population of the study was all the
4,000 registered SMEs in Oyo State, provided by the National Association of
Small and Medium Scale Enterprises. Stratified random sampling technique was
utilised to select sixteen out of thirty-three local government areas in Oyo
State as well as the sample size of 400 SMEs. The choice of the study area was
based on size and concentration of SMEs. The research instrument was a
self-developed and validated questionnaire. The reliability test of the major
variables in the questionnaire yielded the following Cronbach’s alpha
coefficients: Self Employment=0.86, Business Partnership=0.68, Business
Inheritance=0.74, Government Employment Training Programme=0.67 and
Entrepreneurship Development=0.93. A total of 455 copies of the questionnaire
were administered with a response rate of 87.9%. Data were analysed using descriptive
and inferential (multiple regression) statistics.
Findings
revealed that there was a significant relationship between self-employment and
acquisition of vocational skills (R2 =0.763; p=0.000). There was
also a significant relationship between business partnership formation and
acquisition of managerial skills (R2=0.754; p=0.001).Similarly,
there was a significant relationship between family business formation and
acquisition of technical skills through inheriting enterprises (R2=0.713;
p=0.002). Moreover, there was a significant relationship between government
employment training programme and self-employment (R2=0.693;
p=0.000). In addition, among the SMEs in Oyo State, bakery (125) business
center (76), petty trading (63) and barbing (61) generated more employment
opportunities than others.
The
study concluded that vocational skills and government training created
employment opportunities through the SMEs in Oyo State, Nigeria. Also,
formation of business organizations enhanced the acquisition of managerial and
technical skills. The study recommended that government and SMEs should focus
on the establishment of enterprises that generate employment most. In addition,
government should provide adequate training for entrepreneurs while
entrepreneurs in turn should provide adequate and continuous training for
employees to enhance their technical skills.
CHAPTER
ONE
INTRODUCTION
1.1 Background to the
Study
The need for employment creation in
Nigeria did not arise until the mid-1980s, when the economy of Nigeria
collapsed and youth and graduate unemployment became a major issue of the
economy of the country, particularly the latter (Arogundade, 2011). Prior to
this period, the focus was in occupying positions created by the colonial
masters for the smooth running of their colonial administration as well as
filling the positions that the colonial masters were vacating which was
occasioned by the political independence gained by the country. In this way,
both graduates and non-graduates were occupying vacancies so created (Aladekomo
2004; Alarape, 2008).
However, by the mid – 1980s
unemployment had reared its devastating effect on the Nigerian economy. This
was occasioned by various factors such as economic recession, production of
jobless educational institutions’ graduates, low labour absorbing capacity by
companies, mass lay off of civil servants, embargo on employment in the civil
service, unemployability of our educational institutions’ graduates for lack of
relevant skills, irrelevance of curricula offered in educational institutions,
closure and relocation of some business enterprises and infrastructural
deficits (Idowu, 1987; Aladekomo, 2004; Adebisi & Oni, 2008; Olufemi &
Adebola, 2008; Oviawe, 2010; Idogho & Aniabor, 2011; Joseph, 2011; Shadare
& Tunde, 2012).
The general household survey
conducted by the National Bureau of Statistics (NBS) in 2011 put the
unemployment rate in Nigeria as 23.9 percent. This is a very worrisome
development to all stakeholders: the society, the unemployed and the
government. Particularly worrisome is the rising rate of graduate unemployment
among the unemployed labour force in the country over the years (Akintoye,
2008). For instance, the graduate unemployment rate rose from about 1 percent
in 1974 to 4 percent in 1984; and between 1992 and 1997, it rose to 32 percent
(Akintoye, 2008). In 2008, Yoloye reported that graduate unemployment rate had
risen to 71.4 percent (Egunsola, Dazala & Daniel, 2012).
Equally worrisome is also the
alarming rate of unemployment among non-graduates. Oye, Ibrahim and Ahmad
(2011) putthe largest proportions (31-50%) of the unemployed in the country as
being secondary school graduates with 40% of them representing urban youth
ranging between 20 and 24 years. Another 31% of them fall within the age
rangeof15 – 19 years.
The resultant effect of this high rate of
unemployment in Nigeria is youth restiveness of all kinds such as blowing off
of crude oil pipes, kidnapping (Onwubiko, 2011) as well as these youth
organizing themselves into militant groups in the form of Egbesu Boys, Oodua
People’s Congress, Bakassi Boys, Almajiris, “area boys” and Boko Haram to
target the very society that alienated them (Awogbenle & Iwuamadi, 2010;
Liolio, 2013).
In view of the above, the Federal
government adopted several strategies and policies towards entrepreneurial
development in Nigeria by establishing institutions and agencies, which provide
variety of support services to entrepreneurs. The implication of these policies
is the emergence of entrepreneurial development programmes (EDP) in different parts
of Nigeria with the aim of combating unemployment problem in the country (Aladekomo,
2004; Alarape, 2008; Arogundade, 2011; Ekpoh & Edet, 2011).
Entrepreneurial development in itself is
conceived as a programme of activities to enhance the knowledge, skills,
behaviour and attitudes of individuals and groups to assume the role of
entrepreneurs. Entrepreneurial development programmes, therefore, are targeted
at owner managers of small business firms as well as those identified to
possess potentials for self – employment (Owualah, 1999). The aim is to allow
individuals and groups to acquire these skills, knowledge and attitudes to
enable them take the role of entrepreneurs thereby creating jobs for
themselves, since creation of employment also requires the establishment of new
ventures (Aladekomo, 2004; Alarape, 2008; Ekpoh & Edet, 2011).
Some of the entrepreneurial development
programmes aimed at combating unemployment problem in the country are run by
various government agencies which include national economic empowerment and
development strategy (NEEDS), small and medium scale development agency
(SMEDAN), student industrial work experience scheme (SIWES), national
directorate of employment (NDE) which provides vocational training for
participants to acquire vocational skills in different trades, among other
things;, youth enterprises with innovation in Nigeria (YouWin) and subsidy
reinvestment and empowerment programme (SURE-P).
In order to inculcate entrepreneurial
behaviour in the minds of students while in school and by extension, reduce the
rate of unemployment further in the economy, the federal government of Nigeria
through National UniversityCommission (NUC) directed the introduction of
entrepreneurship education in tertiary education institutions during the 2007/2008
academic session(Nzelibe, Yusuf, Ozigbo, Mohammed& Ayuba, 2010).
Entrepreneurship is adjudged as being
capable of generating employment, among other things, as it is considered to be
labour intensive and therefore capable of providing employment for our teeming
youths and graduates (Aladekomo, 2004; Ahmad, Baharun &Rahman, 2004; Onugu,
2009; Deakins and Feel, 2009; Oviawe 2010; Idogho & Ainabor, 2011; Arogundale,
2011; Akhunemomkhan, Raimi & Sofoluwe 2013; Aziz, Friedman& Boprieva,
2013; Ohachosin, Onwuchewa & Ifeanyi, 2013). However, in spite of the
various numbers of these programmes established in different parts of the
country, the rate of unemployment keeps on increasing unabated.
The importance of entrepreneurship
cannot be overemphasized. Deakins and
Feel (2009) making reference to the statement credited to Jean – Philippe
Cotis, the Chief Economist of Organization for Economic Conglomeration and
Development (OECD), confirms the importance of entrepreneurship among policy
makers and academic researchers by saying that it has scientifically been
proved that entrepreneurship activities create employment, productivity and
ultimately economic growth.
Furthermore, OECD entrepreneurship and
small and medium enterprises (SMEs) outlooks asserts that SMEs and
entrepreneurship are more recognized worldwide to be the very source of
dynamism, innovative and flexibility in advanced industrialized countries as
well as emerging and developing economies. Accordingly, they are seen as being
responsible for most of job creation in OECD countries and make important
contributions to innovation, productivity and economic growth. Indeed, Akinlua
and Akintunde (2008) furtherbuttress this statement by asserting that these
small scale businesses employ more workers than their large scale counterparts.
Before this time, however, and inspite
of the importance of entrepreneurship, its development has been neglected for a
long time in Nigeria (Aladekomo, 2004). Aladekomo(2004) pointed out that the
industrial policy which came on board only after the Nigerian independence in
1960 initially concentrated on the establishment of big industries with utter
neglect for small scale businesses and by so doing, entrepreneurship which is
the bedrock of small scale businesses was unwittingly de – emphasized.
Corroborating this view, Olaniyan (2005)
says that Nigerian government in the past formulated policies focused on the
large scale enterprises that are deemed to be the hall mark of development in
the private sector and this encouraged the establishment of public enterprises
to the detriment of private enterprises. He goes further to say that small –
scale businesses most of which operate in the informal sector, were viewed by
government as only incidental to development. Yet, as observed by Akinlua and
Akintunde (2008), it is these small scale businesses that employ more workers
than their large scale counterparts.
However, this rise in the unemployment
of graduates and non – graduates, inspite of the various entrepreneurial
development programmes established that were aimed at combating the menace of
unemployment, has raised some contentious issues. Prior to the mid – 1980s when
unemployment reared its devastating effect on the economy, this group of people
used to enjoy paid employment right from the colonial era. For instance, Aladekomo (2004) says the
colonial masters were using the available educational institutionsas factories
for producing various categories of staff such as clerks, interpreters, forest
guards and sanitary inspectors. All these were paid for their services they
rendered to the colonial administration.
George, Owoyemi and Onakale (2012)
reveal that it was Mungo Park that first introduced wage payment into Nigeria
in 1795 when he had to pay for the services of his two guides. Furthermore, George,
et al., (2012) says that this form of employment became attractive to the
people to the extent that evensome school students then, were unwilling to
complete their primary or secondary school education as the temptation of wage
employment was too much for them to resist while still in school. In this way,
the society known as Nigeria came to accept this type of employment- paid employment
(George, et al., 2012). However, the type of employment that entrepreneurial
development programmes lead to is self-employment (Adekomo, 2004; Ekpoh &
Edet 2011) and not wage/paid employment.
Government employment training
programmes are generally meant as interventionist programmes to alleviate
unemployment situation in an economy. These programmes usually translate to
small business ventures. Previous studies have shown that these
entrepreneurship/SMEs, though provide employment, usually have a short life
span. Though, (Fatunla, 1989; Edet, 1991; Owualah, 1999; Emeh, Nwanguma &
Aborah, 2012) have confirmed that some of the entrepreneurship programmes
initiated by Federal government have recorded appreciable success.
There
has been emphasis on entrepreneurship leading to self–employment. Frimpong(2014)
reveals that there is lack of empirical studies testing the relationship
between participation in entrepreneurship education and partnership business
ventures. Frimpong (2014) further reports that there are a lot of advantages of
entrepreneurship leading to business partnership. He says sole proprietors need
to generate enough funding to remain operational and to capitalize upon market
developments and obtaining such capital can be a very difficulttask because
lenders are often reluctant to finance this type of one man business. Rather
these lenders prefer business organizations corporately owned as a security for
their funds.
1.2 Statement of the
Problem
In the past, high unemployment rate
was alien to graduates in Nigeria. Where this high rate of unemployment was
prevalent then was among people without basic education (Akintoye, 2008). The
study put persons with and without primary school education as people who were
largely affected by unemployment in the 1970s. The study put people with this educational
status at between 76.8 and 80.6 percent of the unemployment in 1974 and 1978
respectively among the unemployed labour force; showing that non-graduates do
experience unemployment problem.At this same period, graduate unemployment
accounted for less than 1 percent of the employed labour force in 1974 but rose
to 4 percent in 1984 (Akintoye, 2008). This trend, however, has since changed.
Graduate unemployment rate has been rising astronomically from that time
onwards. For instance, between 1992 and 1997, it rose to 32 percent; that is
about 700 percent above and over the figure of 1984(Akintoye, 2008). By 2008, Yoloye
reported that the graduate unemployment rate had risen to 71.4 percent (Yoloye
cited in Egunsola, Dazala & Daniel, 2012). The implication of this is that
for every 10 graduates in Nigeria, 7 of them are unemployed among the
unemployed labour force.
In order to get jobs, therefore,relevant
skills must be acquired to carry out such jobs. However, Akutson and Udeh
(2015) drew attention of how relevant skills acquired lead to the creation of
millions of small businesses which create employment. From the foregoing, it is
discovered that the unemployment rate is high among both non – graduates and
graduates. It is in view of this rising rate of unemployment that this study
seeks to find out if vocational skills actually lead to self-employment.
Public-finance theory allows
government to spend public funds to address a peculiar situation (Wolk, 2007).
Consequently, in the face of this enormous unemployment problem, the government
of Nigeria decided to put in place entrepreneurship programmes, as employment
training programmes, financed by it, aimed at combating unemployment in the
country (Owualah, 1999; Adebisi & Oni, 2008; Akintoye, 2008;Awogbenle &
Iwuamadi, 2010; Oghojafor, Aduloju, Olowokudejo, 2011; Emeh, Nwanguma &
Abaroh, 2012).
There is one major handicap that a
self-employedface as he relates with financial institutions. This financial
problem is their inability to access credit from financial institutions because
the latter believe that giving loan to such a business setup can lead to a high
financial risk that can lead to poor performance loan. However, when a group of
such individuals come together to form a partnership, the financial
institutions seem to have confidence in lending to such a business setup.
Besides, another area of problem for a self-employed business entity is lack of
synergy. When two or more people come together to form a business partnership,
they pool their resources together for the progress of the business.
Furthermore, a self-employed business
seems to have a short life span. Most die with their founders. However, with
business partnership, the death of a partner does not necessarily lead to the collapse
of the business entity. Therefore when individuals come together to start a
business partnership, the business will have access to credit from financial
institutions to run the business, get the talents of partners- managerial, marketing
and sales acumen of partners-for the effective running of the business. When
synergy is obtained from partners, and capital is available for the business
and with the guarantee of long life span, such business will employ production
resources, including labour.
However, inspite of these advantages of
business partnership, it still fails for a number of reasons. Some of these
reasons could include unresolved conflict, where values, career or life goal
are misaligned, lack of effective decision making process, lack of team work as
well as lack of well-defined financial structure. There are a number of
businesses that have been inherited from older generations through which
employment is being generated. Hoy (2007) reveals that when intrapreneurs work
under the tutelage of entrepreneurs, they acquire necessary skills to run such
businesses. This guarantees the continuity of such businesses. When this
happens, such businesses have the ability to retain their employees as well as
the ability to employ more people.
Schafer and Talavera (2006) and Pikett,
Pottel–Viriay & Rosenthel (2010) disclose that the continuity of inherited
business is guaranteed when the capital is inherited by such business because
this prevents cash flow problems and gives room for expansion of such business.
However, Hoy (2007), even though, he recognizes that many family businesses
survive for multiple generations; the possibility of “Shirt leaves to shirt
leaves in three generations” cannot be ruled out. This means that no matter how
long a family business lasts, there is the possibility of spoiled grandchildren
squandering the business. This is also buttressed by Hoy (2007) where he stated
that an intrapreneur can ruin down a business enterprise. Nwadukwe and Court
(2014) in their study reveal that the survival of business by inheritance is
difficult to achieve where patriarchal lineage system is put in place where all
offsprings are females.
However, in spite of these programmes
specifically put in place by government to address the high rate of
unemployment among the unemployed labour force, the unemployment rate keeps on
increasing unabated, especially graduate unemployment. It is in view of this
rising rate of unemployment that this study seeks to find out if these
programmes actually have effect in providing employment for these teeming
applicants.
1.3 Objective of the Study
The general objective of this study is
to determine the effect of entrepreneurial development programme on employment
generation in Oyo state, Nigeria.
The specific objectives are to:
1. determinehow acquired vocational skills provide
self-employment;
2. determine how government employment training
programme leads to self-employment;
3. determine how acquired managerial skillslead
to business partnership formations and
4. determine the effect of technical skills
acquired from family business on business formation.
1.4 Research Questions
In view of the above, the following
research questions generated to guide this study.
1.
In what way doacquired vocational skills
provide self – employment?
2.
How does government employment training
programme lead to self-employment?
3.
How doacquired managerial skills lead to
business partnership formations?
4.
To what extent doacquired technical
skills inheritedfrom family business have effect on business formations?
1.5 Hypotheses
The following hypotheses were tested at 0.05
level of significance
H01: Acquired vocational skills have no
significant effect onself-employment.
H02:
Government employment training
programme does not significantly lead to self-employment.
H03:
Acquired managerial skills do not
significantly lead to business partnership formations.
H04:
Acquired technical skills from family
business do not significantly lead to business formations.
1.5.1 Rationales for the Hypotheses
Hypothesis 1(Ho1)
– Acquired vocational skills
Vocational skills are skills that are
needed for certain trade, work or occupation. So the acquisition of such skills
helps the recipients to get employed. The World Bank disclosed that out of the
beneficiaries of vocational education reform project it financed in China
between 1996 and 2004, 91 per cent of the participants found employment within
six months of graduation. Fromthis, it is seen that acquisition of vocational
skills creates employment for the beneficiaries. Therefore when applicants of
varying degrees acquire skills, there is a tendency for them to get employed. The
self-employed can be entrepreneurs or managers of small scale enterprises
creating jobs for themselves and others.
Hypothesis II (H02)
– (Government Employment Training Programmes)
Government at different levels, local,
state and federal try to address unemployment problem by setting up programmes
to reduce unemployment problem or alleviating it. Emeh, Nwanguma and Abaroh
(2012) in their study which focus on youth development empowerment programme in
Lagos State of Nigeria, disclosed that 70.4 percent of their respondents agreed
that government employment programmes help in reducing unemployment in the
country. The same study mentions that past government programmes such as
carried out by Community Bank, Directorate of Food, Roads and Rural
Infrastructure(DFFRI),People Bank, Better Life for Rural Women and Family
Support Programme are some of the projects that helped to reduce unemployment
in the country, proving that government programmes do indeed help in reducing
unemployment problem.
Hypothesis III (H03)
– Acquired Managerial Skills
Partnership can be regarded as a
contract between two or more persons who agree to pool talent andmoney and
share profit or losses.
Some individuals may not have talent to
be self-employed nor do they have sufficient money capital to be on their own.
Such individuals usually form partnership with some other individuals with
varying skills in order to have a synergy effect on the business. At times it
could be for the needed capital for the business; some individuals who have
some capital may team up with partners that have the technical know -how.
Whatever the reasons for such individuals partnering together, the purpose is
to establish a business and employ people who will work in such a business
entity.
Partnership among individuals leads to
establishment of business ventures and when this happens, it leads to
employment creation opportunities.With the current unemployment situation
bedeviling the economy of the country, it is necessary to investigate business
partnership with a view of generating employment. Partnership therefore allows
individuals who lack the required skills or capital, to set up business
ventures with other partners who possess those things the other partner’s lack.
Hypothesis IV (H04)
– Acquired technical skills from family business
Past studies have shown that
entrepreneurs who received inheritance are more likely to remain in business
and their resources also substantially high (Schafer & Talavera, 2006). By
extension such businesses that still exist retain their employees, and at times
increase the number of their employees thereby creating employmentopportunities.
For instance, Schafer & Talavera (2006), examined the inheritance data of a
sample of US individuals and found out, through the inheritance data of 1982
and 1983 that those individuals who received inheritances were those who
remained in business. In the same study, it was discovered that inheritance
exerts a significantly positive effect on the survival probability of small
scale businesses indicating that the reception of the inheritance allows
entrepreneurs to overcome the problem of under -capitalization. The survival of
business indicates that such businesses are still operational and therefore
create employment.
From the above, business inheritance
create employment. When businesses are inherited by younger generations, the
employment status is not only maintained, its gives room for the creation of
employment opportunities. In the face of chronic unemployment situation in the
country, the need to investigate the business inheritance in order to create
employment becomes imperative.
1.6 Significance of the Study
This study is significant in many ways. When
our teeming unemployed non-graduates and graduates are employed through
entrepreneurial development programmes the rate of unemployment in the country might
reduce significantly as against the rate of 23.9 percent (NBS, 2011). Also, the
employment of these applicants through entrepreneurship programmes would not only
reduce unemployment rate, it would also increase aggregate demand in the
economy and also improve their standard of living (Sotunde, Obasan, Saleko, Oni
& Oduwole, 2011). With increase in aggregare demand in the economy, the
need for supply to meet the increase in demand might arise requiring the
employment of factors of production, including labour. Findings of a study of
this nature should have the capacity to trigger additional research work and
provide guidelines to policy makers.
1.7 Justification for the Study
The high rate of unemployment (23.9
percent, NBS 2011) in the country is a strong reason for carrying out this
study. The high rate of non-graduate and graduate unemployment among the
unemployed labour force is worrisome. For instance, Aigbokhan (2000) reported
in Akintoye (2008) that graduate unemployment rate was only about 1 percent in
1974 but rose to 4 percent in 1984. Between 1992 and 1997 it suddenly rose to
32 percent as reported by Dabalan et al (2000) in Akintoye (2008). By 2008, Yoloye
cited in Egunsola, Dazala and Daniel (2012) noted that this graduate
unemployment had hit 71.4 per cent. Just as the rate of graduate unemployment
has been rising so also the rate of unemployment among the people of basic
education has also been rising. For instance, it rose from the rate of 76.8
percent in 1974 to 80.6 per cent in 1978.
This means that the unemployment rate, of both the graduates and non-graduates,
has been rising over the years in spite of the entrepreneurship development
programmes aimed at addressing the problem of unemployment in the country.
This has brought concern to all the
stakeholders: the government, the operators and the affected citizens. This is
why there is a need to revisit these programmes with a view of proffering solutions
for them to realize their primary objective of providing employment.
1.8 Scope
of the Study
The scope of this study is restricted to
small and medium scale enterprises (SMEs) in Oyo state, Nigeria. The target
population of this study is 4000 SMEs. These are the registered small and
medium scale enterprises in Oyo state (NASMEs). The stratified sampling
technique was used for the selection of the local government areas of the study.
Primary source of data was used through the use of questionnaire. The study
covered 26 years (1987-2012). This study considered Oyo state; being an old
established state in Nigeria. Also, the selection of these local government
areas was based on their urban nature as well as their spread across the three
senatorial districts study in Oyo state (Adeoti, 2009;Oyostate.gov,ng,2015).
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