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ENTREPRENEURSHIP DEVELOPMENT AND UNEMPLOYMENT IN NIGERIA

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A number of policy intermediations in Nigeria that were targeted at inspiring and stimulating entrepreneurship development through small and medium scale enterprises have botched. In its place of creating in-country entrepreneurial capacity, entrepreneurs have been converted and become distribution agents of imported goods. This paper argues the development of entrepreneurship and stressed that it has been instrumental in economic growth, balanced regional development and job creation in most vibrant economies, where technology is changing at a faster rate and the product lifetime cycle is dwindling. This paper also looks at Nigeria’s growing unemployment situation and how it increasingly deteriorates the potentials of the country. It emphasizes the prominence and significance of entrepreneurship as realistic machinery for sustainable economic growth and employment generation in Nigeria seeing the experiences of developed nations like Australia, the United States and vibrant economies like China and India.

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ENTREPRENEURSHIP DEVELOPMENT AND UNEMPLOYMENT IN NIGERIA

  1. 1. www.ijm-apm.com International Journal of Management 1 IJM, Vol. 1, Issue 2 (December, 2014) e-ISSN: 1694-2299 | p-ISSN: 1694-240X ENTREPRENEURSHIP DEVELOPMENT AND UNEMPLOYMENT IN NIGERIA AdebobolaZakariyahOlotu University of Newcastle, New South Wales, Australia Abstract A number of policy intermediations in Nigeria that were targeted at inspiring and stimulating entrepreneurship development through small and medium scale enterprises have botched. In its place of creating in-country entrepreneurial capacity, entrepreneurs have been converted and become distribution agents of imported goods. This paper argues the development of entrepreneurship and stressed that it has been instrumental in economic growth, balanced regional development and job creation in most vibrant economies, where technology is changing at a faster rate and the product lifetime cycle is dwindling. This paper also looks at Nigeria’s growing unemployment situation and how it increasingly deteriorates the potentials of the country. It emphasizes the prominence and significance of entrepreneurship as realistic machinery for sustainable economic growth and employment generation in Nigeria seeing the experiences of developed nations like Australia, the United States and vibrant economies like China and India. It is in this instance that this paper seeks a lasting solution to the pervasive and endemic portent in Entrepreneurship development that can assist to regulate unemployment, generate job opportunities and provides recommendations for its sustainability in Nigeria. Keywords: Sustainable Development; unemployment; entrepreneur; Nigeria; employment generation. 1. Introduction Africa is the poorest region in the world and it was the only major developing region with negative growth in income per capita during 1980-2000 (Sachs et al, 2004). The World Bank predicts that poverty in Sub- Saharan Africa is set to rise and by 2015 constitute 50% of the world poor (World Bank, 2004). Nigeria is naturally gifted with entrepreneurship prospects; however the realization of the full potential of these opportunities has been inhibited by the implementation of inappropriate and unsustainable industrialization policies at different periods (Thaddeus, 2012). Several policy interventions that were designed to stimulate entrepreneurship development via small and medium scale enterprises advancement, based on technology transfer strategy, were unsuccessful to achieve the desired goals as it led to the most indigenous entrepreneurs turning to distribution agents of foreign products in contrast to building in-country entrepreneurial capacity for manufacturing, mechanized agriculture and expert services. A study appraised that between 45 and 60 percent of the urban labour force engage in small private enterprises or otherwise referred to as small businesses (Chu, Kara, Benzing, 2010 quoting Nwaka, 2005, as cited in Oyelola et al, 2013). Another study reveals that entrepreneurship has been beneficial because the Nigerian private sector comprising of small and medium enterprises provides diverse employment opportunities for 50 percent of the country's population and 50 percent of the its industrial output (Ariyo, 2005 as cited in Oyelola et al, 2013). Many other countries have been able to strengthen and transform entrepreneurship sub-sector to such a vibrant and exciting industry such that they have been able to reduce considerably their unemployment and poverty level because of the huge and enormous contribution of the sub-sector to
  2. 2. www.ijm-apm.com International Journal of Management 2 their economic growth and development (Onugu, 2005). Unfortunately, this cannot be said about Nigeria as the case is different. In respect to this appalling situation, the government has done little to reduce the misery and frustrations of the citizenry which foisted a state of hopelessness on majority of young people who have resulted to any means including crime to succeed in life. They result to crimes and other vices because they are not gainfully engaged, meaning, they are unemployed. They are Unemployed, not necessarily because they don’t have relevant qualification, but because the system has been politically, economically, socio-culturally and religiously crippled. The agility with which hunger and poverty have shattered lives and future ambition of youths especially graduates in Nigeria, led to scholars prescribing entrepreneurship as the lasting remedy for extreme hunger and poverty (Anyadike, Emeh, and Ukah, 2012). Thus, economic displacement is one of the external forces that influence the development of entrepreneurship despite the fact that entrepreneurship has been regarded as the fortification for employment generation and technological development in Nigeria. Against this framework, entrepreneurship if courteously developed in Nigeria will take its pride of place in crushing unemployment and thus generating employment among Nigerian youths especially the graduates and subsequently stabilise the economy. It is in this respect that this paper seeks to discuss the connection between entrepreneurship and employment generation in Nigeria, assess the level of unemployment in the country and how far entrepreneurship has succeeded, highlight some major problems of entrepreneurship and thus proposing some credible strategies that can enhance effective entrepreneurship which will help control unemployment and create job opportunities especially for the Nigerian youths. 2. Small and Medium Enterprise Development in Nigeria Entrepreneurship in Nigeria started when people in the villages produced more goods than they required, as such; they had to exchange these excesses with those who needed them within their immediate and neighboring communities (Oyelola, Ajiboshin, Raimi, Raheem, and Igwe, 2013). At the beginning, exchange of goods or services was based on trade by barter, until commodity money was developed and used. Exchange encouraged specialisation among producers, and when communities realized that they can concentrate on the areas of production they have comparative advantage, consequently, the culture of entrepreneurship started in Nigeria (Nicks, 2008; Raimi and Towobola, 2011). According to Thaddeus, (2012) Entrepreneurship development in Nigeria became significant only after the Nigerian civil war (1967-70). The early period saw an economic development system of industrialization as the key source of economic growth, and industrialization itself as the invention of technical progress and investment. Technical progress or capital growth on the other hand is seen to be a function of entrepreneurial effort. Precisely, indication from the developed world suggests that economic growth is entirely due to the quality and efficiency of the entrepreneur (Thaddeus, 2012). Therefore, after independence in 1960 Nigerian government realized the need to promote indigenous entrepreneurs. The Government never loses sight of the multilateral relationship between entrepreneurship, industrialization and economic growth. Entrepreneurship is often carried out by micro and small scale businesses and therefore Small and Medium Enterprise Development Association of Nigeria SMEDAN’s focus is on the development of micro, small and medium-scale enterprises (MSMEs) where it co-ordinates and integrates MSME activities in order to develop their full potential and competitiveness. SMEDAN organizes seminars, workshops at both local and international levels and also encourages the formation, registration and co-operation of micro, small and medium business associations. These associations (Nigerian Association of Small and Medium Scale Enterprises (NASME), International Council of Small Business (ICSB), Abuja Enterprises Agency (AED), Acadia Centre for Small Business and Entrepreneurship (ACSBE)) inspire development of businesses and industrial organization via partnership, relationships and licensing of entrepreneurship events. According to Thaddeus, (2012) Nigeria has developed enterprises in the following areas.
  3. 3. www.ijm-apm.com International Journal of Management 3  Agriculture/agro-allied activities: Foodstuff, restaurant, fast food vending etc.  Solid mineral: Quarrying, germ stone cutting/polishing and crushing engineering.  Transportation and power: Power generation and Haulage businesses  Information and telecommunication businesses: Sales and Repairs of GSM accessories.  Hospitality and tourism businesses: Hotels services, accommodation and resort centres, production of film and home video.  Environmental and waste management businesses: Collection and disposal of refuse, recycling of refuse, and drainage/sewage.  Financial and banking services: Banking services, insurance policy and stock trading.  Fabrication work and Engineering: Fabrication of Machines and tools.  Building and construction: Planning and design of services and sourcing of material. The increase of entrepreneurship activity since 2000 is partly due to the increasing rate of unemployment, a growing service sector, a reduction in regulatory control, increasing privatization/competition and the introduction of a poverty eradication program in 2001. 3. Unemployment Saga in Nigeria Unemployment and Poverty remains key developmental challenges in Nigeria over a very long time (Akwara et al, 2013). According to Udu and Agu (2005), unemployment is “a situation in which persons capable and willing to work are unable to find suitable paid employment”. According to the International Labour Organisation (ILO) (2007), unemployed workers are those who are currently not working but are willing and able to work for pay, currently available to work and have actively searched for work. Hornby (2010) defines unemployment as “the facts of a number of people not having a job; the number of people without a job; the state of not having a job”. Nigeria does not seem to have credible data on the rate of unemployment (Udu and Agu, 2005) because no institution has been able to produce accurate figures showing the current rate of unemployment (Udu and Agu, 2005). The great need for entrepreneurship development in Nigeria today, more than ever, is necessitated by the rate of unemployment and its effect on both the people and the nation and the need for small and medium enterprises. According to Chukwubuikem, (2008) and Salami, (2011) despite the abundant human and natural resources notwithstanding, Nigeria is still one of the poorest countries in the world and has one of the highest rates of youth unemployment in sub-Sahara Africa, despite of its alleged strong economic growth. Going by the study of unemployment in Nigeria, Adebayo (1999), Alanana (2003), Echebiri (2005), Ayinde (2008), Morphy (2008 and Awogbenle and Iwuamadi (2010) have recognized some leading causes of youth unemployment in Nigeria; The first to be identified is the rapidly growing urban labour force arising from rural urban migration. The factor is aggravated and provoked in Nigeria by the lack of infrastructural facilities, which makes the rural life unattractive. Youths move to urban areas with the probability of getting lucrative and productive employment in the industries. In addition, there is the focus of social amenities in the urban centres. This implies that the rural areas are neglected in the allocation of social and economic opportunities. Another factor is the rapid population growth. Going by Nigeria National Bureau of Statistics of 2012, the total population of citizens in Nigeria was around 166.2 million people, and projections for the future indicate that the population could be over 180 million by the year 2020, given the annual growth rate of 3.2 percent (National Population Commission and ICF Macro, 2009). With this population, Nigeria is the most populous nation in Africa and the high population growth rate has resulted in the rapid growth of the labour force, which is far exceeding the supply of jobs.
  4. 4. www.ijm-apm.com International Journal of Management 4 Corruption, which has pervaded the entire social structure of Nigeria, has raided the country of developing a vibrant economic base. Funds meant for development projects have been misappropriated, diverted, or embezzled and stashed away in foreign banks, while some ineffectual and corrupt bureaucrats cum administrators in the public parastatals have discharged these establishments (Okafor, 2010). The ruling (political) class failed since they traded the vision, policy, and strategy, that should be the thrust of every leadership with dealings (contract award and other mundane money- related activities), as each successive government patiently took turns to target on the nation’s wealth, by using public power, resources, good will, utilities, instrument of abuse, and personal gains (Okafor, 2005 as cited in Anyadike, Emeh, and Ukah, 2012). As such, this cripples the economy and intensifies unemployment that generates abject poverty, hunger and frustration which is killing the zeal and means for entrepreneurship development in the Nigerian youths. Adeniyi (2013) stated that statistics have shown that with the current drive, on the average, labour force in Nigeria will be around 65.7 million a year between 2011 and 2020, and around 78.2 million a year between 2021 and 2030, ceteris paribus (if there is no war, no natural disaster, no disease outbreak, etc.). This projection may be realistic because it will take at least 20 years before any policy aimed at reducing population can be effective in Nigeria. Adeniyi (2013) further explain however that, with the present trend, employment will only be, on the average, 55.8 million a year between 2011 and 2020 and 65.7 million a year between 2021 and 2030 in Nigeria. This projection will cause unemployment in Nigeria to be around 9.9 million (15.07% rate) and 12.45 million (15.93% rate) on average between 2011 and 2020, and 2021 and 2030, respectively Adeniyi (2013). 4. Entrepreneurship and Economic Development Tijani-Alawiye (2004) describes entrepreneurship as a method of growing the stream of entrepreneurs or increasing the number of existing small, medium and big businesses obtainable in the nation by making and encouraging numerous talented entrepreneurs, that could effectively run inventive enterprises, develop, grow and sustain them, in order to achieve extensive socio-economic objectives. One of the aims of this is to sustain employment. Further, Acs and Szerb (2007) opine that entrepreneurship goes round the blend of the realization of existence of opportunities and the decision to commercialize them by beginning a new business. Thornton (1999) has referred to this cognitive as demand and supply viewpoints of entrepreneurship dissertation. However, Shepherd and Douglas (1997) perceived that the spirit of entrepreneurship development is the capability to visualize and map a way for a fresh firm by merging data from the internal and the external environments in the context of the unusual and indistinctness that a new business could face. According to Anyadike, Emeh, and Ukah, (2012) ‘Entrepreneurship’, when treated as ‘enterprise- creation’ assists to improve fresh talents and skills which can be used in several other exciting aspects of life. Schnurr and Newing (1997) vindicated the necessity for encouraging entrepreneurship culture on the premise that youth in every society have attractive qualities such as creativity, resourcefulness, courage, energy, imagination, eagerness, determination, confidence and bravery that are cherished characters and personalities for entrepreneurship development. In support of this claim, Bennell (2000) suggests that agencies, international bodies and government that seek to develop youth employments could best drive their empowerment goal by investing in the vitality of the youth and consolidate on this resilient spirit of risk-taking via entrepreneurship development. Entrepreneurship development has led to employment generation, which is also responsible for growth of the economy and subsequently sustainable development. Precisely, indication from the industrialized nations shows that economic growth is completely as a result of efficiency and quality of the entrepreneur (Thaddeus, 2012). According to Schumpeter, (2008) entrepreneur play important role in the capital and output growth of an economy. Capital growth is determined by the quality and performance of entrepreneur, which also determines if the growth includes innovation which will develop new products and different production techniques (Thaddeus, 2012). The quality of entrepreneurs is responsible for the significant difference in economic growth rates of many countries of the globe while factors of production such as land, labour, capital remain inactive and idle if they are not organise by the entrepreneur for production (Thaddeus, 2012).
  5. 5. www.ijm-apm.com International Journal of Management 5 According to Thaddeus (2012) the development of entrepreneurship has shown in various facets of Nigerian economy through micro finance business, production of film and music, agricultural activities, food restaurants, small and medium businesses. Thus, entrepreneur has become an important agent for economic growth and technical progress. Global economy is currently knowledge-driven which operates on the logical and advanced thoughts of the entrepreneurs, where business activities have become casual and adapted to self-employment (Thaddeus, 2012). 5. Challenges of Entrepreneurship Development in Nigeria Regardless of the benefits linked with entrepreneurship, lots of obstacles have disallowed youths from totally realizing their potentials and assuming responsibilities in the society (Anyadike, Emeh, and Ukah, 2012). Gradually, People had moved out of farming into urban areas for lack of agricultural motivations and incentives. Even in the urban areas and cities, infrastructure had continued to depreciate, roads not cared for, irregular water supply, power outage was a regular phenomenon, and even for people who could afford to use electricity- generating sets, fuel to power them is very expensive and sometimes might not be available when needed. Instability and high turnover had negatively affected the performance of primary institutions responsible for policy making, implementation and monitoring resulting in distortions in the macroeconomic structure and its attendant low productivity. However, these impediments have been specially classified by different authorities and scholars in their literatures. The following sub-headings are drawn by Onwubiko (2011) as cited in Anyadike, Emeh, and Ukah, (2012). 5.1.Lack of Infrastructural Facilities People believe generally that some fundamental infrastructural facilities boost the development of mind and the body system which contributes to productivity in a given environment (Anyadike, Emeh, and Ukah, 2012). Such amenities include but not limited to good roads, good water supply, constant power, and access to information and communication technology as well as other tools of trade. A situation where these are missing in a country, the growth of the economy will be consequently affected. In Nigeria, there is no enabling environment and basic working tools are not provided. Nigerians with bright ideas and the spirit to bring about positive change in some areas of national life has been frustrated with this situation. For example, the power sector has continued to be the greatest challenge to any ambitious entrepreneur in Nigeria. There is irregular power supply and most of the time businesses have to be run on generators. The cost of generating this alternative source of power often takes away whatever capital or profit the entrepreneur has invested into the business. 5.2.Inadequate Working Capital The availability of capital, according to Onwubiko (2011) is central to the creation and continued existence of any enterprise irrespective of the objective, strategy and structure despite scholars such as Onugu (2005) opines against lack of capital as the major problem of entrepreneurship development. Adequate and sufficient fund has been observed to be essential for successful operations of entrepreneur in Nigeria and where this is not available, it becomes a challenge. This is one of the major issues of entrepreneurship as Banks are also unwilling to give out loans. They have very cumbersome and rigorous procedures for accessing such credits with provision of collaterals that the potential entrepreneur may not have. 5.3.Lack of Adequate Training Inadequate training and skill for youth such that will prepare them for the future challenges as leaders of business and agent of change is the consequence of contemporary entrepreneurship development in Nigeria. Anyadike, Emeh, and Ukah, (2012) observed that the educational curriculum in Nigeria focuses more on the theoretical aspect of training without a corresponding practical approach. Most employers are therefore compelled to reorient their workers as a result of lack of fundamental knowledge of work and ideas. Quality of life has been improved upon by technology through computer and the internet. It is most unfortunate that in Nigeria except for the cities, the internet and other technology advances are not
  6. 6. www.ijm-apm.com International Journal of Management 6 available in the rural areas where majority of the Nigerian youth are located. As such, youth are denied the opportunity of skill acquisition, information gathering and other merits related to the global village. This has made employers prefer experienced hired and makes it practically difficult for the young individuals to gather the much needed experience, skill, familiarity with a work environment to invent a successful enterprise. 6. Recommendation Nigeria is a country with numerous business and investment potentials due to the abundant, vibrant and dynamic human and natural resources it possesses. As good as this sound, Nigeria continues to experience its bit of social, economic and political disruptions which have often inhibited its growth and development into the regional economic power that it struggles to accomplish. Consequent to the problems and incessant omen of entrepreneurship development, some dependable approaches that can enhance effective entrepreneurship which will help control unemployment are highlighted as follows; Basic infrastructural amenities should be provided by the government to encourage the growth/expansion of entrepreneurial businesses in Nigeria. Credit agenda through micro-financing banks should be made available with reasonable and affordable interest including subsidy to assist entrepreneurs especially at the start. Government should redirect the educational curriculum to focus more on practical aspect and also include entrepreneurial/vocational training programs as part of the tertiary education system to equip youth with necessary entrepreneurial skills that will prepare them for future challenges. The Nigerian government needs to shift from over-dependence on oil and place more attention on the development of small & medium sized enterprises for sustainable economic growth in Nigeria. There should be a sustainable entrepreneurship development in Nigeria if the government can address and implement these recommendations effectively. 7. Conclusion Small Medium Enterprises across the globe have been the foremost employer of labour at least in the private sector and turning point of sustainable industrial development, although, this has not being possible for the SMEs in Nigeria due to carelessness by the government (Alarape, 2014). Entrepreneurship development in Nigeria is at the topmost of consciousness, creation and involvement by the public and people, the controlled private sector and government at all levels. The policies of government should move to address the problems of infrastructural deterioration and investment. The problem of power supply remains a critical challenge. The issue of entrepreneurial training, skill and lack of essential education remain unresolved. Innovation by Nigerian entrepreneurs transforms into efficient production techniques and increase levels of output or economic growth. However, Nigerian entrepreneurs still face problems and challenges in their struggle for growth and development. 8. References Acs, Z. J. and Storey, D. J. (2004). Introduction: Entrepreneurship and Economic Development. Regional Studies, Vol. 38, No. 8, pp. 871-877 Adeniyi, J. A. (2013). Persistence of Unemployment in Nigeria. The Role of Output Growth and Population. The IUP Journal of Applied Economics, Vol. 12, No. 4 Alarape, A. A. (2014). Developing the Entrepreneurial Orientation of Owner-Managers of Small and Medium Enterprises in Nigeria. Ife PsychologIA ,Vol. 22, No. 1, pp. 218-231 Anyadike, N., Emeh, I. E. and Ukah, F. O. (2012). Entrepreneurship Development and Employment Generation in Nigeria: Problems and Prospects. Universal Journal ofEducation and General Studies, Vol. 1, No. 4, pp. 088- 102 Apostol, T. and Jatuliavičienė, G. (2009). Evaluation of Entrepreneurship Development Possibilities by Example of Small And Medium Enterprises In The Republic Of Moldova. Vol. 19, No. 1, pp. 100-124 Ariyo, D. (2005). Small firms are the backbone of the Nigerian economy. http://www.africaeconomicanalysis.org. Last Accessed 1 Nov. 2014 Binks, M. and Vale, P. (1990).Entrepreneurship and Economic Change. London: McGraw Hill. Chu, H. M. Kara, O. and Benzing, C. (2008).An empirical study ofNigerian entrepreneurs: Success, motivations, problems, and stress. International Journal of Business Research, Find http://findarticles.com/p/articles/mi_6773/is_2_8/ai_n31121252/ Last Accessed 16 Aug, 2010. Hornby. A. S. (2010). Oxford Advanced Learner’s Dictionary of Current English. Oxford: Oxford University Press. International Labour Organisation, (2012). Global employment trends for youth 2012.
  7. 7. www.ijm-apm.com International Journal of Management 7 http://www.ilo.org/wcmsp5/groups/public/...dgreports/comm/documents/publication/wcms-80976.pdf Last Accessed 27 June 2014 Nicks, (2008): The History of Entrepreneurship in Nigeria. http://bizcovering.com//history/the- history-of-entreprenership-in=-Nigeria. Last Accessed 30 Oct 2014 Onwubiko, C. M. (2011). Entrepreneurship and leadership; Nigeria and the Imperative For Youth Entrepreneurial Development. Univers. J. Edu. and Gen. Stud. Vol. 1, No. 3, pp. 55-70 Oyelola, O. T., Ajiboshin, I. O., Raimi, L., Raheem, S. and Igwe, .C. N. (2013). Entrepreneurship for Sustainable Economic Growth in Nigeria. Journal of Sustainable Development Studies, Vol. 2, No. 2, pp. 197-215 Raimi, L. and Towobola, W. L. (2011). Open Distance Learning (ODL): A Catalyst For Educational and Entrepreneurship Development in Nigeria. Continental Journal of Education ResearchVol. 4, No. 3, pp. 1- 11 Schumpeter, J. A. 1934 (2008), The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle, translated from the German by Redvers Opie, New Brunswick (U.S.A) and London (U.K.): Transaction Publishers. Sachs. J, Mcarthur. J, Schmid. T-Traub.G, Kruk. M, Bahadur. C, Fayem and Mccord, G. (2004): Ending Africa’s Poverty Trap. Economics Studies Program, The Brookings Institute, Vol. 35, No. 1, pp. 117-240 Salami, C. G. E. (2011). Entrepreneurial Interventionism and Challenges of Youth Unemployment in Nigeria. Global Journal of Management and Business Research, USA, Vol. 11, No. 7, Schnurr, J. Newing, (1997). A Conceptual and Analytical Framework for Youth Enterprise and Livelihood Skills Development. Defining an IDRC Niche, IDRC, Canada. Thaddeus, E. (2012). Perspectives: Entrepreneurship Development & Growth of Enterprisesin Nigeria. Entrepreneurial Practice Review, Vol. 2, No. 2 Thornton, P. H. (1999). The Sociology of Entrepreneurship. Annual Review of Sociology,Vol. 25, pp. 19-46. Tijani-Alawiye, B. (2004). Entrepreneurship Processes and Small Business Management, Ilaro, Nigeria. Udu, E. &Agu, G.A. (2005).New System Economics. Onitsha; Africana First Publishers Ltd. World Bank, (2004). Partnership in Development: Progress In The Fight Against Poverty. Washington DC: World Bank AUTHORS First Author – AdebobolaZakariyahOlotu – M.sc Candidate, University of Newcastle, Australia. MBA, Nigeria. E-mail address: olotubolaz@yahoo.com –

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