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| Pages: 65
ADMINISTRATION OF ENTREPRENEURSHIP POLICY AND EMPLOYMENT GENERATION IN SOUTH -WEST, NIGERIA (2004 -2014)
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
In this era of globalization, entrepreneurship has an important role to play in employment generation. The experiences of developed economies in relation to the roles played by entrepreneurship buttresses the fact that the importance of entrepreneurship cannot be over emphasized especially among the developing countries. The quintessence of entrepreneurship is paramount in every economy that targets economic growth and development. However, no economic growth and development may be achieved without changes in factors of production and economic activities. These economic activities are best driven by entrepreneurs as agents of economic growth and development. Without adequate information and knowledge, the impact of entrepreneurship on generation of employment in any nation may be less than optimal. The import of entrepreneurship knowledge was identified by Block, Thurik and Zhou (2012) when they recognized that knowledge was “dispersed” throughout society with each person having a unique stock of information. Consequently, individuals or entrepreneurs bringing their varied talents, knowledge and skills to bear on the society would advance the economic standing of that society. One of the major roles of entrepreneurship is job creation, to reduce unemployment rate in the economy.
Unemployment is a universal challenge except that the rate of prevalence differs from one economy to the other. The World Bank reports (2016) on unemployment revealed that the rates of unemployment in some African nations like Cote d’Ivoire (4.0 per cent), Ghana (2.4 per cent), Guinea (1.8 per cent) can compare favourably with some developed economies like Spain (24.7 per cent), United States of America (6.2 per cent), United Kingdom (6.3 per cent) and France (9.9 per cent). However, the challenges of unemployment are more pronounced in the developing economies than the developed economies where social security and other poverty alleviation programmes for the unemployed are in place. In Nigeria, unemployment which as reported by the National Bureau of Statistics was 31.2 per cent as at the end of September, 2016, against world unemployment rate of 5.8 per cent (ILO, 2016). According to Bassey and Atan (2012), there has been an alarming increase in the rate of youth unemployment as thousands of university graduates are roaming the street without jobs. In spite of the enormous natural and human resources in the country, unemployment still remains a challenge. For instance, the South-West geopolitical zone is rich in cash crops such as cocoa, cola nuts, coffee and rubber. The greatest source of wealth for the Northern states is massive fertile land conducive for wide range of agricultural activities while the South-South states like Rivers, Delta and Akwa Ibom are blessed in petroleum reserves (Badmus, Olurin, Ganiyu and Oduleye, 2013); (Alabi A. B et. al. 2013), yet there is high incidence of poverty and high rate of unemployment (Yakubu and Akanegbu, 2015; Uzoigwe, 2007). Nigeria is still one of the poorest countries in the world and has one of the highest rates of youth unemployment in the sub-Sahara Africa (Ucha, 2010; Amaghionyeodiwe and Adediran, 2012; Chukwuma, 2013).
The predicament of Nigeria as a developing economy with a lack of impactful entrepreneurship policy after over 55 years of independence can be traced to the deficit that we have experienced in governance and unfriendly entrepreneurial environment. The importance of entrepreneurship development was not appreciated until many employable Nigerians could not find jobs to the embarrassment of the government and at threat to national security. This situation propelled the government to initiate one form of entrepreneurship policy and/or job creation scheme or the other.
One of government’s attempt towards policy implementation to address unemployment in Nigeria led to the introduction of Entrepreneurship Development Programmes (EDP) as a panacea to economic development and growth (Osemeke, 2012). These programmes are usually targeted at owner-managers of small business firms as well as those identified to possess potentials for self- employment (Dandago and Muhammad, 2014). For instance, participants in Nigeria's National Directorate of Employment (NDE) and similar programmes in the country are expected to undergo EDP training. This usually includes entrepreneurial tools which range from the preparation of a business plan with emphasis on production, management and marketing, identification of new business opportunities, alternative suppliers and market, sources of finance, cash flow analysis and record keeping to train people to think and act like successful entrepreneurs (Amaeshi, 2007).
The importance of entrepreneurship development cannot be overemphasized. Its contributions are quite obvious and visible in economic transformations. This is why almost every successive government emphasizes it (Arowomole, 2000). The Federal military government in 1976, under General Olusegun Obasanjo introduced Operation Feed the Nation (OFN) scheme. In 1985, the General Ibrahim Badamosi Babangida administration introduced a programme tagged Mass Mobilization for Self Reliance and Economic Recovery (MAMSER). All of these were aimed at stimulating economic growth and boost entrepreneurial spirit among the people.
Toma, Grigorea and Marinescu (2014), in their studies of economic development and entrepreneurship, argued that no nation would break the barriers of development without a critical mass of entrepreneurs. This orientation has helped many developed and developing nations to accelerate their pace of development by focusing on appropriate incentives to support entrepreneurship activity. Mmadu (2014) argued that the factors of production formed the bedrock of Schumpeterian model and that it is the entrepreneur who generates the critical momentum an economy requires for economic growth by breaking new grounds in human endeavour as a result of the vital characteristics or attributes they possess. Entrepreneurship should be paramount to Nigeria, judging by the number of individuals being certified yearly by various Educational institutions. Unemployment rate among the youths in Nigeria especially the graduates, is put between 32.8 per cent and 56.1 per cent (National Bureau of Statistics, 2016). People go into one entrepreneurial venture or another because of that, but unfortunately they are not adequately prepared to face the challenges of venturing into such enterprise. This underscores the expediency of expanding entrepreneurial know-how, for instance, by accommodating it in the curricular of these graduates whilst in educational institutions. Entrepreneur development should be about helping people to start and grow dynamic businesses that add immense value to the nation’s economic growth.
However, the Nigerian entrepreneur is constantly faced with daunting challenges; a cursory look at the Nigerian predicament throws up ironies. There are abundant mineral deposits that remain largely untapped; about 60% of Nigeria’s arable land is uncultivated but there are over a hundred tertiary institutions turning out more than 200,000 graduates every year. An estimated 17 million highly skilled Nigerian professionals live and work outside the country. In spite of these resources, Nigeria remains stagnated. The poverty situation has consistently deteriorated such that by 2010, the incidence of poverty was 69 per cent (National Bureau of Statistics, 2010). The absence of adequate infrastructure compounded by poor maintenance and policy summersault present great challenges to emerging entrepreneurs in providing jobs for the teeming population.
1.2 Statement of the problem
The high level of unemployment in Nigeria has been a major economic and social challenge to the government. The unemployment rate in Nigeria was 13.4 per cent in 2004 and averaged 14.60 per cent from 2006 to 2011, reaching all-time high of 31.2 per cent in May, 2016 (National Bureau of Statistics, 2016). In South-West, Nigeria (Lagos, Osun, Ogun, Ondo, Ekiti and Oyo States), the average unemployment rate was 5.82 per cent, 14.08 per cent and 27.74 per cent in 2004, 2009 and 2010 respectively (National Bureau of Statistics, 2012). The figures revealed clearly the rising and worrisome trend in the unemployment rate in Nigeria and the need for realistic government interventions to abate the tide. The increasing rate of unemployment and poverty is not only embarrassing, given the country’s enormous potentials in human and natural resources but has also become a huge security problem across the entire nation.
However, various entrepreneurship policies have been put in place before and after 2004 to address these challenges: National Directorate of Employment (NDE) 1986, Mass Mobilization for Self-Reliance and Economic Recovery (MAMSER) 1986, The National Economic Reconstruction Fund (NERFUND) 1989, Bank of Industry (2001), Entrepreneurship Development Centre (EDC) 2003, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) 2003, Youth with Innovation (YOUWIN) 2011, and National Enterprise Development Programme (NEDEP) 2013. They were focused primarily on entrepreneurship development and employment generation. In spite of these policies, the rate of unemployment continues to escalate (Adebayo, 2015). In fact, some unemployed youths formed a pressure group known as National Association of Unemployed Graduates in 2013 with the aim of drawing government attention to the problem. (Punch Newspapers, 2013).
The high level of unemployment culminated in the high turnout of a large number of job seekers in the March 15, 2014 recruitment exercise by the Nigerian Immigration Service. With less than 4,000 to be employed, over a million applicants turned up in all the 36 states and the Federal Capital Territory, Abuja. The scramble for the few vacant positions left over 20 people dead and others seriously injured (Punch Newspapers, 2014). It is, therefore, apparent that the nation is inundated with an acute problem of gross unemployment. In spite of the efforts of successive government in Nigeria to ameliorate this scourge, Nigeria is facing growing levels of unemployment.
The security challenge posed by the restive, active but unemployed youths and the effect of the various entrepreneurship agencies such as Bank of Industry (BOI) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) informed this study which examined the administration of entrepreneurship policies in Nigeria and the extent to which they have addressed the unemployment problems between 2004—2014.
1.3 Objective of the study
The general objective of this study is to examine the effectiveness of the administration of entrepreneurship policies on employment generation in South-West, Nigeria. The specific objectives are to:
1. identify the causes of unemployment in South- West, Nigeria;
2. evaluate the effects of Bank of Industry and SMEDAN on the implementation of the National Policy on Micro, Small and Medium Enterprises in addressing unemployment in South West, Nigeria;
3. examine the entrepreneurship policies of government aimed at promoting employment generation in Nigeria since 2004;
4. determine the role of entrepreneurship education in addressing unemployment in South West, Nigeria, and
5. identify the challenges of entrepreneurship development in addressing unemployment in South-West, Nigeria.
1.4 Research questions
Consistent with the problems identified above, the following are the research questions addressed in this study:
1. What were the causes of unemployment in South-West, Nigeria?
2. To what extent did the Bank of Industry and SMEDAN’s implementation of National Policy on Micro, Small and Medium Enterprises address the issues of unemployment in Nigeria?
3. How did the various entrepreneurship policies assist in addressing unemployment?
4. What role did entrepreneurship education play in addressing unemployment in Nigeria?
5. What are the challenges of entrepreneurship development in addressing unemployment in South-West, Nigeria?
1.5 Hypotheses of the study
H01: Bank of Industry and SMEDAN have no significant effect in adder ssing issues of unemployment in Nigeria
H02: The administration of the entrepreneurship development policy has no impact on unemployment in Nigeria
H03: Entrepreneurship education has no significant effect in addressing unemployment in Nigeria
1.6 Significance of the study
The study would be of assistance to policy makers on issues of entrepreneurship development and employment generation and how to avoid the cause of failures of previous policies on the issues of unemployment. The study would assist the government, relevant agencies and ministries to evaluate the effectiveness of their entrepreneurship policies in promoting entrepreneurship development and addressing unemployment problems in Nigeria. The study would give existing and potential investors and other stakeholders a better understanding of the need to develop and implement sound and effective entrepreneurship policies that would maximize the rate of employment generation in the country. The study also contributes to existing literature on formulation and implementation of entrepreneurship policies that are expected to minimize the rate of unemployment in the Nigerian economy.
1.7 Scope of the study
The study focuses on the activities of the Bank of Industry and SMEDAN as they affect entrepreneurship development and employment generation in South-West Nigeria. The study covers issues of unemployment and the significance of entrepreneurship development on the two agencies from 2004 to 2014. The scope of this study covered between 2004 and 2014 because of data availability from the two entrepreneurship agencies of the government. The Bank of Industry which was reconstructed in 2001 from the defunct Nigeria Industrial Development Bank did not commence full operations until 2003 while SMEDAN that was established in 2003 did not commence capacity building programmes until January, 2004. This period of 10 years gives the study the sufficient period coverage needed to make valid observations.
The South-West, especially Lagos State, is seen as the commercial nerve centre of Nigeria which attracts the highest number of individuals who are in search of employment and a better life. However, the study selected three States in the South-West, namely: Lagos, Ogun and Ondo. This is because, majority of businesses are located in Lagos and Ogun States while Ondo is highly endowed with many natural resources that could be gainfully explored to create employment.
1.8 Definition of terms
The frequently used discipline-specific terms in this study are defined as follows:
ii. Capacity Building/ Training: This refers to intentional training and mission driven efforts aimed at improving an individual’s ability to exploit his or her potentials in the aspect of human endeavor.
iii. Entrepreneurship: This refers to a person’s capacity and willingness to develop, organize, and manage a business venture along with any of its risks in order to make a profit
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
In this era of globalization, entrepreneurship has an important role to play in employment generation. The experiences of developed economies in relation to the roles played by entrepreneurship buttresses the fact that the importance of entrepreneurship cannot be over emphasized especially among the developing countries. The quintessence of entrepreneurship is paramount in every economy that targets economic growth and development. However, no economic growth and development may be achieved without changes in factors of production and economic activities. These economic activities are best driven by entrepreneurs as agents of economic growth and development. Without adequate information and knowledge, the impact of entrepreneurship on generation of employment in any nation may be less than optimal. The import of entrepreneurship knowledge was identified by Block, Thurik and Zhou (2012) when they recognized that knowledge was “dispersed” throughout society with each person having a unique stock of information. Consequently, individuals or entrepreneurs bringing their varied talents, knowledge and skills to bear on the society would advance the economic standing of that society. One of the major roles of entrepreneurship is job creation, to reduce unemployment rate in the economy.
Unemployment is a universal challenge except that the rate of prevalence differs from one economy to the other. The World Bank reports (2016) on unemployment revealed that the rates of unemployment in some African nations like Cote d’Ivoire (4.0 per cent), Ghana (2.4 per cent), Guinea (1.8 per cent) can compare favourably with some developed economies like Spain (24.7 per cent), United States of America (6.2 per cent), United Kingdom (6.3 per cent) and France (9.9 per cent). However, the challenges of unemployment are more pronounced in the developing economies than the developed economies where social security and other poverty alleviation programmes for the unemployed are in place. In Nigeria, unemployment which as reported by the National Bureau of Statistics was 31.2 per cent as at the end of September, 2016, against world unemployment rate of 5.8 per cent (ILO, 2016). According to Bassey and Atan (2012), there has been an alarming increase in the rate of youth unemployment as thousands of university graduates are roaming the street without jobs. In spite of the enormous natural and human resources in the country, unemployment still remains a challenge. For instance, the South-West geopolitical zone is rich in cash crops such as cocoa, cola nuts, coffee and rubber. The greatest source of wealth for the Northern states is massive fertile land conducive for wide range of agricultural activities while the South-South states like Rivers, Delta and Akwa Ibom are blessed in petroleum reserves (Badmus, Olurin, Ganiyu and Oduleye, 2013); (Alabi A. B et. al. 2013), yet there is high incidence of poverty and high rate of unemployment (Yakubu and Akanegbu, 2015; Uzoigwe, 2007). Nigeria is still one of the poorest countries in the world and has one of the highest rates of youth unemployment in the sub-Sahara Africa (Ucha, 2010; Amaghionyeodiwe and Adediran, 2012; Chukwuma, 2013).
The predicament of Nigeria as a developing economy with a lack of impactful entrepreneurship policy after over 55 years of independence can be traced to the deficit that we have experienced in governance and unfriendly entrepreneurial environment. The importance of entrepreneurship development was not appreciated until many employable Nigerians could not find jobs to the embarrassment of the government and at threat to national security. This situation propelled the government to initiate one form of entrepreneurship policy and/or job creation scheme or the other.
One of government’s attempt towards policy implementation to address unemployment in Nigeria led to the introduction of Entrepreneurship Development Programmes (EDP) as a panacea to economic development and growth (Osemeke, 2012). These programmes are usually targeted at owner-managers of small business firms as well as those identified to possess potentials for self- employment (Dandago and Muhammad, 2014). For instance, participants in Nigeria's National Directorate of Employment (NDE) and similar programmes in the country are expected to undergo EDP training. This usually includes entrepreneurial tools which range from the preparation of a business plan with emphasis on production, management and marketing, identification of new business opportunities, alternative suppliers and market, sources of finance, cash flow analysis and record keeping to train people to think and act like successful entrepreneurs (Amaeshi, 2007).
The importance of entrepreneurship development cannot be overemphasized. Its contributions are quite obvious and visible in economic transformations. This is why almost every successive government emphasizes it (Arowomole, 2000). The Federal military government in 1976, under General Olusegun Obasanjo introduced Operation Feed the Nation (OFN) scheme. In 1985, the General Ibrahim Badamosi Babangida administration introduced a programme tagged Mass Mobilization for Self Reliance and Economic Recovery (MAMSER). All of these were aimed at stimulating economic growth and boost entrepreneurial spirit among the people.
Toma, Grigorea and Marinescu (2014), in their studies of economic development and entrepreneurship, argued that no nation would break the barriers of development without a critical mass of entrepreneurs. This orientation has helped many developed and developing nations to accelerate their pace of development by focusing on appropriate incentives to support entrepreneurship activity. Mmadu (2014) argued that the factors of production formed the bedrock of Schumpeterian model and that it is the entrepreneur who generates the critical momentum an economy requires for economic growth by breaking new grounds in human endeavour as a result of the vital characteristics or attributes they possess. Entrepreneurship should be paramount to Nigeria, judging by the number of individuals being certified yearly by various Educational institutions. Unemployment rate among the youths in Nigeria especially the graduates, is put between 32.8 per cent and 56.1 per cent (National Bureau of Statistics, 2016). People go into one entrepreneurial venture or another because of that, but unfortunately they are not adequately prepared to face the challenges of venturing into such enterprise. This underscores the expediency of expanding entrepreneurial know-how, for instance, by accommodating it in the curricular of these graduates whilst in educational institutions. Entrepreneur development should be about helping people to start and grow dynamic businesses that add immense value to the nation’s economic growth.
However, the Nigerian entrepreneur is constantly faced with daunting challenges; a cursory look at the Nigerian predicament throws up ironies. There are abundant mineral deposits that remain largely untapped; about 60% of Nigeria’s arable land is uncultivated but there are over a hundred tertiary institutions turning out more than 200,000 graduates every year. An estimated 17 million highly skilled Nigerian professionals live and work outside the country. In spite of these resources, Nigeria remains stagnated. The poverty situation has consistently deteriorated such that by 2010, the incidence of poverty was 69 per cent (National Bureau of Statistics, 2010). The absence of adequate infrastructure compounded by poor maintenance and policy summersault present great challenges to emerging entrepreneurs in providing jobs for the teeming population.
1.2 Statement of the problem
The high level of unemployment in Nigeria has been a major economic and social challenge to the government. The unemployment rate in Nigeria was 13.4 per cent in 2004 and averaged 14.60 per cent from 2006 to 2011, reaching all-time high of 31.2 per cent in May, 2016 (National Bureau of Statistics, 2016). In South-West, Nigeria (Lagos, Osun, Ogun, Ondo, Ekiti and Oyo States), the average unemployment rate was 5.82 per cent, 14.08 per cent and 27.74 per cent in 2004, 2009 and 2010 respectively (National Bureau of Statistics, 2012). The figures revealed clearly the rising and worrisome trend in the unemployment rate in Nigeria and the need for realistic government interventions to abate the tide. The increasing rate of unemployment and poverty is not only embarrassing, given the country’s enormous potentials in human and natural resources but has also become a huge security problem across the entire nation.
However, various entrepreneurship policies have been put in place before and after 2004 to address these challenges: National Directorate of Employment (NDE) 1986, Mass Mobilization for Self-Reliance and Economic Recovery (MAMSER) 1986, The National Economic Reconstruction Fund (NERFUND) 1989, Bank of Industry (2001), Entrepreneurship Development Centre (EDC) 2003, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) 2003, Youth with Innovation (YOUWIN) 2011, and National Enterprise Development Programme (NEDEP) 2013. They were focused primarily on entrepreneurship development and employment generation. In spite of these policies, the rate of unemployment continues to escalate (Adebayo, 2015). In fact, some unemployed youths formed a pressure group known as National Association of Unemployed Graduates in 2013 with the aim of drawing government attention to the problem. (Punch Newspapers, 2013).
The high level of unemployment culminated in the high turnout of a large number of job seekers in the March 15, 2014 recruitment exercise by the Nigerian Immigration Service. With less than 4,000 to be employed, over a million applicants turned up in all the 36 states and the Federal Capital Territory, Abuja. The scramble for the few vacant positions left over 20 people dead and others seriously injured (Punch Newspapers, 2014). It is, therefore, apparent that the nation is inundated with an acute problem of gross unemployment. In spite of the efforts of successive government in Nigeria to ameliorate this scourge, Nigeria is facing growing levels of unemployment.
The security challenge posed by the restive, active but unemployed youths and the effect of the various entrepreneurship agencies such as Bank of Industry (BOI) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) informed this study which examined the administration of entrepreneurship policies in Nigeria and the extent to which they have addressed the unemployment problems between 2004—2014.
1.3 Objective of the study
The general objective of this study is to examine the effectiveness of the administration of entrepreneurship policies on employment generation in South-West, Nigeria. The specific objectives are to:
1. identify the causes of unemployment in South- West, Nigeria;
2. evaluate the effects of Bank of Industry and SMEDAN on the implementation of the National Policy on Micro, Small and Medium Enterprises in addressing unemployment in South West, Nigeria;
3. examine the entrepreneurship policies of government aimed at promoting employment generation in Nigeria since 2004;
4. determine the role of entrepreneurship education in addressing unemployment in South West, Nigeria, and
5. identify the challenges of entrepreneurship development in addressing unemployment in South-West, Nigeria.
1.4 Research questions
Consistent with the problems identified above, the following are the research questions addressed in this study:
1. What were the causes of unemployment in South-West, Nigeria?
2. To what extent did the Bank of Industry and SMEDAN’s implementation of National Policy on Micro, Small and Medium Enterprises address the issues of unemployment in Nigeria?
3. How did the various entrepreneurship policies assist in addressing unemployment?
4. What role did entrepreneurship education play in addressing unemployment in Nigeria?
5. What are the challenges of entrepreneurship development in addressing unemployment in South-West, Nigeria?
1.5 Hypotheses of the study
H01: Bank of Industry and SMEDAN have no significant effect in adder ssing issues of unemployment in Nigeria
H02: The administration of the entrepreneurship development policy has no impact on unemployment in Nigeria
H03: Entrepreneurship education has no significant effect in addressing unemployment in Nigeria
1.6 Significance of the study
The study would be of assistance to policy makers on issues of entrepreneurship development and employment generation and how to avoid the cause of failures of previous policies on the issues of unemployment. The study would assist the government, relevant agencies and ministries to evaluate the effectiveness of their entrepreneurship policies in promoting entrepreneurship development and addressing unemployment problems in Nigeria. The study would give existing and potential investors and other stakeholders a better understanding of the need to develop and implement sound and effective entrepreneurship policies that would maximize the rate of employment generation in the country. The study also contributes to existing literature on formulation and implementation of entrepreneurship policies that are expected to minimize the rate of unemployment in the Nigerian economy.
1.7 Scope of the study
The study focuses on the activities of the Bank of Industry and SMEDAN as they affect entrepreneurship development and employment generation in South-West Nigeria. The study covers issues of unemployment and the significance of entrepreneurship development on the two agencies from 2004 to 2014. The scope of this study covered between 2004 and 2014 because of data availability from the two entrepreneurship agencies of the government. The Bank of Industry which was reconstructed in 2001 from the defunct Nigeria Industrial Development Bank did not commence full operations until 2003 while SMEDAN that was established in 2003 did not commence capacity building programmes until January, 2004. This period of 10 years gives the study the sufficient period coverage needed to make valid observations.
The South-West, especially Lagos State, is seen as the commercial nerve centre of Nigeria which attracts the highest number of individuals who are in search of employment and a better life. However, the study selected three States in the South-West, namely: Lagos, Ogun and Ondo. This is because, majority of businesses are located in Lagos and Ogun States while Ondo is highly endowed with many natural resources that could be gainfully explored to create employment.
1.8 Definition of terms
The frequently used discipline-specific terms in this study are defined as follows:
ii. Capacity Building/ Training: This refers to intentional training and mission driven efforts aimed at improving an individual’s ability to exploit his or her potentials in the aspect of human endeavor.
iii. Entrepreneurship: This refers to a person’s capacity and willingness to develop, organize, and manage a business venture along with any of its risks in order to make a profit
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