IMPACT OF SMALL AND MEDIUM ENTERPRISES (SME ’S) ON ECONOMIC GROWTH OF ANAMBRA STATE

Abstract: This study examined entrepreneurship as a tool for economic development in small and medium enterprises (SME ‘S) Awka South Local Government Area. Entrepreneurship is seen as a process which involves the effort of an individual (or individuals) in identifying viable business opportunities in an environment and obtaining and managing the resources needed to exploit those opportunities. A sample of 394 respondents was selected from the population of of entrepreneurship units cutting across all sectors in small and medium enterprises (SME ‘S) Awka south Local Government in Anambra State using simple random sampling. Data was collected from both primary and secondary sources presented in tables and analyzed using percentages and frequencies. Hypotheses were formulated and tested using Chi square analysis method. It was observed that entrepreneurship will have a positive effect on the economic development of Awka South Local Government Area; it was also observed that there are factors discouraging and hindering job creation in Awka South Local Government Area, and there are measures required in encouraging job creation in Awka South Local Government Area. Following the above findings, the researcher has recommended There should be an enabling environment that would make entrepreneurship activities thrive and encourage youths to go into entrepreneurship activities. Efforts should be made to make provision for infrastructure and other social amenities such as constant electric power supply, good road network, etc. Also loans and credit facilities should be made available for youths and graduates that want to start up their own business.

An Overview of IMPACT OF SMALL AND MEDIUM ENTERPRISES (SME ’S) ON ECONOMIC GROWTH OF ANAMBRA STATE

CHAPTER ONE

• Introduction
  • Background of the study

In recent times entrepreneurs have been referred to as necessary prerequisite to mobilize capital, exploit natural resources and create markets to carry on trade (Harbinson and Myers 1984). Entrepreneurs are agents who perform a vital role in the economic growth of a country and are linked to the overall industrial development of a nation. Entrepreneurship (SME) is critical for the economy as entrepreneurship is an engine of economic progress, job creation as well as social adjustment (Gurol and Atsan, 2006). The growing need to hasten economic development by generating new ideas and to translate into profitable ventures makes entrepreneurship an attention for the scholars as well as the policy makers (Turker and Selcuk , 2008). Entrepreneurship, with all attendant ingredients, is one of the best means of triggering economic and social development in developing nations like Nigeria, thus  catalysing the process of Entrepreneurship (SME) in developing countries will accelerate the process of economic growth and social development (Thomas and Mueller,2000).

One of the major concerns of most societies in the modern time is how to stem the ever rising tide of unemployment and achieve appreciable success in wealth creation and poverty reduction and foster socio-economic development. In Nigeria and other African countries, poverty is described as a socio-economic problem that affects growth and development in the region. The government of these countries have designed and embarked on several measures to reduce the degree of poverty and improve the social well-being of the people (Smallbone & Welter, 2009). In Nigeria, the federal government has initiated several measures and policies to reduce the level of poverty among the masses. Entrepreneurship (SME) is one the measures embraced by the government to reduce mass poverty and unemployment in the country. The development process of any country is determined by the way the production forces in and around the economy is organized. For most countries the development of industry had depended a great deal on the role of private sector. Entrepreneurship has played a major role in this regard.

This opinion is supported by Ogundele (2007) that the promotion and development of entrepreneurial (SME) activities would aid the dispersal and diversification of economic activities and induce even development in a country. Similarly, Osuagwu (2002) added that entrepreneurial development in Nigeria should be perceived as a catalyst to increase the rate of economic growth, create job opportunities, reduces import of manufactured goods and decrease the trade deficits that result from such imports In addition, Ariyo (2008) noted that if Nigeria wants to reach its full potential in terms of economic and social developments, it cannot afford to ignore the importance of its indigenous entrepreneurs and the contributions that they make to the country’s economy. Entrepreneurship (SME) remains the gateway to sustainable wealth creation in Nigeria (Ogundele, 2000).

In view of Matanmi and Awodun (2005), if Nigeria desire to move out of the disturbing high level of unemployment and ravaging level of poverty, adequate attention must be given to the growth of entrepreneurship. This is why Alam and Hossan (2003) see entrepreneurship (SME) as playing a key role in the process of economic development through creation of employment, increasing investment and consumption of a nation. In similar vein, Chigunta (2001) notes that entrepreneurship has received increasing recognition as a source of job creation, empowerment for the unemployed and economic dynamism in a rapidly globalizing world. Furthermore, Garavan and O’Cinneide (1994) in their contributions maintain that entrepreneurship is often used for developing enterprising people and inculcating an attitude of self-reliance using appropriate learning processes.

In Nigeria before the advent of colonial government, unemployment was a rare phenomenon because the people were highly entrepreneurial and productively engaged. This entrepreneurial engagement is prevalent in western, northern and the eastern part of Nigeria. It is on record that Yoruba and Hausa ethnic groups are great entrepreneurs in pre and post independent Nigeria. The Igbo ethnic group particularly is recognized internationally for its culture of entrepreneurship and enterprise development (Dana, 1995). This is why Ananaba (1969) asserts:

“The economy of the various states which make-up modern Nigeria was basically a subsistence economy and customs had established the practice that people serve their parents, village heads and the community without remuneration. On a given day, people went and work for a particular individual. Through the day, the man they serve was responsible for their food and drink. On another day, the man returned the service and it went on until everybody in the group was served.”

This method encourages communal wealth creation and productive use of human resources, thus forestalling unemployment. However, the emergence of administration in Nigeria introduced formal education which enabled people to have the opportunity of being employed in the civil service after graduation. As such, the system destroyed self-reliance, self-employment and entrepreneurial skills of Nigerians as they became permanently dependent on the colonial masters (Nicks, 2008; Raimi and Adeleke, 2010). This led to massive unemployment and craze in the contemporary times for ready-made jobs. It is on this breastplate that the study seeks for the development of entrepreneurship in order to sustain an economy of high level unemployment reduction. In Nigeria and the whole world at large, entrepreneurship (SME) is being seen as a key to economic and developmental process. When people are exposed to entrepreneurship, it is evident that they would be opened to opportunities that will enable them to become creative and productive. This will enhance job creation and improve the standard of living of an individual in the society. Entrepreneurship training is an indispensable ingredient for job creation.

Sanda (2010) asserts that Nigeria and other countries of the world are seeking to increase the entrepreneurship capacities of their citizens with the understanding that it will contribute to economic growth and development. Therefore, there is a need for Quality entrepreneurship education if the recipient is to acquire appropriate knowledge, attitude, abilities and skills that would make them to be job creators instead of job seekers. Quality according to Hornby (2000) is the standard of something when it is compared to other things like it. That is, to make the standard better so as to meet the targeted goals. The recipient should be able to acquire the essential knowledge and experience needed to meet life challenges. Entrepreneurship education seeks to prepare people particularly the youths: to be responsible, enterprising individual who became entrepreneurs or entrepreneurial thinkers by immersing them in real life learning experience whereby they can take risks, manage result and learn from the outcome (Suleiman2010).

The importance of entrepreneurship (SME) development through new business formation for economic growth has been recognized since Schumpeter (1934). Entrepreneurship is strongly linked to SME, which are the main developing force of the developed market economies (Stefanovic, Milosevic and Miletic, 2009) that provides the spring board for industrial development and economic growth. According to the Global Entrepreneurship Monitor Report (2000), about 70 percent of an area’s economic performance and well being is dependent upon how entrepreneurial the area’s economy is. Ogundele, Olajide and Ashamu (2008) argue that Entrepreneurship activities are very fundamental to any meaningful development of an economy. 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. In spite of the fact that entrepreneurship development has been regarded as the bulwark for employment generation and technological development in Nigeria, the sector nevertheless has had its own fair share of neglect with concomitant unpleasant impacts on the economy (Okpara, 2000),

1.2. Statement of Problems

The failure of tertiary education to inculcate the above philosophy in students has led to wastages in terms of both human and natural resources. This is because the youth and graduate from tertiary institutions are not equipped with the skills with which to exploit the natural resources that abound in Nigeria. These factors have rendered the pursuit of self-reliance among our graduates difficult to retain. Another problem identified is inadequate/lack of access to capital which is the principal factors hindering entrepreneurship training in the country.

Other problems identified include irrelevant education that is bookish, theoretic and “white-collar job” oriented. Also Nigeria’s macro-economic environment is unhealthy and unstable for a virile entrepreneurship (SME) development. Another problem is the fear of failure by the people to take risk on entrepreneurial activities. In addition, Government programmes are not designed to promote entrepreneurship training, looking at the country Nigeria, and the level of infrastructural development provided by the government is still very low and this has been affecting to a very high extent the level of productivity and entrepreneurial activities in the country. This problem is coupled with the fact that government have adopted a nonchalant attitude towards entrepreneurship training, this is one of the greatest challenges of entrepreneurship activities. Non availability of funds from the Government has also hampered the success of entrepreneurship. Governments most times fail to make adequate funds available, and at times even delay the little fund they map out for entrepreneurship programmes.

Also, the high rate at which many of the SME fail quickly has become a source of discouragement to youths who wants to embark on entrepreneurship activities. Consequent upon this, employable and unemployable youths and adults idle away. It is against this backdrop that this paper set to look at entrepreneurship as a tool for economic development in Nigeria.

1.3. Objectives of the Study

The broad objective of this study is to examine entrepreneurship (SME) as a tool for economic development in Awka South Local Government Area. Thus the specific objectives are as follows:

1. To determine the effect of job creation on the economic development of Awka South Local Government Area.
2. To examine the factors that discourages and hinders job creation in Awka South Local Government Area.
3. To determine the measures required in encouraging job creation in Awka South Local Government Area.

1.4. Research Question

An attempt has been made in this research study to provide answers to the following research questions.

1. What effect will job creation have on the economic development of Awka South Local Government Area?
2. Are there factors that discourage and hinders job creation in Awka South Local Government Area?
3. What measures are required in encouraging start-ups and job creation in Awka South Local Government Area?

1.5. Research Hypothesis

In a bid to facilitate this research and make it more purposeful, the study will test the following hypothesis;

Hypothesis 1

Hi: Entrepreneurship (SME) will have a positive effect on the economic development of Awka South Local Government Area.

Ho: Entrepreneurship (SME) will have a Negative effect on the economic development of Awka South Local Government Area.

Hypothesis 2

Hi: There are factors discouraging and hindering job creation in Awka South Local Government Area.

Ho: There are no factors discouraging and hindering job creation in Awka South Local Government Area.

Hypothesis 3

Hi: There are measures required in encouraging job creation in Awka South Local Government Area.

Ho: There are no measures required in encouraging job creation in Awka South Local Government Area.

1.6. Significance of Study

This research has both theoretical and empirical significance. There are many concrete reasons for conducting reason for conducting a research of this nature many potential uses for the information generated.

Theoretically this study will aid scholars who wish to contribute immensely in the field of entrepreneurship (SME) as a tool for economic development in Nigeria, in carrying out proper research and formulation of relevant theories.  This study will also serve as a data base for future research to students and other researchers that will in future investigate or carry out further studies in this area of study.

Empirically the significance of this study is to call the attention of the Government of Awka south Local government and other public level of Government, who needs help to assess the problem involved in the lack of entrepreneurship and entrepreneurship spirit, identify the causes of these problems, how to handle these problems, in other to attain economic development, improved standard of living and increased employment opportunities.

1.7. Scope of Study

This study is focused on Entrepreneurship (SME) as a tool for economic development, using Awka South Local Government Area as my area of study. The participants of this study are delimited to residents of Awka South Local Government Area.

1.8. Limitations of Study

In the course of carrying out this study, the researcher encountered some difficulties, the researcher discovered that the resources needed to carry out this research was limited, moving from one library to another. Also the questionnaire had to be typed and administered to Artisans/ entrepreneurs, public and private, unemployed graduates and youths, etc, it required the personal involvement of the researcher to motivate the respondents to fill the questionnaire, explain certain words and answer. Another constraint is lack of total cooperation from the respondents in Awka South Local Government Area, who was unwilling to cooperate with the researcher because they felt that they had nothing to gain from the study.

Another serious constraint is finance, because of economic difficulties Nigeria is passing through, it was difficult to get enough money to achieve ones crucial desires. A research of this nature involves a lot of fund e.g for typing, distributing and collecting the questionnaire, and other necessary data for the study.  In spite of all these limitations, however, data collected were able to provide enough insight into the extent of entrepreneurship in Awka South Local Government Area.

1.9     Definition of Terms

• Development: this refers to the process of developing growth, directed change.
• Economic: pertaining to an economy.
• Entrepreneurship: this can be defined as the willingness and ability of an individual to seek out investment opportunities and takes advantage of scarce resources to exploits the opportunities profitably.
• Entrepreneurial : having the spirit, attitude or qualities of an entrepreneur
• Entrepreneur: a person who organizes and operates a business venture and assumes much of the associated risk.
• Fund: a sum or source of money.
• Government: the body with the power to make and enforce laws to control a country, land area, people or organization.
• SME: