THE IMPACT OF ENTREPENEURIAL AND SMALL BUSINESS ON ECONOMIC

GROWTH OF NIGERIA

BY

ODEBUNMI ADEKUNLE TIMOTHY MATRIC NUMBER NOU060316319

A PROJECT SUBMITED TO

THE SCHOOL OF HUMAN RESOURCE MANAGEMENT, NATIONAL OPEN UNIVERSITY OF NIGERIA

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD

OF BACHELOR OF SCIENCE (B.sc) ENTREPRENUERIAL AND BUSINESS MANAGEMENT

NATIONAL OPEN UNVERSITY OF NIGERIA LAGOS, NIGERIA.

OCTOBER, 2011

ii

DECLARATION

“I ODEBUNMI, ADEKUNLE TIMOTHY, humbly declare that this work

entitled THE IMPACT OF ENTREPRENEURIAL AND SMALL BUSINESS

ON ECONOMIC GROWTH OF NIGERIA is as result of my research effort

carried out in the school of Human Resource Management National Open

University of Nigeria, under the supervision of MR E. O KEHINDE.

I further wish to declare that, to the best of my knowledge and belief, it contains

no material previously published or written by another person nor material which

to a substantial extent has been accepted for the award of any other degree or

diploma of any university or other institute of higher learning, except where due

acknowledgment has been made in the text.

_____________________

“(Signature/name/Date)”

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CERTIFICATION

This is to certify that this research project entitled THE IMPACT OF

ENTREPRENEURIAL AND SMALL BUSINESS ON THE ECONOMIC

GROWTH OF NIGERIA was carried out by Odebunmi Adekunle Timothy in the

school of human Resource Management, National Open University of Nigeria,

Lagos for the award of B.sc Entrepreneurial and Business Management

__________________ _________________

Name & Signature of Name of Signature of

Supervisor Programme leader

_______________ _____________

Date Date

_________________

Name & Signature of Dean

iv

DEDICATION

I dedicate this project to God almighty whom gave me grace and life.

v

ACKNOWLEDGMENT

I give God the Glory, WHOM have help me, give me grace and favour to

pursuit this programmed. I bless his name in life, life is beautiful and lovely. Also

my special thank to my wonderful supervisor MR E O Kehinde, who lead me and

mentor me during the course of this research. In spite of his heavy academic work

load devoted his time to give audience, correction and encouragement. My

greeting to twins my supervisor sons.

My appreciation goes to the Vice Counselor NOUN Prof. Vincent A. Tenebe.

My appreciation also goes to my Prof V A Adisa, the school centre manager, the

staffs of Noun Ibadan study centre. I special thanks to my parent Mr. & Mrs.

Odebunmi, Mr. Oluwaseyi Adewale Odebunmi (brother) Oluwasenu Odebunmi,

(Brother) Folashade Odebunmi (Sister).

Also I appreciate my fiancée pastor Victoria Kemi Alabi, I appreciate Rev.

Dr. Ademuyiwa for their encouragement, Mr. Femi Osungade Mrs. Badmus

Bunmi, Mrs. Bunmi Matilukuro for their support.

Also, Appreciate Mr. Adisa B.A, Senu Ojeogwu, Kemi Fajuyitan,

Adewumi Adeleke Mrs. Adebowale , Mrs. Abidogun,Mrs C Akinjo my

colleagues in NOUN.

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Also appreciate Mr. Kayode Ajibade, and Mr. Tunde Ijasenu for their

encouragement . I also express my gratitude to all my facilitator especially Mr.

Smart Olaiya . TO GOD BE THE GLORY.

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ABSTRACT

This study was conducted on the role and contribution of entrepreneur and

small business organizations to the economic growth and development in Nigeria

The main objective and significance of the study are to review the role of

entrepreneur and small business organization as a veritable tools for economic

development and growth and to potently blend the theoretical frame work linking

entrepreneurships and small business to economic growth and development.

To obtain the result needed for the study, a sample of responses were taken

from some selected entrepreneur and small business organizations in ibadan

metropolis and its environment. The questions were centered on the relevance of

small business organization to the national of small business organization to the

national economy growth and development

An extensive study was carried out to put the research together. Relevant data

were gathered through the process of non-experimental process of physical

process of physical observation and questionnaire administration.

Hypothesis were formed for the study and simple percentage and chi-square

statistical method were used for the analysis, this help to arrive at a final

conclusion drawn through test of hypothesis and the interpolation of such tests.

The researcher found out that, the contribution of small business

organization to employments generation are immense and which in turn will have

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reinforcement effect on economic development of a nation. And it was also affirm

that with the rising population, economic growth is the only sustainable

mechanism for increasing a society’s standard of living and also subscribe to the

view that, it can only be achieved by creating a good investment climate which in

turn, drives growth by encouraging investment and higher productivity.

Finally, large percentage of total number of respondents were in favour of the

alternative hypothesis.

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TABLE OF CONTENT

PAGES

TITTLE i

DECLARATION ii

CERTIFICATION iii

DEDICATION iv

ACKNOWLEDGEMENT vi-vi

ABSTRACT vii-viii

TABLE OF CONTENTS ix

LIST OF TABLE xiii

LIST OF FIGURES xv

CHAPTER ONE

1.1 INTRODUCTION 1

1.2 STATEMENT OF THE PROBLEM 4

1.3 SCOPE OF THE STUDY 5

1.4 PURPOSE OF THE STUDY 6

1.5 OBJECTIVE OF THE STUDY 7

1.6 RESEACRCH QUESTIONS 7

1.7 RESEARCH HYPOTHESIS 8

1.8 SIGNIFICANCE OF THE STUDY 8

x

1.9 OPERATIONAL DEFINITION 9

CHAPTER TWO

2.0 LITERATURE REVIEW 10

2.1.1 INTRODUCTION 10

2.1.2 HISTORY OF ENTREPRENEURSHIP 13

2.1.3 THE NATURE OF ENTREPREUR 13

2.1.4 CONCEPTUALIZING ENTREPRENEURSHIP 14

2.1.5 TYPES OF ENTREPRENEURS 18

2.1.6 ENTREPRENEURS MYTHS 19

2.1.7 ROLE OF ENTREPENEURSHIP TO ECONOMIC GROWTH 19

2.1.8 DIAGRAM SHOWING FRAMEWORK FOR

LINKING ENTREPRENEURSHIP TO ECONOMIC GROWTH 20

2.1.9 PROBLEM OF ENTREPRENEURIAL IN NIGERIA 21

2.1.10SOLUTION TO ENTREPRENERIAL IN NIGERIA 21

2.1.11 BENEFITS OF ENTREPRENEURSHIP 22

2.2.1 SMALL BUSINESS IN NIGERIA 23

2.2.2 THE CONCEPTS OF SMEs 24

2.2.3 OVERVIEW OF PERFORMANCE OF THE SMES IN

NIGERIA 29

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2.2.4 THE ROLE OF SMALL BUSINESS IN THE NIGERIA

ECONOMY 32

2.2.5 PROBLEMS OF SMALL BUSINESS IN NIGERIA 33

2.2.6 THE RELEVANCE OF SMALL BUSINESS TO ECONOMIC

GROWTH 35

2.2.7 THE SMEs SCHEME IN NIGERIA 37

2.2.8 GROWTH PERFORMANCE 38

2.2.9 ECONOMIC STRUCTURE 42

2.2.10BUSINESS ENVIRONMENT 45

CHAPTER THREE

3.1 INTRODUCTION 51

3.2 RESEARCH DESIGN 52

3.3 RESEARCH METHODOLOGY 52

3.4 SAMPLING AND SAMPLING SIZE 52

3.5 SOURCES OF DATA 53

3.5.1 PRIMARY DATA 53

3.5.2 SECONDARY DATA 54

3.6 DATA COLLECTION INSTRUMENT AND PROCEDURE 54

3.6.1 INTERVIEW 54

3.6.2 QUESTIONNAIRE 55

xii

3.7 ANALYSTICAL TOOL 55

3.8 LIMITATION AND VALIDITY OF DATA 56

CHAPTER FOUR

4.0 PRESENTATION OF DATA ANALYSIS AND

INTERPRETATION 58

4.1 INTRODUCTION 58

4.2 COLLECTION OF RESPONSES 58

4.2.1 CHARACTERISTICS OF RESPONDENTS 59

CHAPTER FIVE

5.0 SUMMARY OF FINDING, CONCLUSION AND

RECOMMENDATION 81

5.1 SUMMARY OF FINDINGS 81

5.2 IMPLICATION OF FINDINGS 82

5.3 LIMITATION OF THE STUDY 83

5.4 RECOMMENDATION 83

5.5 CONCLUSION 85

5.6 SUGGESSTION FOR FURTHER STUDIES 86

BIBLOGRAPHY 87

APPENDIX 1 QUESTIONNAIRE 95

xiii

LIST OF TABLES

TABLE 1 THREE TYPES OF ENTREPRENEURS

4.2.1 SEX DISTRIBUTION OF THE RESPONDENTS

4.2.2 AGE DISTRIBUTION OF THE RESPONDENTS

4.2.3 MARITAL STATUS OF THE RESPONDENTS

4.2.4 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS

4.2.5 JOB TITTLE MOF THE RESPONDENTS

4.2.6 NUMBER OF EMPLOYEE THE ORGANISATION CURRENT

EMPLOY/NUMBER

4.2.7 NUMBER OF YEARS IN BUSINESS

4.2.8 INVESTMENT IN THE BUSINESS

4.2.9 HOW DO YOU AIM TO ACHIEVE YOUR LONGER TERM

GROWTH PLAN

4.2.10TOTAL TURNOVER

4.2.11CAN YOU TELL ME, WHATEVER THE MAIN OBTACLES OF

STARTING YOUR BUSINESS

4.2.12WHEN STARTING UP THE BUSINESS/TAKING CONTROL OF THE

BUSINESS WHERE DID YOU SEEK ADVICE OR

INFORMATION

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4.2.13a RESPONDENTS VIEWS ABOUT THE RELATIONSHIP BETWEEN

ENTREPRENEURSIP AND SMALL BUSINESS ACTIVITIES AND

ECONOMIC DEVELOPMENT

4.2.13b HYPTHESIS ONE

4.2.13c CHI SQUARE FOR HYPTHESIS ONE

4.2.13d HYPOTHESIS TWO

4.2.13e CHI SQUARE FOR HYPOTHESIS TWO

xv

LIST OF FIGURES

Figure 1 INTRODUCTION FRAMEWORK

Figure 2 DIAGRAM SHOWING FRAMEWORK FOR LINKING

ENTREPRENEURSHIP TO ECONOMIC GROWTH

Figure 2.1 GDP GROWTH

Figure 2.2 Percentage of Population living on Less than SI PPP per Day

Figure 2-3 Economic, Structure

Figure 4.3 Business Cost of Crime Violence

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACGROUND OF THE STUDY

Small business is a business that is privately owned and operated with

small number of employers and relatively low volumes sales. Small Business are

normally privately owned corporation, partnership, or Sole Proprietorship. The

legal definition of Small Business varies by country and by industry, ranging from

that 15 employers under fair work Act 2009, 50 employee in European Union and

Fewer than 500 employee to qualify for many U.S Small Business Administration

programme. Small business can also be classified according to other method such

as sales, assets or net profits.

These Small business are largely important because they employ, a lot of

people and thereby contribute in a no small measure to the economic development

of Nigeria e.g Sport barber shops, meat shops, mechanic workshops and other

owned and operated by what we had earlier described proprietors. Small business

one is independently owned and operated for profit and is not dominant in its

field. The Small business Administration (SBA) has developed the Follow

Specific “Smallness guideline for various industries.

Manufacturing – a maximum of 500 to 1500 employer, depending on the

product manufactured. Wholesaling – a maximum of 100 employee e.t.c

2

Ayyagan and Beck (2003) have reviewed the contribution made by Small

business to economic in 76 countries. They found that in low-income countries

just 18% of the population was employed by Small business.

Brouwer (2002) state that Entrepreneur is a person who has possession of

a new enterprise venture or idea and is accountable for the inherent risk and the

outcome. The term was originally a loan word from French and was first defined

by Irish French economics Richard Cantillon (1755). A female entrepreneur is

sometimes known as a entrepreneurse.

However with the word “entrepreneurs” being the French Famine form of

entrepreneur, it useage in English in delinaating Sexes detracts from the meaning

of the word entrepreneur”.Entrepreneur in English is a form applied to the types

of personality who is wiling to take upon herself or himself a new venture or

enterprise and accepts full responsibility for the out come. Blinks,

M and Vale, P. (1990) say, the research data indicate that successful entrepreneurs

are actually risk averse. They are successful because their passion for an outcome

leads them to organize available resources in new and more valuable ways.

They effectively use the factor of production. The factor are land (nature

resources), labour (human Input into production using available resources, capital

(any types of equipment used in production i.e machinery intelligence and

knowledge and creativity.

3

Joseph Schumpeter saw entrepreneur as innovator. Joseph Schumpeter is a

prominent theorists of the Austrian School 1934. Entrepreneurship is at the heart

of national advantage (Porter 1990). Schumpeter’s theory predict that an increase

in the number of entrepreneurs lead to an increase in economic growth.

Economic growth is positive change in the level of production of good and

services by a country over a certain period of time.The increase of per capital

Gross domestic Product (GDP) or other measure of aggregate income, typically

reported as the annual rate of changes in real GDP. It usually brought about by

technological innovation and positive external forces. Schumpeter who defined

growth as gradual and steady changes in the long-run which come about by a

gradual increase in the rate of saving and population. Friedman also defines

growth ‘as an expansion of the system in one or more dimensions without a

changes in its structure. The World Bank argues that with rising population,

economic growth is the only sustainable mechanism for increasing a society’s

standard of living and subscribes to the view that “this can only be achieved by

creating a good investment climate which in turn, drives growth by encouraging

investment and higher productivity.

4

1.2 STATEMENT OF THE PROBLEM

Economic growth is positive change in the level of production of good and

services by a country over a certain period of time.

World Bank stressed that the rising population and economic growth is the only

sustainable mechanism for increasing a society’s standard of living and subscribe

to the view that “it can only be achieved by creating a good investment and

climate which in turn drives growth by encouraging investment and higher

productivity. The small and medium business are important because they employ

labour and thereby contribute in no small measure to the economic development

of a nation.

Albeit, entrepreneur and small business find it difficult to have full control on the

economic because of multiple reasons.

The burden of this research work is to review and analyse the role and

contribution of entrepreneur and small business ventures to the economic growth

and development in Nigeria

1.3 SCOPE OF THE STUDY

The bulk of this research work is to examine the role of entrepreneur and

small business organisation as an important tools for economic growth and

development using some selected small business organization within lbadan

5

metropolis as the main areas of research.

A total of thirty respondents were sampled and their responses was analyse within

the aid of simple percentage and chi-square statistical analysis.

1.4 PURPOSE OF THE STUDY

The research attempts to give an insight into impact of enterprenuerial and

small business on economic growth. Entrepreneurs play an important role in

building and nurturing organization learning and initiating organization change.

The change vision of the entrepreneur to enhance the team spirit of his

subordinate to the economic growth. Entrepreneurship and small business has

been acknowledge as a fundamental component of economic growth. The

recognition of small business entrepreneurial significance couple with wide

spread dissatisfaction in traditional business programs has spurred tremendous

growth in entrepreneurship courses at all level of post-secondary

education(Solomon,Dugay and Tarabishy,2002). Entrepreneurship education has

enjoyed more than 50 years of growth, with accelerated growth in the 1990’s

(Katz2003). The economic growth of the national depend on entrepreneur spirit.

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1.5 OBJECTIVE OF THE STUDY

The major aim of this research work is to review the role of entrepreneur

and small business organization as a veritable tools for economic development

and growth. other are:

1 To review the nature and concept of entrepreneurship and small business

organization.

2 To examine the role of government in creating enabling and conductive

environment for the establishment of entrepreneurship and small business

organization.

3 To know the importance of SMI/entrepreneurs in reducing poverty, through

employment generation.

4 To know and review how they source and utilize capital.

5 To ldentify and analyse some of the obstacles and hindrances that is directing

effecting their activites.

6 To analyse it’s reinforcement effect on increasing Gross domestic

Product(GDP) and Gross National Product(GNP) in a nation.

7

1.6 RESEARCH QUESTIONS

1 The presence of a small business has not been able to bring about reduction

in poverty level, inequality (between the rich and the poor) and

unemployment in Nigeria economy?

2 Do entrepreneurial and small business contribute greatly to economic

growth of a nation ?

3 Do you think tax reduction, improve electricity,political stability will create

enabling environment for the establishment of small business enterprises?

4 Is government performing his duties in interm of enabling environment,

regulation, policies and finances to small business?

1.7 RESEARCH HYPOTHESIS

HYPOTHESIS ONE

H1: (Alternate hypothesis): There is a positive relationship between

entrepreneurial and small business activities and economic development.

HO: (Null hypothesis) : There is no positive relationship between

entrepreneurship and small business activities and economic development.

HYPOTHESIS TWO

H1: (Alternative hypothesis) : creating an enabling environment by government

have a significant effect on the activities of entrepreneurships and small business

activities.

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HO: (Null hypothesis): creating an enabling environment by government does not

have a significant effect on the activities of entrepreneurships and small business

activities.

1.8 SIGNIFICANCE OF THE STUDY

The study of entrepreneurial and Small Business is of great importance to

economic growth. It will links entrepreneurship and small business with economic

growth. That is the theoretical framework linking entreneurship to growth as well

as severe constraints in measuring entrepreneurships in a Cross-national context.

The study tried to highlight the role of entrepreneurship, and small

business for natural development. Beside it, the study will try to provide some

basic knowledge of the entrepreneurship and small business. The study also help

to gain some information about it to student, researchers, businessmen and other

ordinary people. The study will also give technical assistance generally in

business planning and development and with preparing grant applications (usually

for those entrepreneurs who are involved in the research and development of new

technologies training and managing staff, financing, marketing and product

development, improving the design of product or the manufacturing process and

accounting and other record keeping function.

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1.9 OPERATIONAL DEFINITION OF TERMS

Small Business: A small business is a business that is privately owned and

operated, with a small number of employer and relative low volume of sales.

Entrepreneur: is a person who has possession of a new enterprise venture or

ideas and accountable for the interest risk and the outcome.

Economic Growth: The increase of per capita gross domestic product (GDP)

other measure of aggregate income, typically reported as the annual rate of

changes in real GDP.

Entrepreneurships: is a person who has possession of a new enterprise venture

or ideas and accountable for the Internal risk and the outcome.

Manufacturing: The use of machine, fool and labour to produce good for use or

sale.

Firms: The firm consist of a number of economic theories that describe the

nature of the firm, company or corporation, including it existences, behaviour

structure to the market.

Innovation: mean renewal or improvement, with novelty being a consequence of

this improvement.

SWOT Analyses: The strategic planning method used to evaluate the strengths,

weakness, opportunities and threats involve in a project or in a business.

TEA: Total entrepreneurship activity.

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CHAPTER TWO

2.0 LITERATURE REVIEW

2.1.1 INTRODUCTION

Entrepreneurial and small business among scholar and researchers seem to

differ considerably. At one extreme is the view that for one reason or the other

entrepreneurial talent involves the establishment and creative, innovation and

formation of industries like manufacturing industries for productive activities in

the real sector of the economy. The small businesses are regulated by small

medium scale in Nigeria. The roles of SMES are similar to role of small business.

2.1.2 HISTORY OF ENTERPRENEURSHIP

In the last century, many writers have identified entrepreneurship with the

function of uncertainly and risk bearing and others with the coordination of

productive resources, the introduction of innovation and the provision of technical

know how (Hosehtz, 1952) cited in Burnet, (2000). During the sixteen century,

people who organized and managed military and exploration expeditions in

France were called “entrepreudre”. The word entrepreneur originated from the

French verb “entrepredre” and the German word “unternehmen” both of which

means to undertake (Afonja 1999). The Oxford Dictionary define an entrepreneur

as one who organizes, manages and assumes the risks of a business enterprise.

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The early 18th century, French economist Richard Cantillon (Grca 1755)

introduced the term entrepreneurship. In his writing, he formally defines the

entrepreneur as the agent who buys means of production at certain prices in order

to combine them into a new product. He further defines entrepreneurship as self

employment of any sort where the entrepreneur is the bearer of uncertainly and

risk. The French economist jean Baptize (1824) defined the entrepreneur as

someone who shifts economic resources out of an area of lower to an area of

higher productivity and greater yield. He added to Cantillon’s definition by

including the idea that an entrepreneur is one who bring other people together in

order to build a single productive organization. The definition according to Peter

Drucker (1985), does not tell us who the entrepreneur is. And since coined the

term almost two hundred year ago, there has been lack of consensus over the

definition of entrepreneur and entrepreneurship.

In the 19th century, British economist such as Adam smith, David Ricardo

and john Stuart Mill defined the concept of entrepreneurship under the broad

English term of business management (Burnett, 2000). However,

Schumpeter(1947) argues that where as the writing of Smith and Ricardo suggest

that they likely undervalue the importance of entrepreneurship, Mill actually

stresses its significance for economic development and growth. He further claims

that entrepreneurship require “ no ordinary skills” and laments the fact that there

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is no good English language equivalent word to encompass the specific meaning

of the French term entrepreneur.

The necessity of entrepreneurship for production was also recognized by

Alferd Manshall in 1890 when he asserted in his treatise of principle of economic

that there are four factors of production i.e land, labour, capital and organization.

Entrepreneurship, both technical and commercial, is the driving element behind

organization. He further argued that the skills associated particular with technical

entrepreneurship are rare and limited in supply and that the ability of entrepreneur

are so great and so numerous that very few people can exhibit them all in a very

high degree.

Another research carried out by Penrose (1959) posit that

entrepreneurship, particularly technical entrepreneurial activity, involves

identifying opportunities within the economic system, filling market deficiencies

through input completing activities including the process of identifying,

developing and bringing a vision to life. This vision may be an innovative idea, an

opportunity or a better way of doing something. The end result of this process is

the creation of a new venture, the expansion of an existing one carried out under

condition of risk and consider able uncertainly (meter et. Al, 1976).

Therefore in recognition of the considerable risk and uncertainly

associated with entrepreneurship, Afonja (1999) made a clear distinction between

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technical entrepreneurship and commercial entrepreneurship. The former involves

product manufacture or the provision of technical service while the later involves

trading buying and selling or provision of non – technical services. The

prerequisites for success and risk factor involved differ significantly for the two

types of entrepreneurship. Therefore, the focus of the study is an impart of

entrepreneurial and small business on the economic growth of Nigeria.

2.1.3 THE NATURE OF ENTREPRENEUR

A number of attributes have been suggested as predicators of central

behaviour with some degree of censuses. These studies intend to examine is some

detail on the synonyms and adjectives used to described entrepreneurs since they

tend to identify what makes an entrepreneurial personality characterized by

certain traits.

For instance Rasheed (2002) suggested that the following are most

relevant; need for achievement, creativity and initiative, risk taking and selling

objective, self – confidence and internal locus of control, need for independence

and autonomy, motivation, energy, commitment and persistence. The

entrepreneur is the individual that identifies the opportunity, gather the necessary

resources, creates, and is ultimately responsible for the performance of the

organization.

14

However, the above definition should not be taken to discount the

importance of the traits and characteristics of the entrepreneur from the

perspective of their propensity to act and the influences of the social, cultural,

psychological, political and economic contextual factors.

“Entrepreneurship as the ability and willingness of individual both on their

own and within organization to”.

Perceive and create new economic opportunities (new products new

production method, new organization schemes and new product – market

combinations):

Introduce their idea in the market, in the face of uncertainty and other

obstacles, by making decision on location, form and the use of resource and

institutions;

Compete with others for a share of that market (Wenneker, Thurik and

Buis, 1997, p. 54)4

2.1.4 CONCEPTUALIZING ENTREPRENEURSHIP

Entrepreneurship is an ill – defined multidimensional concept. The

difficulties in defining and measuring the extent of entrepreneurial activities

complicate the measurement of their impact on economic performance.

Understanding their role in the process of growth required a frame work because

15

there are various intermediate. Variables or linkages to explain how

entrepreneurship influences economic growth. Examples of these intermediate

variable are innovation, variety of supply, entry and exit of firm (competition),

specific efforts and energy of entrepreneurs etc. see figure 1 where also some

condition for entrepreneurial are provided. The condition include personal traits

that lie the origin of entrepreneurship and cultural and institutional elements.

Figure 1 Introduction Framework

Conditions (personal, cultural, institutional

entrepreneurship (multidimensional).

\Intermediate linkages (innovation, variety, competition, entrepreneurial

effort

Economic growth.

Source Wennekers and Thurik (1999)

Entrepreneurship has to do with activities of individual persons. The

concept of economic growth is relevant at level of firms, region, industries and

nation. Hence, linking entrepreneurship of economic growth mean linking the

individual level to aggregate level. In order to considers this link we first pay

16

attention to a definition of entrepreneurship” inspired by Hebert and link (1989),

Bull and Willard (1993) and Lumpkin and Dess (1996), the following definition

of entrepreneurship can be proposed. Entrepreneurship is the manifest ability and

willingness of individuals on their own or in teams, within and outside existing

organization to perceive and create new economic opportunities ( new product,

new production method, new organization schemes and new product – market

combinations), and to introduce their idea in the market, in the face of uncertainly

and other obstacles their ideas in the market decision on location,form and the use

of resources and institution ( Wennkers and Thurih 1999).

Entrepreneurship is synonymous with small business. Certainly, small

firm are on outstanding veticle for individual to channel their entrepreneurial

ambitious. The small firm is an extensions of the individual in charge (Lumpkin

and Dess 1996, p138). however, entrepreneurship is not restricted to person

starting or operating an (innovative)small firm. Enterprising individuals in large

firm, the so-called “lntrepreneur or corporate entrepreneurs’ undertake

entrepreneurship action as well. In these environmental there is a tendency of

mimicking smallness; for instance using business units, subsidiaries or joint

ventures.

First, between the concepts entrepreneurial and manageral in sense of

organizing and coordinating. Secondly, between business owners or self-

17

employed (including owners-manager of incorporated firm) and employees.

Based on this double dischotomy of self employed versus employee and

entrepreneurial versus managerial three types entrepreneur may be distinguished.

These three types are the Schumpeterian entrepreneurs, the intrapreneurs and the

managerial owners who are entrepreneur in a formal sense only. This is

illustrated in table 1

Tables three Types of entrepreneurs

Self-Employee Employee

Entrepreneurial Schumpeterian Entrepreneur Intrapreneurs

Managerial Managerial business owners Executive Manager

Source: Wennkers and Thurk (1999)

Schumpeterian entrepreneurs are found mostly in small forms. They own and

direct independent firms that are innovative and creatively destroy existing market

structures. Intrapreneurs or entrepreneurial managers also belong to the core

entrepreneurship. By taking commercial initiative on behalf of their employer and

by risking their time reputation and sometime their job in doing so. They are

embodiment of leadership resulting in entrepreneurship venture in large firm.

Managerial business owners (entrepreneur in a formal sense) are to be found in

the large majority of small firm. They include many franchise, shopkeeper and

18

people in professional occupations. They belong to what Kirchhoff (1994) calls

“the economics core and are the seedbed for some of the entrepreneurship

ventures.

2.1.5

TYPES OF ENTREPRENEURS

i. Social entrepreneurs

A social entrepreneurship is motivating a desire to help, improve and

transform social environmental, educational and economic conditions key traits

and characteristics of highly effective social entrepreneurs include ambitions and

a lack of acceptance of the status quo or accepting the world “as its is. The social

entrepreneurs is driven by an emotional desire to address some of the big social

and economic condition in the world, for example, poverty and education

deprivation, rather than by the desire for profit.

ii. Serial entrepreneur

A serial entrepreneur is one who contoriously comes up with new ideas

and starts new business. The serial entrepreneur is represented as possessing a

higher effective and efficiently ideas innovations and creatively. They are

involved in established firm, industry and manufacturing company.

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2.1.6 ENTREPRENEURS MYTHS

Entrepreneurs are gamblers: they take very careful and calculated risks.

Entrepreneurs want the whole slow to themselves.

Entrepreneurs are their own bosses and completely independent.

Entrepreneurs experience a great deal of stress and pay a high price.

Starting a business is risky and often ends in failure.

Money is the most important start-up ingredient

Entrepreneurs should be young an energetic.

Entrepreneurs are motivated

Entrepreneurs seek power and control over others.

If an entrepreneur is talented, success will happen in a year or two.

Entrepreneurial IQ is a unique combination of creativity, motivation,

intergiry, leadership, team building, analytical ability and ability to deal

with ambiquity and adversity.

Sources: Tmmons, New Venture Creation (Bun Ridge II Richard D. Irwin

1994)

2.1.7 ROLE OF ENTREPRENEURSHIP TO ECONOMIC GROWTH

Self –Employment as Entrepreneurship.

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New Business starting as entrepreneurship.

The Global entrepreneurship monitor.

Entrepreneurships endogenous growth model.

Entrepreneurs endorse specialization and international trade.

Entrepreneur create value competitively.

Entrepreneur lead to technology economic development.

2.1.8 DIAGRAM SHOWING

FRAMEWORK FOR LINKING ENTREPRENEURSHIP TO ECONOMIC

GROWTH.

Conditional for Crucial elements of Impact of entrepreneurship

Level of Analysis Entrepreneurships Entrepreneurship

Source: Wnneker and Thurik (1999)

Individual Level

Firm Level

Macro Level

Psychological endowment

Culture Institutions Business Culture incentives Culture Institutions

Attitudes skills ACTIONS

Starting entry Into new markets Innovations

Variety Completion selection

Competiveness Economic growth

Firm Performance

Self realization Personal Wealth

21

2.1.9 PROBLEM OF ENTREPRENUERIAL IN NIGERIA

1. Law makers are simultaneously promoting an expansion of government

policies that hinder economic growth and economy opportunity. The

unchecked proliferation of Federal, State and Local Tax and regulatory

requirement that is impending new business formation and business

expansion across the nation.

2. The most entrepreneur are creative imitators rather than innovators” with

low level of entrepreneurial talent (Umo,2001).

3. The low productivity and low quality output. These compound the

increase competition for imports, which has resulted in downsizing or

outright closure of many manufacturing industries.

4. The inability of government to emphasized the crucial role of

technological innovation and technical entrepreneurship.

5. Government in Nigeria does not pay adequate attention to the need for

accelerated economic growth.

2.1.10 SOLUTION TO ENTREPRENERIAL IN NIGERIA

1. The restructuring of the private sectors as the engine of growth of the

economy will succeed depend on the fostering and development of

technical entrepreneurship among the indigenous population.

22

2. The implentation the components of technology policy and economic

planning.

3. The prerequisite for progress in Nigeria is the development of an

institutional framework and enterprise culture capable of creating the

optimum condition for technical entrepreneurship. (Adegbite and Van

hattum 2002).

4. Creating business opportunity by reducing the or reform the tax policy

and the regulation.

5. Encourage entrepreneur training and entrepreneurial perspective that can

develop individual.

2.1.11 BENEFITS OF ENTREPRENURSHIP

1. Encourage and supporting women any young entrepreneurs.

2. Increase provision of government services to and regulation of the

informal business sector.

3. Growing rural economic infrastructure and opportunities.

4. Grant fund buy in from national and international development agencies

and NGOs committed to poverty alleviation, youths empowerment, private

sector business development, fair trade.

5. Enhancing the quality and competitiveness of Nigeria businesses.

23

6. Increased capacity to adopt new business technologies

7. Strengthening the organizational and business linkage between the formal

and informal sectors.

8. Creating and enhancing economic opportunities for school leavers and

University and College graduates.

2.2.1 SMALL BUSINESS IN NIGERIA

Small business are synonymous with small and medium Scale enterprise

(SMEs). SMEs are usually referred to as small business in developed

countries. Although, there is no universal definition of SMEs’ there is a

general consensus regarding variables used in identifying SMEs. Small

business enterprises have been contributing substantially to the national output in

many economic both developed and developing country Oluba (2009:1). He

Observed that they account for 80% of the economic output in the United state

and Japan while sub-sector accounted for 45% in Western Europe.

While explaining the contribution of small business to Nigeria, Ojo

(2004:7 ) noted that the sector accounted for about 70% of nations GDP,

generated mainly in the agricultural services, manufacturing and distributive trade

sectors. Gbadamosi (1995:4) observed that the high population growth rates in

most developing countries and Nigeria have increased the demand for consumer

24

goods Thus, small scale industries produce mostly consumer good which

increase not only the variety to consumer but the products are more accessible to

the poor majority. Small business enterprises serves as a vehicle through which

Ideas for new product and service find their way to the consuming public thus

help in meeting local demand and diversifying and expanding the nations output.

2.2.2 THE CONCEPTS OF SMEs

The criteria include capital investment, annual turnover, gross output and

employment, what constitutes SMEs varies across space and time and each

country tends to derive its own definition based on the SMEs are expected of play

in an economy and the programme of assistance designed to achieve a goal. The

definition of SMEs in Nigeria has varied the years and institutions.

Prior to 1992 in Nigeria both the federal Government and its agencies had

adopted varying definition at the same time due possible to their variation in

developing focus or strategy. For example the 1989 industrial policy of Nigeria

defined this enterprises as follow ;

Small scale: those whose total investment was between N 100 000 and N

2,000 000 excluding land but including working capital .

Medium scale: those with total investment of between N2 ,000,000 and

N5,000 000 excluding land but including working capital. Moreover, the

25

decree establishing the National Economic and Reconstruction Fund

(NERFUND) in 1989 define SMEs as these whose fixed asset excluding land and

including cost investment do not exceed maximum asset base of

N2,00,000,000 exculuding land and working capital and with the number of

Staff employed not less than 10 or more than 300.

* Tenba and kayode (1972) define SMEs by considering size of

employment .However, the difference in factors proporting among

establishment, the complexity of capital and the type of organization are

some of the consideration that reduce their definitions to operational

meaningfulness. They identified some important features as follow:

* Little or no specification in management.

* Close and personal Contact of the manager with employees and clients on

customers.

* Lack access to Credit through an organized securities market and offer

Short term loan.

* Lack of dorminant position in a major market.

In CBN credit guidelines to bank in 1991, which defined small- scale

enterprises as an enterprise whose capital Investment ( including land and

working capital) does not exceed N10,000,000 or whose turnover was not

more than N25,000,000 per annum. Meanwhile initially CBN publication

26

defined SMEs as any enterprise with a maximum asset of

N200,000,000,excluding land and working capital, with no lower or upper limit

of Staff.

Recently CBN defined, SMEs as any enterprise with a maximum asset base

N500,000,000 (excluding land and working capital) and with no lower or

upper limit of Staff. However Since 1990, due to the persistent depreciation in

the exchange rate of the naira, the maximum size of capital investment has been

raised to N5,million and the turnover to N25million.

At the 13 council meeting of the Natural Council on Industry held in

July2001,the different categories of business enterprise that came under the

banner of SMEs in Nigeria contest were listed out. The categorization which is

based on their scale of operation includes :

CLASSIFICATION OF SMALL BUSINESS

Micro/ cottage: An enterprise with total cost (including working capital but

excluding cost of Land) not more than N1.5million, with labour size of not more

than 10 workers

Small Scale: An enterprise with total cost ( including working capital but

excluding cost of land) between not N1.5million to N50 million, with a labour

size of not more than 10 workers.

27

Medium scale: An enterprise with total cost (including working capital but

excluding cost of land)above N50 million but not exceeding N200 million with

a labour size of between 101-300 workers. Under the world banks; small and

medium scale enterprise (SMEs) scheme is defined as an enterprise whose total

fixed assets (excluding land plus cost of investment) do not exceed N10million

in constant 1998 prices. Thus, precisely what constitutes SMEs depends either on

the general scale of enterprise covered or on the legal definition in a country

scheme.

The Classification of Small business in china is based mainly on sale

revenue and total assets. Thus small business have sales revenue not less than

RMB 50million. In Canada, small businesses are those with less than 100

employees in manufacturing and less than 50 employees in the Service Sectors.

The United Kingdom classified business according to number of employees:

Micro 0-9, Small business, 0-49 medium sized business, 50-249 and large

business,250 and above.

In Nigeria, the current classification is base on the number of employees

and asset (excluding land and building).

Some of the classification of small business by various agencies, as noted by

Otiti (2007:236) are

28

1. The Center for Industrial Research and Development (CIRD) of

Obafemi Awolowlo University,-IIe-Ife classified small business as an

enterprise with working capital base not exceeding N250,000 and

employment on full time, 50 workers or less

2. The Nigerian Industrial development Bank (NIDB) now Bank of

Industry) classified small scale enterprise as an enterprise that has

investment and working capital not exceeding N750,000 while it defined

medium scale enterprise as those operating within the range of N750,000

to N3million.

According to the Committee for Economic development (CED) a small business

has as least two or more of the following key features.

1. Management is Independent. Usually the managers are the sole

owners.

2. Capital is supplied and an individual or small group hold

ownership.

3. The area of operation is mainly local

4. The business is small when compared with the biggest units in its

filed.

5. Small share of the market that cannot influence the activity in

most level of the firms

29

6. The Chief Executive generally participate actively in most level of

decision- making process and day- today operation of the firms.

7. The Chief Executive can be know by all employees of the firms.

Section 376(2) of Companies and Allied Matter Decree of 1990 defines

Small scale company as one with:

(a) Annual turnover of not more than N2million

(b) Net assets value of not more than N1million

The European Commission (EC) Coined the term “ Small and Medium

enterprises (SMEs)’ The Three component of the SMEs are

(1) Firms with 0-9 employee are micro enterprises.

(2) Firms with 10-99 employee are small enterprises.

(3) Firms with 100- 499 are medium enterprises .

2.2.3 OVERVIEW OF PERFORMANCE OF THE SMES IN NIGERIA

An appraise of the performance of the SMEs in Nigeria shows that past

government have made some positive effort on the sectors. For example it is

estimate that SMEs account for about 70 percent of the total manufacturing

output. Specifically the agricultural sectors which is the largest consists of SMEs

employs over 60 percent of the gross Domestic product GDP. Furthermore SMEs

30

are knows to be very active in promoting increased in the use of local of inputs

into either intermediate are final outputs.

Similarly many SMEs have successfully adapted imported machinery for

local usage, thus positioning themselves as veritable tools for promoting technical

know low and developing indigenous technology. Their fact is that SMEs are

mostly resource based and therefore, well despersed throughout the country. They

have to an extent facilitated the opening up of rural areas and have large assisted

to mitigated rural urban drift.

The importance of small business sectors in Nigeria be Summarized and

includes the following:

- Employment generation: it bring about industrial expansion and create

employment opportunities which make for a better economy due to high

unemployment rate in the country. ( Storey & Johnson 1987)

- Development of local technology i.e new technology Nigerians are

making new approaches to the provision of machines that can Fabricate

equipment for oil drilling and compressor, block moulder, bakery and soap

making equipment. Farm tools e.g hoes

- Encourage the development and application of local raw materials-:

This sectors has attracted small businessmen into investing in the

processing of farm products and minerals.

31

- The sector promote indigenous enterprises: This is a very vital role in

the area of growth and development. For instance a pure water company

will lead to the need for printer who will print the company’s name,

address, NAFDAC and batch numbers nylon bags production, sign

writing e.t.c

- The sector encourage the growth and training of local skill and

workers: These are young school leavers trained to serve these business in

their communities who could rise to serve bigger organization.

- The SMEs helps in control rural/urban migration i.e with the

establishment of business in local places; The drive for employment

outside that environment is reduced as the companies in that environment

will employ some of the people there.

- It bring about the improvement of the standard of living of the people

and quality of life general i.e the presence of the small business attract

the infrastructure that bring about these development e.g For examples

telecommunication sector.

- This sectors encourage the Utilization and development of available local

resource through improved production storage, reservation or

conservation, processing, recycling, packaging, marketing.

32

- SMEs provides excellent opportunity for developing Youngs talent into a

great entrepreneurs and managers which are necessary for economic

development.

- Foreign exchange is also earned by exporting the technology developed in

“technology cluster” of a country e.g the silicon valley technology in

America and New York, Banking clusters are spring boards for Nigeria

information technical and banking growth.

- SMEs support industrialization policies for a rural- urban economic

balance in a country.

2.2.4 THE ROLE OF SMALL BUSINESS IN THE NIGERIA ECONOMY

The role of SMEs is based mainly on the belief that such enterprise are

likely to:

- Facilitate the development of a broader base indigenous entrepreneurial

culture for the country and a higher value-added to domestic industrial

production i.e basics for the national economy.

- Boost employment as they employ a larger number of people per unit of

investment capital-intensive enterprises.

- Enhance regional economic balance through industrial dispersal, including

rural areas.

33

- Moderate rural-urban migration.

- Promotion of effective domestic resources utilization .

- Facilitate managerial training for the unskilled and semi-skilled labour.

- Produce intermediate goods for use in the large enterprises.

- Mobilize and utilize domestic savings.

- Expand export possibilities and substitute imports effectively .

- Produce import substituting machinery and equipment (copying and

duplicating multiplication of prototype machinery and equipment) for

possible leasing.

2.2.5 PROBLEMS OF SMALL BUSINESS IN NIGERIA

However, small business particularly in Nigeria are faced with so many

problems which inhibit them from being an active agent of economic growth in

Nigeria.

1. Inadequate, inefficient at time and non functional infrastructural facilities

which tend to escalate cost of operation as small business are forced to

resort to private ownership to utilizes such as road, water, electricity,

transportation, communication amongst which often increase cost per unit

price of good and service.

34

2. Lack of easy access to funding/credits, which can be traceable to the

reluctance of banks to extended credit to them owning among the to poor

and adequate documentation of business proposal. Lack of appropriate and

adequate collateral, high cost of administration and management of small

loan as well as high interest rates.

3. Bureaucratic bottlenecks and inefficiency in the administration of

incentives and support facilities provided by the government, which tend

to discourage the would be entrepreneurs of SMEs while shifting existing

ones.

4. Low demand for product; arising from low and dwindling consumer

purchasing power aggravated by lack of patronage of locally produced

goods by the general public as well as those in authority.

5. Unfair practice characterized by the dumping and importation of sub-

standard goods by unscrupulous businessmen. This situation is currently

being aggravated by the effect of globalization and trade liberalization

which make it difficult for SMEs to compete even in the local/home

markets.

6. Weakness in organization, marketing, information-usage, processing and

retrieval personal management according record and processing etc arising

35

from the dearth of such skill in most SMEs due to inadequate education

and technological background in the part of the SME promoters.

7. High incidence of multiple of regular agencies, taxes and levies that result

in high cost of doing business and this discourage entrepreneurs. This is

due to the absence of a harmonized and gazetted tax regime which would

enable manufacturer to build in recognized and approved levies and taxes

payable.

8. Import liberalization: the over generous application of this policy as a

result of the world trade organization (WTO) exposing them to rude and

unfair competition of dumped goods from all over the globe free trade as a

global concept should not be adopted at the expense of our domestic

economy, importance of primary goods that can be produces locally by

our SMEs should be discontinued.

2.2.6 THE RELEVANCE OF SMALL BUSINESS TO ECONOMIC

GROWTH

The operation of small business is like the sole proprietorship though

some are often registered as limited liability companies with limited labour force.

Mostly, they are labour intensive with little provision for on the farming,

machinery of administration viable source of medium and long term capital and

36

high mortality rate. In fact, small business is a big business in Nigeria. Through

their capital investments they create job and new opportunities to promote

community building and social activities. They also contribute to the development

of a diversified economy by absorbing surplus labour resulting from economic

restructuring. The small business are the engines of job creation and economic

growth ( Rosen2weig 1988; Brownetal.1990; heedhlolm and mead 1987).

They create market for their good and service. This occur through the

Gross National Product (GNP) is the total value of the final good and services

product for consumption in society during a particular time period. it rise or fall

measure economic activity based on the labor and production output within a

country. The Gross National Product (GDP) a measure output generated through

production by labor and property which is physically located within the confine of

a country. The gross domestic product GDP and the gross national product (GDP)

of the country is increased as a result of the activities of small scale businesses.

The Gross domestic product of any country is the total wealth created by the

citizen living in that country, the gross national product is the total wealth created

by the national of a given country. The activities of small scale business lead to

growth in the economy.

37

2.2.7 THE SMEs SCHEME IN NIGERIA

The Banker’s committee is a body constituted by representative of Bank in

Nigeria. The scheme was approved at their 246th meeting on December,21, 1999.

- According to them, this was a response to President Obasanjo concern and

policy measure for the promotion of small and medium industries (SMI)

as a vehicle for rapid industrlisation, sustainable economic development,

poverty alleviation and employment generation. The scheme require all

bank’s in Nigeria to set aside 10% of their profit before tax (PBT) for

equity investment in small business and medium scale industries. The

scheme commenced in June 19th 2001.

- The scheme among other thing assist the establishment of new viable SMI

projects, thereby stimulating economic growth, development of local

technology, promotion and creation of employment and indigenous

entrepreneurship.

- The funds will be available for projects in the real sector of the economy

which includes agro-ached, information technology and

telecommunication, manufacturing, educational establishments

- Service (directly related to production in the real sector to enhance

production) tourism and leisure, sold minerals, construction and any

38

activity as may be determined from time to time by the banker’s

committee.

- To qualify for the scheme and enterprise, in addition to being engaged in

any of the activity listed above, must have a maximum asset base of N200

million excluding land and working capital.

- With the number of staff employed by the enterprises not less than 10 or

more than 300. The enterprise must be registered as a limited liability

company with the corporate Affairs commission and comply with relevant

regulation.

- The companies and Allied Matters Act (1990) such as fact filing of annual

returns including audited Financial Statement. Comply with all applicable

tax and regulation and render regular returns to the appropriate authorities.

Timing of investment exist shall be a minimum of 3 years.

2.2.8 GROWTH PERFORMANCE

Nigeria’s economy has experienced strong growth in recent years. Real

GDP growth averaged 7.8 percent from 2004 to 2007, and growth of 6.4 percent

in 2007 exceeded the low-income sub-Saharan (LI-SSA) media (4.0 percent) the

LI median (6.0 percent) and the rate in Indonesia (6.3 percent), although it was

lower than the rate in Kenya (7.0 percent) (see Figure 2-1). Oil accounts for

39

nearly 40 percent of GDP, but from 2001 to 2006 – except in 2003 – real growth

in other sectors outpaced growth in the oil sector. Sectors that have experienced

particularly strong growth include telecommunications, which has been

liberalized and privatized over the past decade and wholesale and retail trade.

Agriculture has also shown some growth-although in remains far from fulfilling

its potential (see Agriculture).

Despite Nigeria’s relatively high per capital GDP, poverty remains

widespread and there are wide disparities in income (see Poverty and Inequality)

40

Figure 2.1: Read GDP Growth

Real GDP growth has been strong in recent years.

Time series Comparison to Other Countries. Most Recent Year

Source IMF Article IV (Nigeria 2008) and IMF World Economic Outlook

Database (April, 2008)

Nigeria’s labour force grew more productive by an average of 5.1 percent

annually between 2003 and 2006, but growth dipped from 7.5 percent in 2004 to

3.3. percent in 2006 lower than Kenya’s 3.6 percent and Indonesia’s 3.5 percent

Year Valve 2003 10.3 2004 10.6 2005 5.4 2006 6.2 2007 6.4

Summary for 2003 – 2007 Five year average 7.9

12 10 8 6 4 2 0

8

7

6

5

4

3

2

1

Expected value and margin of errors

Global Standing Highest-five average

2003 2004 2005 2006 2007

Nigeria LI LI SSA Kenya Indonesia Lowest –live average CAS Code 11P3

6.4 6.0 4.0 7.0 6.1

NGA

0.6

17.2

41

in 2005 (Most recent year available). Nigeria has significant scope for increasing

labour force productivity by improving health and education, Introducing new

technologies and eliminating protectionist trade policies.

Nigeria may also be able to increase productivity and growth by

improving the business enabling environment and increasing fixed investment

(expenditure on fixed assets such as buildings, equipment and infrastructure) from

both the private and public sectors. Reliable data on Nigeria’s gross fixed

investment are unavailable, but the poor state of the country’s infrastructure

suggests that more fixed investment is needed.

Figure 2.2.

Percentage of Population Living on Less than SI PPP per Day

42

Despite impressive growth, poverty in Nigeria is a major concern.

Comparison to the other Countries, Most Recent Year.

NigeriaL1 indonesia

Source World Development Indicator (April 2008)

2.2.9 ECONOMIC STRUCTURE

Nigeria neglected its strong agricultural and manufacturing base during

the oil boom of the 1970s and 1980s, largely through the appreciation of the real

exchange rate that occurred because of the very rapid expansion of oil exports.

Through various initiatives of the NEEDS and its equivalent at the state level

(SEEDS). Nigeria continues to pursue diversification to reduce dependence on

crude oil production. Growth in non-oil sectors has been strong in recent years

(see Growth Performance), but the sector still accounts for a large share of GDP.

80

70

60

50

40

30

20

10

0 70.8 38.7

7.5

NGA

0.6

Global Standing Highest-five average

12.3

Lowest-five average CAS code 12P3a

43

Dominated by oil, industrial output reached 41.7 percent of GDP in 2006. a share

for higher than the median value for LI countries globally (24.0 percent).

Indonesia’s industrial output as a share of GDP is identical to Nigeria’s but output

in Indonesia comes from a more diversified industrial base, which provided

employment for 18.0 percent of the labour force in 2005. By contrast, the entire

Nigerian industrial sector provided employment for only 3.4 percent of the

workforce. This reflects the weak contribution of the oil sector to the job growth

needed to transform the economy, and underlines the need for USAID and other

donors to support non-oil-led growth in Nigeria. See Figure 2-3.

Agriculture is important in the Nigerian economy, not only because it

employs a large share of the labor force (58.6 percents in 2005) but also because

of its importance in the allocation of consumption. Subsistence farming and

agricultural production of food and beverages dominate output, but the federal

government and several state governments want to revive the prominence of

commercial agriculture. The sector has grown in real terms, but its share in GDP

has hovered at about one-third in the past few years as the price of oil in the world

market has increased along with Nigerian’s revenues from oil exports. This share

of GDP for agriculture tracks well the expected value of 33.8percent for a country

with Nigeria’s characteristics and the medians for low-income countries globally

(28.1 percent) and in sub-Saharan African (35.6 percent). These data contrast with

44

figures for Indonesia, where only 11.9 percent of GDP comes from agriculture,

providing an indication of Indonesia’s adjustment to a more industrialized

economic base.

Figure 2-3

Economic, Structure

Although the oil-dominated industrial sector is Nigeria’s largest, agriculture is still very important.

The services sector’s share of output increased from 21.2 percent in 2002

in 26.3 percent in 2006 but remained well below the L.I median (44.6 percent),

100

90

80

70

60

50

40

30

20

10

0

26.3

41.7

32.0

44.6

24.0

28.1

44.1

19.7

35.6

54.8

17.4

27.9

46.32

41.7

11.9

Nigeria LI LI - SSA Kenya Indonesia

Source: IMF Article IV (Nigeria, 2008), Nigeria National Bureau of Statistics & World Development Indicator (April, 2008)

CAS Code 13P1a-c 13P2 a-c

45

the LI-ASA media (44.1 percent) and the shares in Kenya (54.8 percent) and

Indonesia (46.3 percent). Reforms in the banking and insurance sectors as well as

liberalization and privatization in telecommunications and transport have been

helpful, as have reforms in the aviation and mobile phone industries (see

Economic Infrastructure). Wholesales and retail trading has also grown. In

addition, tourism Nigeria’s movie industry “(Nollywood”) and the entertainment

industry in general show potential for growth and employment generation.

In summary, growth in non-oil sectors has been promising but will need to

outpace oil sector growth for a sustained period to lessen the economy’s

dependence on oil. By supporting Nigeria’s efforts to diversify, donors can help to

create jobs and alleviate poverty.

2.2.10 BUSINESS ENVIRONMENT

Institutional barriers to doing business, including perceived corruption in

government are critical determinants of private sectors development and prospects

for sustainable growth. Backed by donors, the Government of Nigeria has been

engaged in comprehensive investment climate reform at the federal and state

levels over the past four years.

The World Bank’s composite Doing Business indicators for 2007 ranked

Nigeria at an unsatisfactory 108 to 175 world economies. Though this compares

46

favorably to the LI median rank of 147 and Indonesia’s 123. It is far behind

Kenya’s 72. Kenya was labeled a “top 10 reformer “ in 2007.

Government reforms, such as the establishment of the Economic and

Financial Crimes Commission (EFCC). The Extractive Industry Transparency

Initiative, and legislation establishing the National Council on public

Procurement, have institutionalized the fight against corruption, enabling

successful prosecution of high-level cases and substantially reducing instances of

419 advance fee fraud. Graft in the bureaucracy is a problem however and

heighten risk for entrepreneurs. This is reflected in Nigeria’s score of -1.3 in 2006

on the Control of corruption index (-2.5 for poor and 2.5 for excellent) and its

scoring below the global median Zero on the World Bank’s governance indicators

(Rule of Law index, Regulatory Quality Index,Government Effectiveness index).

Score on the Rule of Law index and the Regulatory Quality index, however have

improved since enactment of the seal island Compact of 2004.

Nigeria’s performance on standard indicators of business-government

interface is mixed Administrative reforms at the Cooperate Affair Commission

(CAC), the federal business registry, and other agencies have lowered both the

cost as a percentage of gross national income per capital and number of

procedures necessary to start a business. The cost of starting a business in Nigeria

(56.6 percent of GNI per capital) 48 is lower than in Indonesia (80.0 percent) and

47

the median for LI and LI-SSA countries (103.6 percent and 134.9 percent

respectively) but higher than in Kenya (46.1percent). Nigeria’s score is expected

to improve once the CAC’s computerization initiative is complete and business

registration and tax stamp duty registration and tax stamp duty registration are

fully integrated further streamlining procedures. Still, state and local government

controls create bottleneck in post-registration procedures. In many states,

duplication and lack of transparency about additional requirements for registration

with state authorities (e.g. for business premises) hinder the move from

registration to actual start up of business operations.

Automation of court transcripts, more effective use of alternative dispute

resolution, and reform in judicial summary procedures in Lagos helped reduce the

time to enforce a contract from 730 days to 457 a performance surpassing that of

all comparators and benchmarks. Nigeria enterprises pay 29.9 percent of total

operating costs in taxes as calculated by the doing Business Project-lower that

both LI medians and rates in Indonesia and Kenya. This suggests that relative

formal or official taxes are not a major constraint on business in Nigeria.

Administration of taxes, however, is still a major problem.

Other key weakness in the business environment include serious deficiencies in

property registration and business executives’ perception of crime and insecurity

as constraints on business. The business cost of crime and violence illustrates how

48

insecurity affects business performance (Figure 4-3). On this indicator, Nigeria

performs worse than all benchmarks and better than Kenya, but only because of

social unrest before and after that country’s presidential elections of 2007. Indeed,

Nigeria’s ‘’image problem’’ stems from a perceived lack of security and high

crime rate, two problems that are acute in certain parts of the country such as the

Niger Delta. Recent reforms in land registration have reduced the time it takes to

register in Nigeria from 274 t0 82 days, better than the LI-SSA median of 94

days, but still time consuming in comparison to the LI country median of 72 days,

Kenya’s 64 days, and Indonesia’s 42 days.

49

Figure 4.3

Business Cost of Crime and Violence

Crime and insecurity are a chronic problem in Nigeria.

Comparison to Other Countries. Most Recent Year

1(Significances ) – 7 (No Significant cost)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Sources Global Competitiveness Report 2007 – 2008 CAS code: 22S9

Multiple taxation and the often arbitrary manner of tax collection at the

subnational level are not captured in the data but also pose a major risk and create

uncertainty of small business in addition to encouraging unofficial payments.

Donors should continue to support efforts to reduce business environment

constraints at the state and local government levels.

2.9

3.6

3.6

5.7

2.5

Nigeria

LI

LI - SSA

Kenya

Indonesia

50

Of all the problems facing Nigeria’s small business by far the greatest in the cost

of providing private electricity to compensate for deficiencies in the public

supply. A more detailed description of this problem is in the section on Economic

Infrastructure.

51

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION

This chapter is concerned with the general approach and method by which

the various data used for the purpose of this research work were collected. It

covers research design, research methodology, sampling and sampling size,

sources of data, data collection instrument and procedure, analytical tool and

limitations and validity of data.

Therefore, research methodology is a set of rules and procedure upon

which a research is based and against which claims for knowledge and

assumptions are evaluated for decision making.

3.2 RESEARCH DESIGN

According to Fabohungbe (1999) research design could be described as the blue

print that allows a research to provide solution to the problem of who to study,

what to study, when to study and how to generate data in a research situation. It is

the plan for collecting and utilizing data so that desired information can be

obtained.

Descriptive survey was adopted for this research because it involves on

empirical research methodology in collection of data having to manipulate the

52

samples to the research hypothesis. The approach was used on the sample of the

target population. The research was conducted among entrepreneur and small

business who are professional innovator and creative in their field. The researcher

focus on selected entrepreneur and small business that are in manufacturing

industries, food processing, textile and weaving apparel, metal fabrication and

foundry, agricultural raw material processing, saw milling, woodwork and

furniture, leather processing, chemical and pharmaceutical and soon on.

3.3 RESEARCH METHODOLODY

The methodology used in this research involves the collection of

quantitative and qualitative data from both primary and secondary sources.

Selected entrepreneurial and small business organisation provide the data

needed to test the hypothesis that were formulated.

3.4 SAMPLING AND SAMPLING SIZE

The purpose of sampling is to obtain external validity. Selected

entrepreneurial and small business with innovation and creativity were test

. Questionnaires were administered to the selected entrepreneurial and

small business owner. The entrepreneur and business owner were sampled

altogether for the purpose of this research work. Subjects were sampled

53

based on their operation level and significance. It was through the

administration of questionnaires.

3.5 SOURCES OF DATA

All relevant data are collected from the primary and secondary sources.

The yardstick used in selecting a particular source of data relied on its

relevance to the research topic. In order to carry out the study successfully,

emphasis will be placed on the relation of both primary and secondary

data.

3.5.1 Primary Data

They are statistical material that are original and correspond to the

objective of investigation in the hand of the investigation for the purpose

of enquiring. Examples are observation, oral interviews, questionnaires.

etc.

Questionnaires were administered to entrepreneur and small business

owners. It is designed to gather valid and relevant information through the

response of the respondent that answers the planned sequence of

questions. Questionnaire are used to obtain facts about past, present and

future events.

54

3.5.2 Secondary Data

In this research, entrepreneurial and small business owner provide their

cash book, receipt, voucher, payment vouchers, journal and other

document use to keep their financial record. Other secondary data use are

textbook, magazine, published articles, specialized journal and trade

association.

3.6 DATA COLLECTION INSTRUMENT AND PROCEDURE

3.6.1 INTERVIEW

This is described as face to face interaction situation in which a person

(the interviewer) asks another person (the interviewee) the questions which he

responded to orally. This method permits the researcher to obtain directly first

hand information about a persons knowledge, his values, experience as well as

his attitudes and beliefs. It is a method that provides immediate feedback and

gives the opportunity of asking question which arises from other questions.

3.6.2 QUESTIONNAIRE

These are sets of questions relating to the aims and objectives of the study

to which respondent are required to answer by writing. Questionnaires are used to

obtain fact about past, present and future events, the prevailing conditions and

practice and to obtain information on people attitudes and opinions. 30

55

questionnaires were given. And all the thirty questionnaire were return

completed.

3.7 ANALYSTICAL TOOL

Simple percentage and chi-square method were used to analyse the

primary data collected and information gather were presented in a tabular form.

Through these method, such question would separately be analysed, based on the

answers supplied. This would be done to foster easy and clear understanding of

the work. Chi-square test was used to test the validity of the hypotheses.

According to Asika (2011) Chi-Square test is applied in the following situation.

1. Where there are two variable drawn from independent sample.

2. Where the data are non-parametric, when the data are expressed in

variable. For instance, these can be categorized in two ways. The

following hypotheses were stated;

H1: (Alternate hypothesis): There is a positive relationship between

entrepreneurial and small business activities and economic development.

HO: (Null hypothesis) : There is no positive relationship between

entrepreneurship and small business activities and economic development.

56

H1: (Alternative hypothesis) : creating an enabling environment by government

have a significant effect on the activities of entrepreneurships and small business

activities.

HO: (Null hypothesis): creating an enabling environment by government does not

have a significant effect on the activities of entrepreneurships and small business

activities.

X2 = ∑[0 –E]2

E

Where

∑ - Summation

O - Observation

E - Expected frequency

3.8 LIMITATION AND VALIDITY OF DATA

Problems were encountered during the process of this research. The

entrepreneur does not have more time spend with the researcher for the interview.

Although, the questionnaire was fill and submitted early. Also some facts were

regarded as classified document, which is secret which could not be disclosed to

an outsider. The director (entrepreneur) chairman, refuse to disclose this book

57

keeping record but with more effort, it was released, for researcher to work on it

in their office. Despite all these hindrance, results from questionnaire and

interview was gathered and records, alongside with other journal from publication

and textbook were used.

58

CHAPTER FOUR

4.0 PRESENTATION OF DATA ANALYSIS AND

INTERPRETATION

4.1 INTRODUCTION

The chapter discusses the results of this study. It provides a description of the

instrument used in the study and analytical tools adopted. The presentation and

analysis represent the breakdown, order and summary of data collected in a way

that answers the research hypothesis developed for the study.

Thirty questionnaires were administered to the respondents, which were some

selected small and medium organization within lbadan metropolis. The entire

administered intrusments were retrieved by the researcher.

4.2 COLLECTION OF RESPONSES

Thirty questionnaires were administered and the presence of the

researcher helped a lot. All the questionnaires were answered and returned. The

hypothesis proposed earlier was tested.

59

CHARACTERISTICS OF RESPONDENTS

TABLE 1

4.2.1 SEX DISTRIBUTION OF THE RESPONDENTS

SEX RESPONDENTS PERCENTAGE

MALE 17 57

FEMALE 13 43

TOTAL 30 100%

Source: Research Survey, October 2011

Interpretation: From the table above, 43% of the respondents were female while

the remaining 57% were male.

TABLE 2

4.2.2 AGE DISTRIBUTION OF THE RESPONDENTS

AGE RESPONDENTS PERCENTAGE

UNDER 25 NIL 0%

25 – 34 4 13.3

35 – 44 13 43.3

45 AND ABOVE 13 43.3

TOTAL 30 100%

60

Source: Research Survey, October, 2011.

Interpretation: The age distribution of the respondent is spread. From the above

table, one can conclude that the questionnaires were administered among people

of matured mind, hence, their response is reliable.

TABLE 3

4.2.3 MARITAL STATUS OF THE RESPONDENTS

AGE RESPONDENTS PERCENTAGE

SINGLE 5 17%

MARRIED 25 83%

TOTAL 30 100%

Source: Research Survey, October 2011

Interpretation: From the above table, 17% of the respondents were single, while

83% were married.

61

TABLE 4

4.2.4 EDUCATIONAL QUALIFICATION OF RESPONDENTS

QUALIFICATION RESPONDENTS PERCENTAGE

WAEC & BELOW 4 13.3%

OND/ATS/NCE 5 16.6%

B.SC/HND 17 56.6%

POST GRAGUATE/PROFESSION 4 13.3%

TOTAL 30 100%

Source: Research Survey, October, 2011

Interpretation: From the above table, 13.3% of the respondents hold WAEC

CERT & BELOW QUALIFICATION, 16.6% of the respondents hold OND/ATS

and NCE respectively, 56.6% of the respondents are holder of B.SC/HND, while

13.3% of the respondents were postgraduate and professional Certificate holder.

62

TABLE 5

4.2.5 JOB TITLE OF THE RESPONDENTS

JOB TITLE RESPONENTS PERCENTAGE

OWNER 6 19.8%

PARTNER 2 6.6%

DIRECTOR 22 73.3%

TOTAL 30 100%

Source: Research Survey October, 2011.

Interpretation: The above table show the statistical analysis of the respondents

job tithe 19.8% of the total respondents were owner of the business,6.6% were

partner, while 73.3% of the total respondents were employed directors.

63

TABLE 6

4.2.6 NUMBER OF EMPLOYEE THE ORGANISATION CURRENT

EMPLOY/NUMBER

CATEGORY RESPONENTS PERCENTAGE

BELOW 10 9 30%

11 – 20 10 33.3%

21 – 50 5 16.6%

51 – 100 3 9.9%

101 – 200 3 9.9%

TOTAL 30 100%

Source: Research Survey October, 2011.

Interpretation: From the table above 30% of the respondents employed below 10

staff,33.3% of respondents employed the 11-20 staff,16.6% of the respondents

employed 21-50 staff, 9.9% of the respondents also employed 51-100 staff, while

9.9% of the respondents also engaged 101-200 staff.

64

TABLE 7

4.2.7 NUMBER OF YEARS IN BUSINESS

NUMBER OF YEARS RESPONENTS PERCENTAGE

1 -5 YEARS 4 13.3%

6 – 10 YEARS 10 33.3%

11 – 15 YEARS 9 30%

16 – 20 YEARS 7 23.3%

TOTAL 30 100%

Source: Research Survey October, 2011.

Interpretation: From the above table, 13.3% have been in business for up to 5

year, 33.3% have been in business between 6-10 year,30% have used between 11-

15 year in business, while the remaining 23.3% of the respondents have been

operating between 16-20 years.

65

TABLE 8

4.2.8 INVESTMENT IN THE BUSINESS

TOTAL INVESTMENT RESPONENTS PERCENTAGE

N50,000 – 5,000.000 3 9.95

510,000 – 1,000,000 4 13.35

1,100,000 – 2,000,000 3 9.9%

2,000,000 & ABOVE 20 66.6%

TOTAL 30 100%

Source: Research Survey October, 2011.

Interpretation: The table above show the statistical analysis of the respondents

investment level of the respondents, shows that 9.9% of the respondent have

investment N50,000-500,000, 13.3% of the respondent invest between N510,000-

1,000,000, 9.9% of the respondents invest between N1,100,000-2,000,000, while

66.6% of the respondents invest over N2,000,000 in the business.

66

TABLE 9

4.2.9 HOW DO YOU AIM TO ACHIEVE YOUR LONGER TERM

GROWTH PLAN?

RESPONENTS PERCENTAGE

INCREASE MARKET SHARE 5 16.6%

INCREASE

MANGER/WORKFORCE

8 26.7

REDUCE COST OF

PRODUCTION

2 6.7

INCREASE PRODUCTION 15 50%

TOTAL 30 100%

Source: Research Survey October, 2011.

Interpretation: From the above table 16.6% respondents increase in market

share, 26.7% respondents increase manager/workforce 6.7% respondents in

reduce the cost of production, while 50% response increase in production.

TABLE 10

67

4.2.10 TOTAL TURNOVER

TUNROVER% RESPONENTS PERCENTAGE

0% - 25% 1 3.3%

25% - 50% 17 56.6%

51 – 75% 8 26.6%

75% - 100% 4 13.2

TOTAL 30 100%

Source: Research Survey October, 2011.

Interpretation: The table above show the statistical analysis of the respondent

investment turnover.

TABLE 11

4.2.11 CAN YOU TELL ME, WHATEVER THE MAIN OBTACLES OF

STARTING YOUR BUSINESS?

TUNROVER% RESPONENTS PERCENTAGE

TAX AND REGULATION POLICY 10 33.3%

SHORT MANAGERIAL/

SKILL/TECHNOLOGY

8 26.6%

SHORT CASH FLOW/FINANCIAL 12 40%

TOTAL 30 100%

Source: Research Survey, October 2011

68

Interpretation: From the table above 33.3% respondents tax is regulation policy

are obstacles, 26.6% respondents shot managerial/skill technology are obstacles,

while 40% respondents that short cash flow/financial is obstacle to start business.

TABLE 12

4.2.12 WHEN STARTING UP THE BUSSINESS/TAKING

CONTROL FOT HE BUSINESS WHERE DIO YOU

SEEK ADVICE OR INFORMATION?

RESPONENTS PERCENTAGE

BANK 4 13.3%

LEGAL ADVICE 11 36.7%

CONSULTANT/EXPERT 10 33.3%

PERSONAL 5 16.6%

TOTAL 30 100%

Source: Research Survey, October 2011

Interpretation: From the above table, 13.3% respondents seek advice or

information from bank, 36.7% respondent seek advice or information from legal

advice, 33.3% respondents seek advice from consultant/expert, while 16.6%

respondents seek advice from personal source to start up the business.

69

The responses provided by the sample respondents were modified for

easier item by item analysis of the responses. The column for strongly Agree and

Agree were merge to form a new column – YES, while the column for Strongly

Disagree and Disagree were also collapsed into a new column – NO-. The

responses are in the table below:

Table 13a: Respondents views about the relationship between entrepreneurship

and small business activities and economic development.

TABLE 13a

4.2.13

TUNROVER RESPONENTS PERCENTAGE%

YOUR BUSINESS IS A SOLE

PROPRIETORSHIP

18 (59.45) 12 (39.6%)

IS YOUR BUSSINESS A

PARTNERSHIP COMPANY

11 (36.3%) 19 (62.7%)

THERE HAS BEEN A CHANGE

OF OWNERSHIP OF THE

BUSINESS IN THE PAST THREE

YEARS

4 (13.2%) 26 (85.8%)

THE BUSINESS HAS BEEN 18 (59.4%) 12 (39.6%)

70

INCORPORATED BY

CORPORATE AFFAIRS

COMMISSIONS

The Business Venture was able to

maximize it profit performance in the

last financial years

28 (92.4%) 2 (6.6%)

Your business Organisation do use

information and Communication

Technology (Computer, Internet,

Intercall) for Managing the business

record keeping, research and

communication.

27 (89.1% 3 (9.9%)

You can Manager your cash flow

effectively

29 (95.7%) 1 (3.3%)

You do finance your business growth

using internal finances

28 (92.4%) 2 (6.6%)

The organization also make use of

external finance providers

28 (92.4%) (6.6%)

Entrepreneurial contribution greatly 29 (95.7%) 1 (3.3%)

71

to economic growth of a nation

Do you think the creation of more

small business enterprises drastically

reduce unemployment and poverty

27 (89.1%) 3 (9.9%)

Your business take interest in

innovation and creativity

25 (82.5%) 5(16.5%)

Tax reduction, lmprove electricity,

political stability, will encouraged

your business to grow

29(95.7%) 1(3.3%)

Source: Research Survey, October 2011

TESTING OF HYPOTHESIS

Hypothesis is a statement made about some characteristics of a population

that can either be supported or rejected based on available sample data. The

hypothesis Ho is known to be the NULL HYPOTHESIS which is the negative

hypothesis. The hypothesis H1 is the ALTERNATIVE HYPOTHESIS which is

the positive hypothesis.

The hypothesis formulate earlier would now be tested with the aid of Chi-

Square distribution at 0.05 level of significance. This can be computed using the

formula below

72

X2 = (oi – ei )2

ei

Where: = Summation, Qi – Observation, ei – expected Frequency.

HYPTHESIS ONE

Hi: (Alternative Hypothesis): There is a positive relationship between

entrepreneurship and small business Activtieis and economic

development.

Ho: (Null Hypothesis): There is no positive relationship between

entrepreneurship and small business activities and economic development.

To test for this hypothesis, the responses to item 1 – 6 in the questionnaire were

used as a basis for measuring it.

TABLE 13b

4.2.13b

ITEM YES NO TOTAL

Your business is a sole Proprietors 18 (59.4%) 12 (39.6) 30

Is your business a partnership

company

11 (36.3%) 19 (62.7)% 30

There has been a change of

ownership of the business in the past

4 (13.2%) 26(85.8%) 30

73

three years

The business has been incorporated

by Corporate affairs commissions

18 (59.4%) 12 (39.6%) 30

The business venture was able to

maximize it profit performance in the

last financial years

28 (92.4%) 2 (6.65) 30

Your business organization to use

information and communication

technology (Computer, Internet,

Intercall) for managing the business

record keeping research and

communication.

27 (89.1%) 3 (9.9%) 30

106 74 180

To determine the expected values from the above observed value, the formula

illustrated below was used ei = rt x ct

N

Where, rt = row total, ct = Column total.

e.g ei = 106 x 30 = 3180 = 17.7

180 180

74

4.2.13c Table:13c

Oi ei Oi – ei (oi – ei)2 (oi – ei)2 ei

18 17.7 0.3 0.09 5.08 12 12.3 - 0.3 0.09 7.3 11 17.7 - 6.7 44.9 2.5 19 12.3 6.7 44.9 3.7 4 17.7 -13.7 187.7 10.6

26 12.3 13.7 187.7 15.3 18 17.7 0.3 0.09 5.08 12 12.3 -0.3 0.09 7.3 28 17.7 10.3 106 6.0 2 12.3 -10.3 106 8.6

27 17.7 9.3 86.5 4.9 3 12.3 -9.3 86.5 7.03

(oi – ei)2 Ei

= 83.39

X2 (tab) = 12.592, df = 6, = 0.05, X2 (CaL) = 83.39

Tabulated Chi Square value (X2 (tab) )= 12.592

Calculated Chi square value (X2 (Cal)) = 83.39

DECISION RULE

Since the calculated value 83.39, is greater than the tabulated value 12.592 at 0.05

level of significance, reject the null hypothesis which is “there is no positive

relationship between entrepreneurship and small business activities and economic

development” is rejected and the alternative hypothesis which is “there is a

75

positive relationship between entrepreneurship and small business activities and

economic development” is accepted.

DISCUSSION

Penrose (1959), posit that entrepreneurship particularly technical entrepreneurial

activity, involves identifying opportunities within the economic, filling market

defiencies through input completing activities including the process of

identifying, developing and bringing a vision to life.

The small business and entrepreneurship are the engines of job creation

and economic growth (Rosens weig 1988; Brown et al 1990; beedlolm and mead

1987). Acs (1992) Small firm play an important role in the economy serving as

agents of change by their entrepreneurial activity, being the source of

considerable innovative activity, stimulating industry evolution and creating an

important share of the newly generated jobs. Entrepreneurship is ‘at the of

national advantage ’(Porte, 1990, p. 125).

HYPOTHESIS TWO

Ho (NULL HYPOTHESIS): Creating an enabling environment by government

does not have a significant effect on the activities of entrepreneurships and small

business activities.

76

Hi (ATERNATIVE HYPOTHESIS): Creating an enabling environment by

government have a significant effect on the activities of entrepreneurship and

small business activities.

The responses of item 7 – 13 in the questionnaire were used a basis for measuring

this.

4.2.13d TABLE: 13d

ITEM YES NO TOTAL

You can manage cash flow

effectively

29 (95.7) 1 (3.3%) 30

You do finance your business growth

using internal finances

28 (92.4%) 2 (6.6%) 30

The organization also make use of

external finance provider

28 (92.4%) 2 (6 .6%) 30

Entrepreneurial contribute greatly to

economic growth of nation

29 (95.7%) 1 (3.3%) 30

Tax reduction, improve electricity,

political stability, will encouraged

your business to grow.

29 (95.7%) 1 (3.3%) 30

77

Do you think the creation of more

small business enterprises will

drastically reduce unemployment and

poverty.

27 (89.1%) 3 (9.9%) 30

Your business take interest in

innovation and creativity

25 (82.5%) 5 (11.5%) 30

195 15 210

To determine the expected values from the above observed value, the formula

illustrated below was used.

ei = rt x ct , where rt = row total, ct = column total

N and N = total number

e.g ei = 195 x 30 = 5850 = 27.9

210 210

78

4.2.13e TABLE 13e

Oi Ei Oi – ei (oi – ei)2 (oi – ei)2

ei

29 27.9 1.1 1.21 0.04

1 2.1 -1.1 1.21 0.6

28 27.9 0.1 0.01 3.6

2 2.1 -0.1 0.01 0.05

28 27.9 0.1 0.01 3.6

2 2.1 -0.1 0.01 4.8

29 27.9 1.1 1.21 0.04

1 2.1 -1.1 1.21 0.6

27 27.9 -0.9 1.21 0.04

3 2.1 0.9 1.21 0.6

27 27.9 -2.9 0.81 0.03

3 2.1 0.9 0.81 0.4

25 27.9 -2.9 8.41 0.3

-5 2.1 2.9 8.41 4.0

(oi – ei)2

Ei

= 21.4

79

X2 (tab) = 14.067, df = 7, = 0.05, X2 (Cal) = 21.4

DECISION RULE

The result showed a chisqure calculated value of 21.4 (Cal) as against tabulated

chi-square value of 14.067 (tab). Since the calculated value of X2 exceeds the

tabulated value, the alternative hypothesis is accepted while the null hypothesis is

rejected.

DISCUSSION:

To corroborate the above finding 44. “The world Bank’s composite of doing

business indicators for 2007 ranked Nigeria at an unsatisfactory 108 to 175 world

economics”. Though this compares favourably to the LI Median rank of 147 And

Indonesia 123. It is far behind Kenya’s 72. Kenya was labelled a top reformer in

2007. The World Bank bases its income base group classification on GNI per

capital calculated using the World Bank Atlas method. Low income countries are

those with GNI of $906 to $595. Nigeria released revised national accounts data

in October 2007 that included substaintial upward revisions to GDP figure. The

World Bank’s World Development indicator database reports Nigeria’s GNI per

capital using the Atlas method as $620 in 2006. Nigeria growth rate was strong in

80

2007 and it is possible that Nigeria will “graduate” to lower-middle-income status

in the World Bank’s.

IN CONCLUSION: It was inferred from the open ended questions in the

questionnaire that, the responded express there view on how they intend to

achieve their long term growth plan, some of their responses include, proactive

and aggressive increased of their market share, development of managerial skills,

reduce and minimize cost of production and maximize their profit margin through

increase production.

The respondents also talk about there sources of advice and information which are

through bank, legal practitioner, consultant/expert e.t.c

To comb it up, some of the obstacles of doing business in Nigeria according to the

respondents are tax and regulation policy, socio-political instability, lack of

adequate power supply, access to capital and loan, technological backwardness

and other environmental obstacles.

81

CHAPTER FIVE

5.0 SUMMARY OF FINDING, CONCLUSION AND

RECOMMENDATION

This chapter present, the summary of the project findings and report,

project recommendation, conclusion and suggestion for further studies.

5.1 SUMMARY OF FINDINGS

The researches focus on the impact of small business and entrepreneurial

on the economic of Nigeria. The responses from the questionnaire were analyzed

using the percentage analysis method and chi-square as the statistical tools. The

findings of this research is based on the data gathered from the respondents. From

the data collected the alternative hypothesis “there is a positive relationship

between entrepreneurship and small business activities and economic

development” is accepted while Null hypothesis “there is no positive relationship

between entrepreneurship and small business activities and economic

development is rejected.

The following finding was deducted from data collected, these are:

1. Creating a collective socio-economic atmosphere that encourage

entrepreneurial in its fullest and widest applicability.

82

2. The creation of business has been able to bring about a reasonable

reduction in the level of poverty inequality (between the rich and the poor)

and unemployment in the Nigeria economy.

3. Enhancing tax reduction and access to business capital for entrepreneur

and small business operation by means of promoting lending through

equity instead of debt.

4. Entrepreneurship generate growth, necessary for wealth creation and it

serves as a vehicle for innovation and charge.

5. Small business serves as building blocks in the economic growth and

structural transformation process in Nigeria.

6. Creating an enabling environment by government have a significant effect

on the activities of entrepreneurship and small business Activities.

7. The test the hypothesis that the higher level of entrepreneurial activity

leads to higher growth rate of local economies and strongly positives

associated with higher growth rate.

5.2 IMPLICATION OF FINDINGS

Small business and entrepreneurial were fully recognized as the main

engine of economic growth in Nigeria and a major factor that course reduction in

unemployment and poverty level.

83

Therefore, an increase in entrepreneurship, give rises to more forms

inventing new intermediate goods, enhancing growth, increase in productivity of

good and services.

The invent of small business cause Small Firms to grow faster than large firms

and significant contributors to industry growth, small firm are more innovative

and entrepreneurial firm are greater contributors towards innovation.

5.3 LIMITATION OF THE STUDY

This study attempt to emphasize the Impact of Small business and

entrepreneurial to economical growth. It has not been able to provide a

comprehensive solution to the problems of facing the economic growth, problem

facing entrepreneur to economic growth to acceleration of economic growth.

Evaluative Studies of this nature bordering on financial matters are best with a

number of problem such as: capacity, time frame, poor record and knowledge of

the researcher.

5.4 RECOMMENDATION

In order to increase the Impact of Small business and entrepreneurial to

economic growth: the following key issue involve creating an enabling

environment:

84

1. Specialized training programmes in entrepreneurship should be organized

to expose potential and existing entrepreneurs to risk taking strategies

inherent in self-employment and wealth creation.

2. Education system should incorporate business management course in

schools curriculum through the use of case studies and business plan,

Business Bite, entrepreneurial skill, human resource management, good

leadership and business simulation clinic. To enhance the ability of future

entrepreneurs to be proactive, set goal and objectives.

3. Entrepreneurs should be exposed to various source of information and

business opportunity available both Nigeria and external environment.

4. The above will expose entrepreneurs to source of raw materials, new and

improved profess technologies, domestic and Foreign market and other

information necessary for business survival and growth.

5. Need for transformational growth requires a high level of investment and

rising productivity. This is achieved by establishing a strong enabling

environmental for private sector development, involving multiple element;

a sound legal and regularly, a sound and efficient financial system,

openness to trade and investment and sustainable use of natural resources.

6. There is need to restructure and strengthen the government policies in

favour of rapid growth and development of small business and

85

entrepreneurial so that they could serve as the hub industrial

transformation.

5.5 CONCLUSION

The impact of Small Business and Entrepreneurship on economic growth

of Nigeria is great. For any economic to survive the global economic downturn or

meltdown the impact of Small business and entrepreneur is needed. For example

US president Barack Obama echoed an imperative sentiment when he declared in

his first state of the Union address in February this year that “the future of our

economy relies on the inauguration of our entrepreneurs”. This is no doubt that

the statement holds fundamentally truth for nations across the world in general

and stagnated global economy in particular. Entrepreneurship and small business

is longer seen as being solely (exclusively or alone) applicable to people to start

enterprises but to people involved in any endeavor (effort or attempt). It is

essential to motivate the youths to become self-employed even when they are

studying in schools and colleges.

It is the spirit (Feeling) of entrepreneurship that plays a crucial (important

or essential) role in making the society move towards the new phase of

knowledge economy.

86

A constructive way of contributing to society is by developing

entrepreneurial skills. Innovation is the implantation (act of planting) of creative

inspiration for Entrepreneurs.

5.6 SUGGESSTION FOR FURTHER STUDIES

It is believed that findings brought about by this study will be studied and

digested by all concerned. Also, there are still grounds to be researched this topic.

All prospective researcher are therefore encourage to further exploit and do more

on the topic which is the importance and relevance of small business and

entrepreneurship to the economic development of a nation. Been an explicit and

voluminous topic, the researcher believe there is room for further studies.

87

BIBLIOGRAPHY

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Landstrom (eds), The Blackwell Handbook Entrepreneurship, Oxford:

Blackwell publishers.

Audretsch, D.B. and A.R. Thurik (2001a), Linking Entrepreneurship to growth,

STI working paper 2001/2, paris: OECD.

Audretsch, D.B. Verhuel and A. R Thurik and S. Wennekers (eds) (2002),

Entrepreneurship: Determinats and Policy in a European Us Comparison.

Boston/dordrecht, Kluwer Academic Publishers.

Audretsch, D.B M. A Carree and A. R Thurik (2001), Does Entrepreneurship

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Appendices

NATIONAL OPEN UNIVERSITY OF NIGERIA

SCHOOL: School of Business and Human Resources Management

Programme: Bsc Entrepreneurial and Business Management

Topic: Impart of Entrepreneurial and Small Business on the Economic Growth of

Nigeria.

QUESTIONNAIRE

Tick the Box appropriate box

1. What is the named company.

2. Gender Male ( ) Female ( )

3. Age?

(a) Under 25 ( ) (b) 25-34 ( ) (c) 35-44 ( ) (d) 45-34

above ( )

4. Qualification?

(a) WAEC & Below ( ) (b) OND/ATS/MCE ( )

(c) B.Sc/HND ( ) (d) Post/Gradual/Professional Qualification ( )

5. Married Status: (a) Married ( ) (b) Single ( )

6. Job Title? (a) Owner ( ) (b) partner ( ) (c) director ( )

7. How many employee does your business currently employ across all site?

(a) 1-9 (b) 10-25 (c) 25-50, (d) 51-100 (e)100-250

96

8. How many year has the firm been trading ? This includes under all

ownership all legal statues ? (a) 1-5 year (b) 6-10 year (c) 11- 15 year

(d) 16-20 year

9. How much did you Invest in total in all of these business?

(a) N 50,000- N500,000 (b) 510,000-1,000,000 (c) 1,100,000-2,000,000

(d) 2000,000-above

10. How do you aim to achieve your longer term growth plan? Is it by (a)

Increase market share (b) Increase manager skill/workforce (c) Reduce

cost of production (d) Increase production.

11. Which of the following bandtest represent the proportion of your turnover

generated (a) % - 25% (b) 25% - 50% (c) 51% - 75% (d) 75% - 100%

12. Can you tell me, what were the main obstacles to starting your business?

(a) Tax and Regulation policy(b) short managerial skill/technology

(c) short cash flow/financial

13. When starting up the business/taking control of the business where did

you seek advice or information (a) Bank ( ) (b) Legal advice ( ) (c)

Consultant/Expert ( ) (d) Personal ( )

A SA D SD

14. Your business is a sole proprietorship.

97

15. Is your business a partnership company.

16. There has been a change of ownership of the business

in the past three years.

17. The business has been incorporated by Corporate affair

commissions.

18. The business venture was able to maximize it profit

performance in the last financial years.

19. Your business organization do use information and

communication technology (Computer, Internet,

Intercall) for Manager the business record keeping,

researvh and communication.

20. You can manage your cash flow effectively.

21. You do finance your business growth using internal

finances.

22. The organization also make use of external finance

providers.

23. Entrepreneurial contribute greatly to economic growth

of a nation.

24. Tax reduction, improve electricity, political stability,

98

will encouraged your business to grow.

25. Do you think the creation of more small business

enterprises drastically reduce unemployment and

poverty.

26. Your business take interest in innovation and creative.

A = Agree

SA = Stronger Agree Yes

D = Disagree

SD = Stronger Disagree No