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ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES AS PANACEA TO UNEMPLOYMENT IN NIGERIA
By
Bisayo Oluwatosin Otokiti (M.Sc., B.Sc.)
Lecturer, Department of Business and Entrepreneurship
Kwara State University, Malete,
Kwara State, Nigeria
E-mail addresses: or
Blessing Akinsia (B.Sc.)
Researcher, Department of Business and Entrepreneurship
Kwara State University, Malete,
Kwara State, Nigeria
E-mail address:
ABSTRACT
This study is concerned with the effective use of entrepreneurship development programme as meaningful tools to ameliorating the current acute and perpetually increasing unemployment rate in Nigeria. This study examines the roles and contribution of entrepreneurship development programmes in Nigeria. It also examined the degree to which entrepreneurship activities can serve as veritable solution to unemployment in Nigeria. The study used secondary data obtained from established government institutions. With the use of descriptive statistical tools- percentage, frequency count tables, inferential statistical tools of analysis precisely Pearson correlation was used to test formulated hypothesis. The study established that entrepreneurship development programmes have a positive significance on employment generation and capable of being solutions to unemployment in Nigeria. The empirical study of this research work also reveals that entrepreneurship is a necessary ingredient for stimulating growth. The conclusion therefore, is that creation of enterprises through entrepreneurial development programmes contribute more to employment generation, income earning and economic empowerment as well as overall economic growth. It is therefore recommended that entrepreneurship development and entrepreneurial orientation should be more rigorously pursued by government in order to reduce unemployment and by extension accelerate economic growth and development in Nigeria.
Key Words: Entrepreneurship Development Programmes, Panacea,Unemployment
1. INTRODUCTION
Many scholars have written widely on entrepreneurship and its importance to employment generation. In order to highlight its uniqueness in relation to the growth and development of a given economy, entrepreneurship has been variously referred to as a “source of employment generation”. This is because entrepreneurial activities have been found to be capable of making positive impacts on the economy of a nation and the quality of life of the people (Adejumo, 2000, Chinonye, 2013). Studies have established its positive relationship with stimulation of economic growth; employment generation; and empowerment of the disadvantaged segment of the population (Reynolds, 1987, Thomas and Mueller, 2000, Oluremi and Gbenga, 2011.)
Nigeria as a country has numerous businesses and investment potentials due to the abundant, vibrant and dynamic human and natural resources it possesses. Tapping these resources require the ability to identify potentially useful and economically viable fields of endeavour. The world and most particularly developing nations like Nigeria is currently facing serious employability challenge and widespread decent work deficits, a development that is capable of increasing the spread of poverty.
According to Doreo (2013) unemployment rate in Nigeria is growing at the rate of 16% per year with the youth negatively impacted the most and accounting for three times the general unemployment. The International Labour Organization (ILO 2014) asserted that over 900 million persons in the world are living below $2 a day. It is estimated that 456 million workers around the world are living in extreme poverty (below $1.25 a day). The ILO further stated that the situation would worsen in Africa unless concerted and conscious efforts are made by the governments at all levels. About 400 million new jobs would be needed over the next decade to avoid a further increase in unemployment, adding that it was high time the people, the government (that the private and the public) invested more in productive job creation rather than continuing with excessive recurrent expenditures, the intensity of unemployment within the global economy can be seen from the fact that unemployment rate is steadily increasing each year. In the African continent, unemployment has risen with South Africa, having a higher rate than Nigeria at 25 per cent, Angola at 25per cent, Botswana at 17.5per cent, Egypt at 11.8 per cent, Kenya at 11.7 per cent and Namibia at 51per cent. Nigeria’s rate increased from 21.5 % in 2010 to 23.9 % in 2011 but the nation has experienced a reduction of 0.2% in 2012 (23.7%) and a further 1.2% reduction in 2013 (22.5%). Evidence abound that such reduction was as a result of many entrepreneurial activities and developmental programmes initiated by the government. (Onugu, 2013).This reduction notwithstanding, government critics are strongly of the opinion that the rate of unemployment in the country is still very high and urgent attention is required to reduce this to single digit (Ngozi, 2013).
Such high unemployment situations lead to serious security problems for the respective nation. Nigeria is still one of the poorest countries in the world and has one of the highest rates of youth unemployment in sub-Sahara Africa, and despite its alleged strong economic growth (Chukwubuikem, 2008). The great need for entrepreneurship development programmes in Nigeria today, more than ever, is necessitated by the rate of unemployment and its effect on both the people and the nation.
The objective of this study is to examine the link between entrepreneurship development programmes and reduction in unemployment in Nigeria; Also, this paper further examined the contribution of entrepreneurship development programmes in Nigeria.
Hypothesis
H0: There is a significant relationship between entrepreneurship development programmes and employment generation in Nigeria.
H1: There is no significant relationship between entrepreneurship development programmes and employment generation in Nigeria.
2. CONCEPTUALISING AND CONTEXTUALIZING ENTREPRENEURSHIP DEVELOPMENT
2.1 Entrepreneurship and Unemployment
Entrepreneurial opportunities are not just the result of the push effect of (the threat of) unemployment but also of the pull effect of produced by a thriving economy full of opportunities (Parker, 2004; Van Stel & Thurik & Verheul & Baljeu,2007; Thurik et al, 2008.). The relationship between unemployment and entrepreneurship has been shrouded with ambiguity. There are many views on the relationship between unemployment and entrepreneurial activity ( Audretsh & Carree & Van Stel & Thurik, 2005; Baptista & Van Stel & Thurik,2006). The simple theory of income choice, which has been the basis for numerous studies focusing on the decision confronted by individuals to start a firm and become an entrepreneur (Evans & Jovanovic, 1989; Blanchflower & Meyer, 1994; Blau, 2000; Evans & Leighton, 2011) suggests that increased unemployment will lead to an increase in startup activity on the grounds that the opportunity cost of not starting a firm has decreased. This effect has been referred to as the refugee or shopkeeper effect. However, the unemployed people tend to possess lower endowments of human and social capital and entrepreneurial talent required to start and sustain a new firm which may lead to early exit (Lucas, 1978, Jovanovic, 1982,Baptista & Van Stel & Thurik,2006;Thurik,2007).
High unemployment may also imply lower levels of personal wealth reducing the likelihood of becoming self-employed or the survival in the initial stages of business ownership (Hurst & Lusardi, 2004; Van Stel & Thurik & Verheul & Baljeu, 2007). High levels of unemployment may correlate with low economic growth leading to a low number of entrepreneurial opportunities (Audretsch, Thurik & Verheul & Wenneker, 2002; Baptista & Van Stel & Thurik, 2006). A low rate of entrepreneurship may also be a consequence of the low economic growth levels, which also reflect higher levels of unemployment (Audretsch, 1995; Audretsch & Carree & Thurik, 2001). While some studies find that greater unemployment serves as a catalyst for startup activity (Reynolds & Miller & Makai, 1995; Reynolds & Storey & Westhead, 1994; Hamilton, 1989; Highfield & Smiley, 1987; Yamawaki, 1990; Evans & Leighton, 2010& 2011), but much of studies has found that unemployment reduces the amount of entrepreneurial activity (Audretsch & Fritsch, 1994; Audretsch, 1995; Audretsch & Carree & Thurik, 2001). There are lots of claims that start-up activity influences unemployment. The positive effect of entrepreneurship on economic performance has been referred to as the Schumpeter effect (Van Stel & Thurik & Verheul & Baljeu, 2007). New firm startups hire employees, resulting in subsequent decreases in unemployment (Picot et al, 1998; Pfeiffer & Reize, 2000a; Audretsch & Carree & Thurik, 2001). Entrepreneurship may influence economic performance in different ways. Entrepreneurs often play a vital role in the early evolution of industries by way of introducing new products or processes and, in the long term, enhancing productivity through increasing competition (Van Stel & Thurik & Verheul & Baljeu, 2007). The resulting learning process speeds up the discovery of the dominant design for product-market combinations. The learning does not solely apply to the experimenting entrepreneur (Baptista & Van Stel & Thurik, 2006). Knowledge spillovers play an important role in this process(Audretsch & Aldridge & Oettl, 2006; Audretsch,2007; Van Stel & Thurik & Verheul & Baljeu, 2007).
Self- employed individuals tend to work longer hours than wage-employed people and may be more productive as their income is more clearly linked to working effort (Van Stel & Thurik & Verheul & Baljeu,2007; Carree & Thurik, 2003 ; Carree & Verheul & Thurik, 2007). The ambiguities found in the empirical evidence reflect these two conflicting forces. For example, Evans and Leighton (1990) found that unemployment is positively associated with a greater propensity to start a new firm, but Garofoli (1994) and Audretsch and Fritsch (1994) found that unemployment is negatively related to new-firm startups, and Carree (2001) found that no statistically significant relationship exists. Audretsch & Thurik (2000); show that an increase in the number of business owners reduces the level of unemployment. They identify a Schumpeter effect in terms of the positive impact on employment resulting from the entry of new firms (Audretsch & Carree & Thurik, 2001).
Thurik et al. (2007) examine the relationship between entrepreneurship and unemployment in Japan .They find that, although Japan‘s unemployment rate has been influenced by specific exogenous shocks, the effects of entrepreneurship on unemployment are not different when compared to other OECD countries. They find that entrepreneurship significantly lowers unemployment but that it takes a lag of four yearly data (VanStel & Thurik & Verheul & Baljeu, 2007). VanStel & Baptista & Thurik, (2006) examine the relationship between entrepreneurship and unemployment, as measured by the variation in business ownership rates, and unemployment in Portugal. It concludes that Portugal has been a relative outlier in regard to the effects of entrepreneurship on unemployment when compared whit the OECD average. They found that the industrial re- structuring effects brought about by increases in business ownership rates probably do not have a significant impact on the reduction of unemployment. Thurik (2003), the influence of industrial structure, more specifically of entrepreneurship, is investigated on the level of unemployment in the UK. It will be concluded that the UK is a relative outlier when using a simple model of the relationship between unemployment and the rate of business ownership. The model is calibrated using recent data of some 23 OECD countries. It underestimates the decrease in unemployment in the UK in the period 1982-1990. Thus, while there are not just theoretical reasons, but also empirical support as well, that while unemployment leads to increased entrepreneurial activity, entrepreneurship leads to reduced unemployment. Unraveling the relationship between entrepreneurship and unemployment is crucial, because policy is frequently on assumptions that do not reflect this ambiguity (Baptista & Thurik & Van Stel, 2006).
2.2 Entrepreneurship and Economic Growth
For many developing countries, entrepreneurship has been a powerful engine of economic growth and wealth creation, and is crucial for improving the quality, number and variety of employment opportunities for the poor, it has several multiplier effects on the economy, spurs innovation, and fosters investment in people, which is a better source of competitive advantage than other natural resources, which can be depleted (Versloot, 2007). Entrepreneurs create new enterprises, new commercial activities, and new economic sectors. They generate jobs for others; they produce goods and services for society; they introduce new technologies and improve or lower cost outputs; and they earn foreign exchange through export expansion or the substitution of imports (Carree & Thurik, 2002).The importance of entrepreneurship development through new business formation for economic growth has been recognized since Schumpeter (1934).
The Global Entrepreneurship Monitor, a research program aimed at assessing the national level of entrepreneurial activity in selected countries, conducted an entrepreneurship and economic growth study on 48 countries in 2008 (Global Entrepreneurship Monitor, 2008). According to the study, the economic growth of a country is directly correlated to its level of entrepreneurial activity. In particular, there is a high correlation between economic growth and entrepreneurial activity in industrialized countries. For instance, the American economy is well known for its flexibility, adaptability, and grasping of opportunity partly because of a prevalence of entrepreneurial culture in the United States. According to the report, Countries that are able to replenish the stock of businesses and jobs and have the capacity to accommodate volatility and turbulence in the entrepreneurial sector are best placed to compete effectively. Entrepreneurs therefore play a key role in addressing poverty through their contributions to wealth and job creation, economic advancement and social empowerment.
Gillis, (1996) and Burnett, (2000) assert that entrepreneurship is a necessary ingredient for stimulating growth and in order to achieve successful economic development, a country must experience both economic growth and "fundamental changes in the structure of its economy. Despite their typically unappreciated role, entrepreneurs orchestrate these transformations and create new channels for economic activity and employment. According to the Global Entrepreneurship Monitor Report (2010), about 70 percent of an area’s economic performance and well being is dependent upon how entrepreneurial the area’s economy is.
Ogundele, Olajide and Ashamu, (2008) argued that Entrepreneurship activities are very fundamental to any meaningful development of an economy, many well meaning people and leaders in the societies always clamour for the development of entrepreneurs that would bring a turnaround in the economy. This explains the reason behind the government conscious policy statements that are often made in this direction. However, it has to be noted that the benefit and relevance of entrepreneur to accelerated economic growth cannot be achieved in isolation without the existence of the right opportunities that serve as the wheel of its development.
Abdullahi, (2008) reported that Petrin, (1992) opined that for countries to accelerate their economic growth and development, it is necessary for them to build up the critical mass of first generation entrepreneurs because development is now being linked more and more to entrepreneurship. Entrepreneurship as argued by Abdullahi, (2008) stands as a vehicle to improve the quality of life for individuals, families and communities and to sustain a healthy economy and environment. However, the acceptance of entrepreneurship as a central development force by itself will not lead to economic development and the advancement of private enterprises until an enabling environment necessary for entrepreneurship to be rewarding is created within communities. One of the goals of economic development strategies pursued by successive Nigerian Governments has been the reduction of poverty through job creation. Many government policies over the years for the achievement of the objective have been based on the development of indigenous entrepreneurship. However, Ekpu, (2012) humorously observed some of these policies have been like changing one structure for another much like ‘exchanging a monkey for a baboon, recycling of ideas; a duplication of efforts which turn out to be of doubtful relevance or simply a money-guzzling machine.”
Chukwuemeka, Nzewi and Okigbo, (2008) opined that a cursory look at Nigeria indicates that she either lacks entrepreneurship ability or that government entrepreneurship oriented policies are not effective. Ugwu, (2006) argues that most entrepreneurship related policies and programmes in Nigeria fall short of appropriate development frameworks, some of the policies are poor, frequent changing of policies and programmes and lack of clear entrepreneurial development vision and commitment pose serious threat to entrepreneurship in Nigeria. Some of the entrepreneurial related policies are good but the issue of poor environmental forces hinders them, for instance electricity supply, water and good road network,uneasy access to finance, high import tariff and other tariffs of government are not available to encourage entrepreneurs Carree, (2002).
3. RESEARCH METHODOLOGY
Secondary data are the data collected by a party not related to the research study but collected these data for some other purpose and at different time in the past. (Ghauri & Gronhaug,2005). A variety of secondary information sources is available to researchers gathering data on an industry, potential product applications and the market place. Quantitative research method was adopted in analyzing data needed to examine entrepreneurship development progammes as panacea to unemployment in Nigeria from the National Bureau of Statistics, Federal Bureau of Statistics and Central Bank of Nigeria.
4. DATA PRESENTATION
From Table 2 and Table 3 (see apendix) it is seen that a correlation exist between the level of employment generation and entrepreneurship in state whose spirit of entrepreneurial development are high.
Hence the data on entrepreneurship indicate that states with high rate entrepreneurship includes: Kano (9.8%), Kaduna (9.4%), Lagos (8.5%) Akwa ibom (7.4) and Anambra (5.7%) respectively however from table 3 which is data on employment generation states with highest rate of employment generated are as follows:- Kano (9.7), (Kaduna 9.5 %), Lagos (9.0%), Akwa ibom (7.2 %)
Entrepreneurships has been characterized as productive and unproductive (Baumul, 2010). Productive entrepreneurship contributes to economic growth while unproductive entrepreneurship results in net reduction in social income and wealth.
However from the data on entrepreneurship rate by state, the state with high rate of entrepreneurship could be categorized as productive as they contribute to a state output reducing the chronic level of unemployment as show in table one. The high rate of entrepreneurship leading to employment generation i.e job creation arises from establishment of ventures which in turn employ individual with the required skill and as result social income is attained. As a way of creating more jobs in the system, government initiated some policy in measures, key of which is agriculture transformation agenda designed to boost employment generation by creading agricultural value chain (Salako, 2011)