THE CONTRIBUTION OF SMALL SCALE ENTERPRISES TO EMPLOYMENT CREATION IN LOKOGOMA ABUJA

1.1 Introduction

The role of Small and Medium-Scale Enterprise (SMEs) in the national economy cannot be underestimated. These enterprises are being given increasing policy attention in recent years, particularly in third world countries partly because of growing disappointment with results of development strategies focusing on large scale capital intensive and high import dependent industrial plants. Small firms marketing practices have been assessed in the context of existing models based on large firm practices. However, given that the marketing discipline is undergoing a transformation in some part of African countries with new paradigms emerging as relationship marketing, it is now appropriate to assess small firm practices in a broader and more contemporary perspective.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.

1.2 Background of Study

For the past decades, small business enterprises in Nigeria were characterized as essentially backward and cog in the wheel of the overall development of the Nigeria economy. As a result of this, there has been a prevalent feeling that such businesses could be assisted only for social reasons, not as a promising opportunity for national development. Obviously, too little attention has been paid to the benefits to be derived from helping small enterprises of modernize and grow. This attitude arose partly amongst both the citizens and government and mainly from the very nature of the small business which made it difficult for its impact to be felt in the economy.

Small and Medium Scale Enterprises (SMEs) have been acknowledged the world over as the driver of economic development and growth. This is because these enterprises have great potential for employment generation, economic empowerment, poverty alleviation, improvement of standard of living, substantial local capital formation, achievement of high levels of productivity and capacity, means of achieving equitable and sustainable industrial diversification and dispersal, appreciable contribution to gross domestic product, increase harnessing of local raw materials and technological and export diversification (Ekpo, 2000; Essien, 2006; Butt, Hunjra and Rehman, 2010; Akpakpan, 2012). Not only do they provide employment and income for the bulk of the population, they have been recognized as critical breeding and nurturing ground for domestic entrepreneurial capacities, technical skills, technological innovativeness and managerial competencies for private sector development (Derinola, 2008; Ojo, 2010; Olorunshola; 2014).

Generally, therefore, SME’s are the pivot for achieving economic development of any nation. This is because, they create employment opportunities for teeming youths and self reliance for owner managers, contribute to gross domestic product (GDP) through their outputs (production of goods and services), development and inculcating entrepreneurial spirit, as well as better living standard of the populace through poverty alleviation.

The role of SMEs in the developing economies has also assumed a major significance in recent years. Studies have indicated that developing countries including Nigeria, show increased interest in the promotion of SMEs due to three main reasons: the failure of past industrial policies to generate efficient self- sustaining growth; increased emphasis on self-reliant approach to development and the recognition that dynamic and growing SMEs sector can contribute substantially to a wide range of development objectives (Sanni, 2009; Uwonda, 2013).

According to Onuoha, (2008), Etim, (2010); Kishore (2010), SMEs form the great majority of businesses in almost all countries in the world and hold the promise for the development and transformation of our economic in terms of domestic capital formation and industrialization. In many developed countries, more than ninety-eight percent of all enterprises belong to the SMEs sector (Uwonda et al, 2013); eighty percent of the total industrial labour force in Japan, fifty percent in Germany and forty six percent in USA are employed in smaller firms (Udechukwu, 2014). In the USA, SMEs employed about 25 million people in 2004, and contributes nearly thirty nine percent to the national income (Whah, 2006).

Therefore, in Lokogoma Abuja where the research was carried out, the activities that was conducted is to know the contribution of small scale enterprises to employment creation.

1.3 Statement of Problems

Investigation revealed that Nigeria is currently witnessing an alarming rate of unemployment rate is growing tin geometric progression. The economy is also increasingly finding it difficult to cope as Nigerian economy is waning. A lot of experts have called for the creation of an enabling environment for small–scale enterprise to thrive.

The Nigeria’s unemployment rate has been the major issue of debate for a decade yet the small scale and medium scale enterprises are set all over the country employing most especially two or three family members with low returns and high cost of production makes it inevitable for these enterprises to collapse. In Nigeria, amidst, the rapid establishment of these enterprises,58 percent of the population are not working making the un utilized potential of Nigeria’s population to stand close to 1O~4 million (UBOS 2014).

Nigeria’s most pressing employment challenge is insufficient labour demand due to inadequate firm creation and growth. Most jobs are created in industries such as retail trade, hospitality and recreational and personal services, which are characterized by very high firm entry but also high exit rates and therefore limited sustained employment growth (MOFPED 2014).

1.4 Aim and Objectives of Study

The aim of the study is to examine the contribution of small scale enterprises to employment creation in Lokogoma Abuja. In achieving this aim, the following specific objectives were laid out as follows:

1. To determine the level of growth of SMES’ towards job creation in Lokogoma Abuja
2. To examine the effects of SMES’ on employment creation in Lokogoma Abuja
3. To evaluate the relationship between the SMEs and economic growth.
4. To examine the overall contributions of the SMEs to employment creation in Lokogoma Abuja.
5. To examine the relationship between the increase in SMEs and level of unemployment in Lokogoma Abuja.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Is there any significant relationship between the increase in SMEs and level of unemployment in Lokogoma Abuja?
• Is there any linkage between the SMEs and economic growth?
• What is the level of growth of SMES’ towards job creation in Lokogoma Abuja?
• What are the effects of SMES’ on employment creation in Lokogoma Abuja?
• What are the overall contributions of the SMEs to employment creation in Lokogoma Abuja?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: There is no significant effect of SMES’ on employment creation in Lokogoma Abuja
• H1: There is a significant effect of SMES’ on employment creation in Lokogoma Abuja

Hypothesis Two

• H0: There is no significant relationship between the increase in SMEs and level of unemployment in Lokogoma Abuja
• H1: There is a significant relationship between the increase in SMEs and level of unemployment in Lokogoma Abuja

1.7 Significance of Study

The study is thus important because of its potentiality in the development of the small business sector which has been characterized as the “man carrier of development and the engine of social and economic growth” in Nigeria. The study will also help in identifying why people don’t go into small–scale enterprise despite its numerous advantages. It will also find our problems encountered while running the business.

The study will help government identify areas requiring attention, thus stimulating government into proper directing of loans and incentives to improve upon existing ventures. It will also provide useful guide for prospective entrepreneur that wish to choose self-employment as a career. And finally, it will serve as secondary data for subsequent studies by a prospective researcher.

1.8 Scope of Study

The scope of the research is focused on the contribution of small scale enterprises to employment creation in Lokogoma Abuja.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research material: availability of research material is a major setback to the scope of the study.
3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

Small Scale Enterprise: The definition of small scale enterprise varies with people and countries such that it is better defined based on the characteristics.

Entrepreneur: According to Hagen, an entrepreneur is an individual who conceives the idea of business, design the organization of the firm, accumulates capital, recruits labour, establishes relations with supplies, customers and the government and converts the conception into a functioning organization business.

Development: This entails growth of the business, increases in goods and services and t he improvement of lives of the citizen.