ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT IN SOUTH- SOUTH, NIGERIA

ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT IN SOUTH- SOUTH, NIGERIA

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Abstract

The study examined entrepreneurship and economic development in south- south Nigeria. Entrepreneurship variables identified and studied by the researcher were innovation, skills acquisition and technology. The major problem identified was that in the south- south Nigeria, Small and Medium Size Enterprises (SMEs) which are considered the engine of economic growth operate in an informal sector, technologically backward with low level of human resource skills, weak management system and entrepreneurial capability among others. The broad objective was to examine the effect of entrepreneurship on economic growth and development in south- south Nigeria. The specific objective was to ascertain the implications of innovation, skills acquisition and technology on economic growth and development in south-south, Nigeria with corresponding research questions and hypotheses. The theories adopted were Schumpeterian growth theory and the neoclassical growth theory. The population of study was 1774 consisting of registered SMEs in Akwa- Ibom state and Cross River state, both in the south-south Nigeria. The sample size was 326 determined using Taro Yamene formular. The research design adopted was the survey design. Data was collected using questionnaire. Data was statistically analysed using Ordinary Least Square Regression analysis tool. The study revealed that Innovation has a significant effect on economic growth and development in South-South Nigeria, skills acquisition growth and development in South-South Nigeria also that technology has significant contributions to economic growth and development in South-South Nigeria. The Researcher concludes that innovation, skills acquisition and technology are capable of accelerating economic growth and development are relevant in the growth and development of South-South Nigeria. The researcher recommends more entrepreneurial engagement in training and development for further enlargement of skills, entrepreneurial research and development for enhanced product innovation for export and customer satisfaction. Also that government should provide financial facilities to entrepreneurs in South-South Nigeria to continuously acquire newer entrepreneurial skills, adopt and use innovative technologies and have international profile as well as improve on infrastructural facilities and ensure speedy power supply in South-South Nigeria.


CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY             

Entrepreneurship in Nigeria started when people in villages and farming community produced more products than they needed, as such they had to exchange their surpluses with those who needed them within their immediate and neighbouring communities. The exchange of goods for goods or services was based on trade by barter initially, until commodity money was developed and used. This encouraged specialization among producers and the communities came to realize they can concentrate on the areas of production they are best fitted. Consequent on the above, the culture of entrepreneurship started in Nigeria (Nicks,

2008; Raimi and Towobola, 2011). Entrepreneurship studies were introduced into the Nigerian educational system especially in higher institution as a mandatory course in the early 2000s and a Centerfor Entrepreneurship Development (CED) which has objective of teaching and encouraging students of higher institution especially in Sciences, Engineering and Technology to acquire entrepreneurial innovative and management skills, was established. The Center’s goal is to make the graduates self-employed, create job opportunities and to generate wealth (Thaddeus, 2012).

The impact of entrepreneurship on the sustainable growth of a nation’s economy, according to Chu, Kara and Benzing (2010), is believed to be highly dynamic and significant. For instance, before the oil boom in the early 1970s, Nigeria was predominantly agrarian, being sustained by the agricultural sector. Nigeria was less dependent on importation of finished goods since domestically produced substitute were available at reasonable price, and for export (Ebo, 2012). The real rate of the naira to a dollar was 0.52798 (CBN, 2005), and the country experienced a favourable balance of payment. Today, Nigeria is one of the world’s top producers of crude oil, and also has comparative advantage in solid minerals as well as agricultural product. Despite this, the aggregate output as measured by Gross Domestic Product (GDP at 2010 constant basic prices) recorded – 7.58 percent in 1983, and 0.51 percent in 1984 (CBN, 2014). The implication of this is that the available opportunities and resources need to be exploited for improved economic growth.

Harbinson and Myers (1984) pointed out that entrepreneurs are the necessary prerequisite to mobilize capital, exploit natural resources and create markets to carry on trade. Gurol and Atsan (2006) also noted that entrepreneurs are agents who perform a vital role in the economic growth of a country and are linked to the overall industrial development of a nation. The authors viewed entrepreneurship as critical for the economy as entrepreneurship is an engine of economic progress, job creation as well as social adjustment. Popoola (2014) puts it succinctly that entrepreneurship is a cornerstone, and at the heart of the free enterprise economy.

According to the Global Entrepreneurship Monitor Report (2000), about 70 percent of an area’s economic performance and wellbeing is dependent upon how entrepreneurial the area’s economy is. Based on this, Nwoye (2007) views entrepreneurship as a model factor of development. According to him, societies that have studied and applied entrepreneurial economy such as in Japan, Australia, and some Southern Asian counties are witnessing unprecedented economic growth. These countries have moved from a traditional economy characterized by paternalism or domestic management to dynamic, innovative, future oriented and entrepreneurial management with policies, practices and strategies applied to enhance the business sectors that determine the growth of the economy and create jobs.

Entrepreneurship according to Stefanovic, Milosevic, and Mitelic (2009), is strongly linked to Small and Medium Size Enterprises (SMEs) which are the main developing force of the developed market economies that provide the spring board for industrial development and economic growth. The Small and Medium Size Enterprises (SMEs) are the major component of the private sector and is generally considered as the engines of economic growth, cornerstone for creativity and innovation, and seedbeds of entrepreneurship (Baig, 2007).

Baig (2007) further explains that the private sector contributes substantially to the Gross Domestic Product (GDP), thus unleashing domestic resources (finance and entrepreneurial) likely to create a more stable and sustainable pattern of growth. Also, Sanusi (2003) argues that Small and Medium Size Enterprises (SMEs) are critical components of economic development as they account for more than 50 percent of Gross Domestic Product (GDP) of developing countries. According to him, Small and Medium Size Enterprises (SMEs) are the main source of entrepreneurship and enterprise, and technological development. Small and Medium Size Enterprises (SMEs) areconsidered as the main sustenance of the economy because of their capacity in enhancing productivity and standard of living of the people (Akinguola, 2011).

The importance of entrepreneurship development through business formation had since been recognized by Schumpeter (1934).  Schumpeter believed that entrepreneurship “gale of creative destruction” to replace in whole or in part inferior offerings across markets and industries and simultaneously creating new products and new business models is largely responsible for long term economic growth.

Consequently, government and Non-Governmental Organizations (NGOs) are becoming more sensitive to the need to create a friendly business climate supportive of the needs of Small and medium Size Enterprises, particularly in the developing nations. It has been noted that since the mid-1980s there has been an increased commitment of Nigerian government to entrepreneurship development especially after the introduction of the

Structural Adjustment Program (SAP) in 1986. Added to this was the establishment of the National Directorate of Employment (NDE), National Open Apprenticeship Scheme (NOAS) and, the Small and Medium Enterprise Development Association of Nigeria (SMEDAN) (Thaddeus, 2012). While, several schemes and institutions have also been established to extend credit to SMEs as highlighted by Nwachukwu (2012), and Yusuf and Schindehutt

(2000). These include the direct financing and establishment of Agricultural Development

Progammes such as Farm Settlement Schemes (FSS) and River Basin Development Authorities RBDA) between 1950 – 1960; the establishment of Nigerian Industrial Development Bank (NIDB) in 1984 and the Nigerian Agricultural and cooperative Bank (NACB) in 1973 as well as the Nigerian Agricultural Cooperation and Rural Development Bank (NACRDB) by the merger of FEAP, NACB and PBN in year 200; the  provision of Nation Economic Reconstruction Fund (NERFUND), and the establishment of Micro Finance Bank (MFB) in 2003. Also, the incentives from the Nigerian Export – Import Bank (NEXIM) to stimulate export loan facilities to Small and medium Size Enterprise (SMEs) and Export duty drawback schemes administered by the Nigerian Export Promotion Council (NEPC).

Despite the numerous credit schemes, the assessment of the growth performance of Nigerian economy shows that the Gross Domestic Product (GDP) grew by an average of 2.8 percent in the 1990s, while the per capita growth rate was zero, and in 1999 – 2003 the Gross Domestic Product (GDP) grew by an average of 3.6 percent with a per capita growth rate of 0.8 percent which is far lower than the 4.2 percent per capita growth rate needed to significantly reduce poverty (Needs, 2004).

Afolabi (2015) however documents an analysis of the performance of Nigeria economy up till 2013 and states that Nigeria has maintained an impressive growth over the past decade with real Gross Domestic Product (GDP) growth of 5.4 percent, 8.3 percent and

7.8 percent in 2011, 2012 and 2013 respectively. While Afolabi (2015) gives credence to agriculture in this respect, Okafor (2011) expresses regrets over the result of the audit carried out by Manufacturing Association of Nigeria (MAN) in 2010 showing 834 cumulative aggregate of firms that have shut down their operations in 2009 across the country. Oyo (2003) however, had asserted that since Nigeria attained independence in 1960, industrial development efforts have shifted from large industries to Small and Medium Size enterprises (SMEs) following the lesson from the success of SMEs in Asian countries.

This study is carried out to ascertain whether entrepreneurship can be relied upon to stimulate the growth and development in the South- South Nigerian.

1.2 STATEMENT OF THE PROBLEM

The problem that initiated this study is the researcher’s observation that in Nigeria the Small and Medium Size Enterprises (SMEs) which are considered the engine of economic growth in developing countries operate in an informal sector technologically backward with low level of human resources skills, weak management system and entrepreneurial capability, unavailability of appropriate and timely information technology, unfriendly macro environment with stringent and unpredictable government policies and regulations, poor road network and other related infrastructural facilities, epileptic power supply, poor water supply, difficulty of the SMEs to access bank loans, and the experience of double taxation.

Furthermore, there is poor product quality and product standardization.

1.3 OBJECTIVE OF THE STUDY

The major objective of this study is to determine the effect of entrepreneurship on economic growth and development in the South-South of Nigeria. The specific objectives of the study are;

1.      To determine the implications of innovation on economic growth and development in the South-South, Nigeria

2.      To examine the effect of skills acquisition on economic growth and development in the South- South, Nigeria.

3.      To ascertain the contributions of technology on economic growth and development in the South-South, Nigeria.

1.4 RESEARCH QUESTIONS

The study seeks to provide answers to the following research questions:

1.      Does innovation significantly affect economic growth and development in the South-South, Nigeria?

2.      What is the effect of skills acquisition on economic growth and development in the South-South, Nigeria?

3.      To what extent does technology contribute to economic growth and development in the South-South, Nigeria?

1.5 RESEARCH HYPOTHESIS

Ho: There is no significant effect of innovation on economic growth and development in the South- South, Nigeria.

Ho: There is no significant effect of skills acquisition on economic growth and development in the South-South, Nigeria.

HO: There is no significant relationship between technology and economic growth and development in the South-South, Nigeria.

 

1.6 SIGNIFICANCE OF STUDY

1.      The study result will serve as a guide to government policy makers, as well as information to private operators.

2.      The study is an opportunity for the researcher to conduct an independent research thereby contributing to knowledge which will serve as a reference material to other researchers and scholars especially in the management sciences and other related fields to have an understanding of how entrepreneurship affects economic growth and development in the South-South of Nigeria.

1.7 SCOPE OF THE STUDY

The study focused on the impact of entrepreneurship on economic growth and development of the South-South of Nigeria. The dependent variable is the South-South

Nigerian economic growth and development. Economic growth in this study is measured by Gross Domestic Product (GDP), Export and Manufacturing. While economic development is measured by Employment, Income and Regional development. The independent variable is entrepreneurship which is broken down into Innovation, Skills and Technology.

1.8 LIMITATION OF THE STUDY

The extent of the research was limited to verifying the effect of entrepreneurship on economic growth and development in the South-South of Nigeria, and specifically the respective relationship between innovation, skills acquisition, and technology, and the gross domestic product, manufacturing and exports, as well as employment, income and regional development in Nigeria, using data drawn through questionnaire

 1.9 OPERATIONAL DEFINITION OF TERMS 

Economic Development: The process by which a nation improves the wellbeing of the people.

Economic Growth: A steady process which the productive capacity of the economy is increased over time to bring rising levels of national outputs and income.

Entrepreneurship: The capacity and willingness to develop organize and manage a business venture along with any of its risks in order to make profit.

Export: To send goods or service across national borders for the purpose of selling and realizing foreign exchange.

Gross Domestic Product (GDP): A macroeconomic variable (the key measure of the state of the economy) that presents the monetary value of all goods and service produced within a nation’s geographical boarders over a specific period of time.

Imports: These are goods brought into a jurisdiction especially across a national border from an external source are imports.

Innovation: The commercial application of something new such as a new production, new market or source of supply and a new form of business or commercial organization.

Manufacturing: The process of converting raw material components, or parts into finished goods that meet a customer’s expectations or specifications. Manufacturing commonly employs a man – machine setup with division of labour in a large scale production.

Skills: specific abilities of a person, which results from experience, knowledge, information acquisition, training, practice and aptitudes which gives him leverage to perform a particular task.

Small and Medium Size Enterprises (SMEs): Any enterprise with asset base less than two hundred million naira excluding land and working capital and with the number of staff employed not less than ten and not more than three hundred.

Technology: The sum total of the knowledge we have of ways to do things. It includes inventions and techniques and influences how we design, produce, distribute and sell goods. 




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