ENTREPRENEURSHIP FOR DEVELOPMENT
By
Prof. Suleiman Elias Bogoro (FNIAS, FFPNO, FSPSP) (Executive Secretary, TETFund, Abuja, Nigeria)
Being the Convocation Lecture delivered at the 2ND Convocation Ceremony of the Kaduna State University, Kaduna on December 11, 2015
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Protocols: 1.0
INTRODUCTION
Let me start by thanking the Vice Chancellor and Management; the Prochancellor/members of the Governing Council and all members of the University community for according me the opportunity to be the Guest Lecturer at this year’s convocation lecture. My hearty congratulations also goes to the entire staff and students of Kaduna State University for the giants strides recorded in Entrepreneurship Education in Nigeria through the Entrepreneurship Research and Development Centre, the Trade and Skills Acquisition Centre and the Network of African Students Entrepreneurs as well as other Entrepreneurship strides in terms of GownTown
relationship
which
has
brought
about
Entrepreneurship
collaborations and community engagements in business models that will empower our students to be job creators and not job seekers. Your efforts in this regard are highly commendable. I am confident that your
commendable initiatives in Entrepreneurship will attract the support of the Tertiary Education Trust Fund and other organizations interested in deepening skills acquisition and wealth creation. I urge you to keep on with the good works. The theme of this year’s convocation lecture is timely, given the dire need for economic development amidst dwindling oil resources. We at the Tertiary Education Trust Fund (TETFUND) have been encouraging the entrenchment of entrepreneurship development across the nation through targeted intervention in the nation’s tertiary institutions specifically we have given the public universities a 100M grant for the establishment of Entrepreneurship Centres. It is our firm believe that our modest imprints are yielding the needed dividends for all of us. In addition to providing structures for conducive learning environment at the Kaduna State University, TETFUND has given overseas scholarship to the lecturers of this University and entrepreneurship resource persons. The result of this effort can be seen in the quality of the projects of students at the Entrepreneurship Centre and also it’s impact on the immediate environment. One of the cardinal objectives of every government is job creation. Job creation helps an economy to achieve full employment and economic growth and development, which is one of the four macroeconomic objectives of every nation. Nigeria has been bedevilled with high unemployment rate, which has become worrisome to government and other stakeholders. The role of entrepreneurship in job creation, economic growth and development cannot therefore be overemphasised. The current global economic realities of the inability of governments to provide employment Page 2 of 34
for its people continue to bring entrepreneurship to the fore. In addition, the global trend of countries tending towards capitalism makes entrepreneurship an important issue of discussion in the world, because at the heart of capitalism is ‘the private enterprise’, which stresses entrepreneurship and ownership of private properties. The causality factor is clear to all that it is the entrepreneurship that brings the needed economic development and not the other way round. As it is globally today, Entrepreneurship education remains the missing link in our quest for a rapid and sustainable economic development as a nation. Global development is entering a phase where entrepreneurship will increasingly play a more important role. There are at least three reasons for this, each particular to certain types of countries. Firstly, in the West, the managed economy of the 1970s-2000s, characterized by reliance on big business and mass production, has given way to a so-called entrepreneurial economy. Here knowledge-driven goods and services are now more flexibly provided by smaller firms, and the emergence of a creative class requires a less interfering but more facilitating state. Secondly, in the emerging countries, most notably the BRICs – Brazil, Russia, India, China – impressive growth has been driven by a veritable entrepreneurial revolution. The need in these economies to sustain growth through sustainable access to resources, knowledge, markets, and lowcarbon industrialization puts a premium on innovative entrepreneurship. Finally, in the least developed countries, where aid dependency is high, donors have been shifting the emphasis in development cooperation towards private sector development. In many of these countries, including resource-poor North African countries, populations consist of many young people who see little prospects of gaining employment with decent wages. Page 3 of 34
Promoting youth entrepreneurship here has become a vital policy objective of many development organizations and donors. It is expected that entrepreneurship will, in light of the above, contribute to growth and employment creation in advanced, emerging and least developed economies alike. 2.0
THE CONCEPT OF UNEMPLOYMENT
Every economy is characterized by both active and inactive populations. The economically active ones are referred to as the population willing and able to work, and include those actively engaged in the production of goods and services and those who are unemployed. The International Labour Organization (ILO) defines the unemployed as numbers of the economically active population who are without work but available for and seeking work, including people who have lost their jobs and those who have voluntarily left work (World Bank, 1998). According to Fajana (2000), unemployment refers to a situation where people who are willing and capable of working are unable to find suitable paid employment. It is one of the macro-economic problems which every responsible government is expected to monitor and regulate. The higher the unemployment rate in an economy the higher would be the poverty level and associated welfare challenges. Fajana (2000) and Alao (2005) identify the following types of unemployment. a) Structural unemployment occurs when there is a change in the structure of an industry or the economic activities of the country. This may be because people's tastes have changed or it may be because technology has outmoded and the product or service is no longer in demand. It is mostly to be found in the developing countries Page 4 of 34
of Asia and Africa. This type of unemployment is due to the deficiency of capital resources in relation to their demand. In other words, structural unemployment results from a mismatch between the demand for labour, and the ability of the workers. b) Frictional Unemployment is caused by industrial friction in which jobs may exist, yet the workers may be unable to fill them either because they do not possess the necessary skill, or because they are not aware of the existence of such jobs. The employable may remain unemployed on account of shortage of raw materials, or mechanical defects in the working of plants. Therefore, the better the economy is doing, the lower this type of unemployment is likely to occur. c) Seasonal Unemployment is due to seasonal variations in the activities of particular industries caused by climatic changes, changes in fashions or by the inherent nature of such industries. In the tropical region, ice factories are less active in rainy season because demand for ice is low. Seasonal oriented industries are bound to give rise to seasonal unemployment. d) Cyclical Unemployment also known as Keynesian unemployment or the demand deficient unemployment is due to the operation of the business cycle. This arises at a time when the aggregate effective community demand becomes deficient in relation to the productive capacity of the country. In other words, when the aggregate demand falls below the full employment level, it is not sufficient to purchase the full employment level of output. Cyclical or Keynesian unemployment is characterized by an economy wide shortage of jobs and last as long as the cyclical depression lasts. e) Residual Unemployment is caused by personal factors such as old age, physical or mental disability, poor work attitudes and Page 5 of 34
inadequate training. f) Technological Unemployment is caused by changes in the techniques of production. Technological changes are taking place constantly, leading to the increased mechanization of the production process. This naturally results in the displacement of labour and finally causing unemployment (Oladele, et al, 2011). Whatever the type and cause of unemployment, entrepreneurship is its answer. 2.1
Causes of Unemployment in Nigeria
According to some studies of unemployment in Nigeria, Adebayo (1999), Alanana (2003), Ayinde (2008), Morphy (2008) and Awogbenle and Iwuamadi (2010) several factors have been identified as the main causes of youth unemployment in Nigeria. The first is the rapidly growing urban labour force, arising from rural urban migration. Rural-urban migration is usually explained in terms of push-pull factors. The push factors include the pressure resulting from man-land ratio in the rural areas and the existence of serious underemployment arising from the seasonal cycle of climate. The factors are further exacerbated in Nigeria by the lack of infrastructural facilities, which makes the rural life unattractive. Youths move to urban areas with the probability of securing lucrative employment in the industries. In addition to this, there is the concentration of social amenities in the urban centers. This meant that the rural areas are neglected in the allocation of social and economic opportunities. The second is the rapid population growth. Going by the 2006 census in Nigeria, the nation’s population was put at 140,431,790 and projections for the future indicate that the population could be over 180 million by the year 2020, given the annual growth rate of 3.2 percent (National Population Commission and ICF Macro, 2009). With this population, Page 6 of 34
Nigeria is the most populous nation in Africa. It is argued that the high population growth rate has resulted in the rapid growth of the labour force, which is far outstripping the supply of jobs. The accelerated growth of population on Nigeria’s unemployment problem is multifaceted. It affects the supply side through a high and rapid increase in the labour force relative to the absorptive capacity of the economy. The third is the outdated school curricula and lack of employable skills. Some scholars and commentators have argued that as far as the formal sector is concerned, the average Nigeria graduate is not employable and, therefore, does not possess the skills needed by the employers of labour for a formal employment. After all employers do not need people to pay or spend their money on but people that will help their organization grow and make more profit as the primary goal of every enterprise is to make profit. Often, this is attributed to the Nigeria’s education system, with its liberal bias. The course contents of most tertiary education in Nigeria lack entrepreneurial contents that would have enabled graduates to become job creators rather than job seekers. The fourth factor is the rapid expansion of the educational system, which directly leads to increase in the supply of educated manpower above the corresponding demand for them. This contributes to the problem of the youth unemployment in Nigeria. For instance, according to Manning and Junankar (1998), the total number of graduates turned out by the higher institutions in Nigeria, which were 73,339 in 1986/1987 and rose to 131,016 in 1996/1997. Presently, with over 97 universities in Nigeria (both federal, state, and private) and the increasing demand for higher education there has been the problem of suitable employment for the varieties of graduates who are turned out by these higher institutions every Page 7 of 34
year. Ordinarily, this should not have been a problem, but the reality is that the Nigerian economy is too weak to absorb this large number of graduates (Utomi, 2011). Further, there is no vibrant manufacturing sector which has the capacity to absorb unemployed youths in Nigeria, as there are over 800 collapsed industries in Nigeria and over 37 factories have closed shops in 2009. About half of the remaining operating firms have been classified as “ailing,” a situation that poses a great threat to the survival of manufacturing in the country in the next few years. According to a survey carried out as part of its membership operational audit in January 2010 by the Manufacturers Association of Nigeria (MAN), the 834 figure represents the cumulative aggregate of firms that have shut down their operations in 2009 across the country. The MAN survey usually covers five manufacturing enclaves, into which the country is divided, in terms of manufacturing activities. These include the Lagos, Northern, South-East, South-South and South-West areas. The report of the survey showed that in 2009, a total number of 176 firms became terminally sick and collapsed in the Northern area, comprising the Kano and Kaduna States manufacturing axis. In the South-East area, which is comprised of Anambra, Enugu, Imo, and Abia States, a total number of 178 companies closed down during the period. While in the South-South area, which consisted of Rivers, Cross River, and Akwa-Ibom States, 46 companies shut down operations before December 2009. According to the survey, the South-West area, which is comprised of Oyo, Ogun, Osun, Ondo, Ekiti, Kogi, and Kwara States, lost 225 companies during the year. It said that the Lagos area, covering Ikeja, Apapa, Ikorodu, and other industrial divisions in the state, followed closely with 214 manufacturing firms closing down before the end of 2009 (Okafor, 2008). Page 8 of 34
In a nutshell, Nigeria is a country with numerous business and investment potentials due to the abundant, vibrant and dynamic human and natural resources it possesses. As good as the foregoing sounds, Nigeria continues to experience its share of social, economic and political upheavals which have often stunted its growth and development into the regional economic power that it strives to attain. Nigeria has a relative high rate of violent crimes (Onwubiko, 2011). The fact is that Nigeria is becoming hostile to investment due especially to lack of steady and sustainable power supply/ energy crisis in spite of the various attempts are reviving this sector lading to firms depending on generators for their operation whose cost of buying, fuelling and maintenance are high, thereby increasing the cost of operation in Nigeria. Besides, high and multiple levies and taxations being paid by these companies, energy crises have combined to make the cost of doing business in Nigeria to be very exorbitant. When the industries and factories closed down or relocated to a friendlier economic environment, workers were laid off and prospects of recruiting new ones were dashed. All these exacerbated the crisis of youth unemployment in the labour market (Onoja et.al, 2009). Corruption, which has permeated the entire social structure of Nigeria, has robbed the country of developing a vibrant economic base. Funds meant for development projects have been misappropriated, diverted, or embezzled and stashed away in foreign banks, while some incompetent and corrupt bureaucrats and administrators in the public enterprises and parastatals have liquidated these organizations (Okafor, 2011). The point being made here is that the collaboration of the political elites, local and foreign contractors in the inflation of contract fees have robbed Nigeria of the chances of using more than $500 billion estimated revenue from the oil sale in the last 50 years to develop a vibrant economy that would have created Page 9 of 34
jobs for the youths in various sectors of the economy. The ruling (political) class failed because they replaced the vision, policy, and strategy, which should be the thrust of every leadership with transactions (contract award and other mundane money- related activities), as each successive government took turns to prey on the nation’s wealth, by using public power, resources, good will, utilities, instrument of abuse, and personal gains (Okafor, 2008). Thus crippling the economy and engendering and exacerbating unemployment which creates abject poverty, hunger and frustration; killing the zeal and means for entrepreneurship development in the Nigerian youths. I will now focus on entrepreneurship and its role in mitigating youth unemployment in our country. 3.0
ENTREPRENEURSHIP AND THE ENTREPRENEURS
Entrepreneurship is more than simply “starting a business.” It is a process through which individuals identify opportunities, allocate resources, and create value. This creation of value is often through the identification of unmet needs or through the identification of opportunities for change. It is the act of being an entrepreneur. “My will shall shape the future. Whether I fail or succeed shall be no one’s doing but my own. I am the force. I can clear any obstacle before me or I can be lost in the maze. My choice. My responsibility. Win or lose; only I hold the key to my destiny.” Elaine Maxwell, Author. 3.1 Who is an Entrepreneur? The word entrepreneur is a derivative of the French word ‘enterpendre’ which simply means ‘to undertake’. Schumpeter (1950; 1961) famously Page 10 of 34
defined the entrepreneur as the coordinator of production and agent of change (‘creative destruction’). As such the “Schumpeterian” entrepreneur is above else an innovator. Scholars who share this view of entrepreneurship do not consider entrepreneurship to be very important in earlier stages of economic development – they see the contribution of entrepreneurship to be much more important at later stages of development, where economic growth is driven by knowledge and competition. At earlier stages of development, entrepreneurship may play a less pronounced role because growth is largely driven by factor accumulation (Á cs and Naudé , 2013). An Entrepreneur is therefore seen as "one who undertakes innovations with finance and business acumen in an effort to transform innovations into
economic
goods
hence
Entrepreneurs
see
“problems”
as
“opportunities,” and then take action to identify the solutions to those problems and the customers who will pay to have those problems solved. To clearly understand the difference between entrepreneur and entrepreneurship, let us take this example. If I set up a small poultry firm I become an entrepreneur. The process of setting up and running the firm is called entrepreneurship. It doesn’t however stops at that, the entrepreneur are expected to bring innovation to bear in the business, expand the business and extend its frontiers. There are some basic qualities that an entrepreneur needs to possess to be able to succeed in the business environment. Possession of these qualities makes the entrepreneur to fit in the changing business environment. (i) Planning/evaluation: this involves setting goals to be achieved within the constraints of time and finance. Setting goals within constraints gives Page 11 of 34
the entrepreneur a sense of direction. Evaluating achievements and failures help the entrepreneur to strategize and re-strategize to ensure that the business is on the path of success. (ii) Risk-taking: starting a new business outfit or expanding an existing one involves investment of time and resources. There is always no guarantee that the resources invested will be recouped. But the entrepreneur should always be an ‘optimist’ that the business would succeed. (iii) Creativity: an entrepreneur should be able to recognise new way of doing business or making a product/service. It also involves improving on the old way of doing business. (iv) Determination/Dedication: an entrepreneur should work hard to make the business succeed. He should also devote time and resources towards the actualisation of his business. (v) Smartness/Flexibility: an entrepreneur should be alert by knowing the changing market needs. He should also be able to respond to those changing conditions appropriately by positioning himself strategically. (vi) Leadership: an entrepreneur must have zeal and enthusiasm towards achieving his set goal. An entrepreneur is a leader who sets examples for his employees (Liles 1974). 4.0
THEORIES
OF
ENTREPRENEURSHIP
AND
ECONOMIC
DEVELOPMENT The theory that underpins developmental impact of entrepreneurship is that of Schumpeter (1961). Schumpeter sees the entrepreneur as an ‘innovator’ who transforms the market place by introducing new Page 12 of 34
production method, new source of raw materials, new form of organisation and finally a new product to the market. This innovative tendency of the entrepreneur is very vital for economic development (Naude 2013). As it is the theories that followed that of Schumpeter were a validation of his thoughtful propositions inters of the various theories that theorises entrepreneurship. The modern ideas on entrepreneurship is not one we can call a theory per se because of their black rigorous academic reviews and validation, most of which are mere introspection and largely subjective. For instant, the notion that entrepreneurs are born or made is a case in time. The intention here is not to debate the make up of the entrepreneur but the contribution to economic development of a nation and that is the main crux of this lecture. The economic theory of entrepreneurship is applicable to Nigeria as it has been modeled as an occupational choice between self- employment and wage-employment (Murphy et al. 1991). Hence someone will become an entrepreneur if profits and the non-pecuniary benefits from selfemployment exceed wage income plus additional benefits from being in wage employment. Entrepreneurship is thus often synonymous with selfemployment. Because self- employment is often not by choice but by necessity, a distinction if often made in between necessity and opportunity entrepreneurs. There is no gain saying the fact that entrepreneurship brings about economic development. Examples of nation that have moved from third world to first world is a classic case of what entrepreneurship has done to a nation that all national leaders must imbibed if they want to develop their economies.
Page 13 of 34
4.1
The Concept of Entrepreneurship
Entrepreneurial success is simply a function of the ability of an entrepreneur to see opportunities in the marketplace, initiate change (or take advantage of change) and creates value through solutions. Entrepreneurship is known as the capacity and attitude of a person or group of persons to undertake ventures with the probability of success or failures. It demands that the individual should be prepared to assume a reasonable degree of risks, be a good leader in addition to being highly innovative. In business management, Entrepreneurship is regarded as the “prime mover” of a successful enterprise just as a leader in any organization must be the environmental change agents. Binks and Vale (1990) defined entrepreneurship as ‘an unrehearsed combination of economic resources instigated by the uncertain prospect of temporary monopoly profit’. Hence Kanothi, (2009) defined Entrepreneur as the ‘instigator of entrepreneurial events for so long as they occur’. TijaniAlawiye (2004) defines entrepreneurship as the process of increasing the supply of entrepreneurs or adding to the stock of existing small, medium and big enterprises available to a country by creating and promoting many capable entrepreneurs, who can successfully run innovative enterprises, nurture them to growth and sustain them, with a view to achieving broad socio-economic developmental goals. One of these goals is sustaining employment. Furthermore, Acs and Story (2004) noted that entrepreneurship revolves around the realization of existence of opportunities in combination with decision to commercialize them by starting a new firm. This reasoning is what Thornton (1999) called demand and supply perspectives of entrepreneurship discourse. However, Stevenson and Gumpert (2002) Page 14 of 34
observed that the essence of entrepreneurship development is the ability to envision and chart a course for a new business venture by combining information from the functional disciplines and from the external environment in the context of the extraordinary uncertainty and ambiguity which faces a new business venture. It then manifests itself in creative strategies, innovative tactics, uncanny perception of trends and market mood changes and courageous leadership. To the duo, ‘entrepreneurship’, when treated as ‘enterprise-creation’ helps develop new skills and experiences that can be applied to many other challenging areas in life. More importantly, Schnurr and Newing (1997) justified the need for promoting entrepreneurship culture on the ground that youth in all societies have sterling qualities such as resourcefulness, initiative, drive, imagination, enthusiasm, zest, dash, ambition, energy, boldness, audacity and courage which are all valuable traits for entrepreneurship development. Supporting this assertion, Baumol (1990) maintained that governments, NGOs and international bodies seeking to improve youth livelihoods could best pursue their empowerment objective by tapping into the dynamism of young people and build on their strong spirit of risktaking through entrepreneurship development. Entrepreneurship development has also led to employment generation, growth of the economy and sustainable development. The current number of colleges and universities offering small business management and entrepreneurship development programme has grown from one university in 1947 to over 1600 in the 1990s (Solomon and Fernald, 1991; Solomon, et al, 2002). White and Kenyon (2000) also found a ‘flourishing youth enterprise culture’ in the United Kingdom among young entrepreneurs aged 18-24 years. In Zambia, it was show that 25% of the youth are selfPage 15 of 34
employed (Chigunta, 2001). Most of these young people, especially younger youth, tend to be concentrated in marginal trading and service activities. Findings in Ghana of small scale enterprises reveal that young people owned almost 40 percent of the enterprises (Osei et.al, 1993). Similarly, research in South Africa suggests that the probability of selfemployment among young people rises with age (Chigunta, 2001). When Nigerians especially unemployed youth are mentored and provided with the needed resources and enabling environment for business start- ups, they will economically be engaged thereby shunning the illegal acts of hostage-taking, kidnapping, bombing and vandalism and homelessness. In every act of entrepreneurship development, a new firm is raised hence entrepreneurship is enterprise-creation. Often times, millionaires and billionaire are made such as Bill Gate of Microsoft and Aliko Dangote of Dangote Group of Companies. Historically, the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years. In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. However, Salami (2011) has identified two types of entrepreneurship viz: i.
Opportunity - Based Entrepreneurship
This occurs when an entrepreneur perceives a business opportunity and chooses to pursue it. Ernst and Young (2009) in a survey found that Page 16 of 34
majority of entrepreneurs said they saw economic slowdown as the perfect time to pursue new market opportunities. In addition, economists, academics and industry leaders agree that recession tend to favour the naturally innovative temperament of entrepreneurs. ii.
Necessity - Based Entrepreneurship
This occurs when an entrepreneur is left with no other viable option to earn a living. It is borne not as a choice but compulsion which makes him or her choose entrepreneurship as a career. An example is the Nigerian Civil War of 1967-1970 when the economic embargo introduced by Federal Government forced the secessionist Biafra to develop fuel pump from coconut and palm oil. 5.0
PROBLEMS
OF
ENTREPRENEURSHIP
IN
EMPLOYMENT
GENERATION IN NIGERIA The key roles of entrepreneurship include mobilization of domestic savings for investment, significant contribution to Gross Domestic Product (GDP) and Gross National Income (GNI), harnessing of local raw materials, employment creation, poverty reduction and alleviation, enhancement in standard of living, increase in per capita income, skills acquisition, advancement in technology and expert growth and diversification. Irrespective of the benefits associated with entrepreneurship, there are lots of barriers that have prevented people from fully realizing their potentials and assuming responsibilities in the society. Perceptively, people had gradually moved out of the farms into urban areas for lack of agricultural incentives. Even in the urban areas and cities, infrastructure had continued to deteriorate, roads uncared for, irregular water supply, regular power outage, and even for people who could afford to use electricity- generating Page 17 of 34
sets, petroleum products to power them might not be available as at when needed. Instability and high turnover had negatively affected the performance of primary institutions responsible for policy enunciation, monitoring
and
implementation
resulting
in
distortions
in
the
macroeconomic structure and its attendant low productivity. Some of these barriers re outlined under the following sub-headings: 5.1
Absence of Infrastructural Facilities
It is a universal belief that certain basic infrastructural facilities aid the development of the mind and body and assist productivity in any environment. These facilities have been identified as good roads, good water supply, constant power, access to information and communication technology and other tools of trade. A case where these are lacking in a country, the growth of the economy will be adversely affected. In Nigeria, these basic work tools as well as the enabling environment is lacking. This state of affairs has frustrated a lot of young people with bright ideas and the corresponding spirit to effect a change in some areas of our national life. For instance, the power sector has proven the greatest challenge to any aspiring entrepreneur in Nigeria. Power supply is epileptic and most times businesses have to be run on generators. The cost of this alternative source of power most often erodes whatever profit or capital an entrepreneur has put aside for his enterprise. The worst hit are the barbers, dry cleaners and cyber café operators. In times of energy crisis when there is shortage of fuel supply, businesses are almost grounded due to unavailability of petrol or gas to power generators. This avoidable factor adds immensely to overhead costs and unnecessarily makes the cost of production very high. Due to this, investment in manufacturing and Page 18 of 34
entrepreneurial activities is made uninteresting. Another factor dissuading young people from going into entrepreneurship is the bad state of the roads in Nigeria and the lack of adequate and alternative means of transportation. Air transport in Nigeria is expensive and rail is almost non-existent. Since road is the most affordable means, most people prefer to travel by road which is often a harrowing experience for many. The transportation system is unorganized and the dilapidated roads connecting the states and intractable traffic snarls in the commercial cities are often a nightmare for businessmen; adding to the occasional armed robbery and motor accidents on the roads. Telecommunication before now was a major issue for any entrepreneur but with the liberalization of the sector in the last few years, the problems associated with this all-important factor in business have to a certain degree being solved. What most people complain about is the enormous cost of the services rendered by the companies, which is seen as the costliest anywhere in the world. This cost of course has a domino effect on other services associated with telecommunications such as the Internet. It is therefore the responsibility of the graduates of today to see these deficiencies in the system and build enterprises from them. 5.2
Inadequate Working Capital
Even though many scholars have argued against non-availability of capital as the prime problem of entrepreneurship development, the availability of capital, says Onwubiko (2011) is central to the establishment and continued existence of any enterprise irrespective of the size, focus and objective. It has been observed that for an entrepreneur in Nigeria to start a business, he must have adequate funds. In a situation where the working capital is inadequate or unavailable, it becomes a problem. This is one of Page 19 of 34
the major, if not the major problem that young people encounter when opening a business. Banks are before now reluctant to give out loans to intending entrepreneurs especially when they are young people. The procedures for accessing such credits are often rigorous and dependent on the provision of collaterals, which the potential entrepreneur may not possess. Furthermore, the financial institutions charge outrageous interest rates sometimes as high as 21% depending on the bargaining power of the applicant. Suffice to say that government is very concern about this factor and has put appropriate measures in place through the assessment of loans from Bank of Industry and Small and Medium Enterprise Development Agency of Nigeria (SMEDAN). 5.3
Low Standard of Education
There is no gainsaying the fact that education is the key to knowledge and that it plays a strong role in forming the burgeoning entrepreneur. The world today is a global village and since an intending entrepreneur must be conversant and in tune with events around and about him, education becomes a critical factor in preparing and empowering the entrepreneur with the qualities required of him. Unfortunately, the role of education in forming young people to become change agents it seems, have been ignored. 5.4
Lack of Adequate Training
A regrettable consequence of the immediate foregoing is the absence of adequate training for students such as will enable them meet the challenges of the future as leaders of business and change agents. It has been observed that the educational curriculum in Nigeria focuses more on the theoretical without a corresponding practical approach. Most Page 20 of 34
employers are always compelled to retrain their employees due to lack of knowledge of basic work ideas or familiarity with the area of study of the employee. Technology has been used to improve the quality of life through the use of the computers and other technological discoveries such as the Internet. Where the youth does not have the knowledge or skill of the latest technology, it affects their outlook to life. It is surprising that in this age and time when the computer and the Internet are taken for granted in so many parts of the world, the reverse is the case in Nigeria. Except for the cities, the Internet and other ICT are not available in the rural areas where majority of the Nigerian youth are located. This situation denies these people an alternative means of skill acquisition, information gathering and other advantages associated with the World Wide Web. This has resulted in a situation where employers prefer to take people with on-the- job experience and required skills thereby making it impossible for the young person’s to gather the much needed experience, skill, familiarity with a work environment and basic contacts and network to pioneer a successful enterprise of a business or non- business nature. Where some of these basic trainings are offered, they are usually directed at the employees of big businesses considering the exorbitant fees charged by the institutions or bodies providing same. With little or no money to spare, young people often miss these opportunities to equip themselves mentally and otherwise for the assumption of entrepreneurial roles. This also results in low morale, inefficiency and lack of confidence.
Page 21 of 34
6.0
PROSPECTS
OF
ENTREPRENEURSHIP
DEVELOPMENT
IN
EMPLOYMENT GENERATION IN NIGERIA In spite of the foregoing challenges, possibilities of entrepreneurship development to generate employment abound. Hence government fully appreciates the opportunities entrepreneurship creates for employment generation, their contributions to economic growth and development as well as the constraints and difficulties in their operating environment. These explain why the government has established various support institutions and relief measures specially structured to render assistance and succour to minimize the constraints, which entrepreneurship typically face. The support institutions established by the government range from specialized banks designed to focus on the funding of Small and Medium Enterprises to agencies and departments all meant to give a flip to the fortunes of Small and Medium Enterprises. The comfort is that the governments (local, state and federal) are neither relenting nor giving up in their bid to revamp and invigorate the fortunes of SMEs as to enable them play the expected role in Nigeria’s economic growth and development. This is evidenced by the government’s recent establishment of as well as the mandate given to the Bank of Industry (BOI) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the facilitation of the Bankers’ Committee’s institutionalization of the Small and Medium Industries Equity Investment Scheme (SMIEIS), the federal government’s drive and focus on realizing the objective of NEPAD, the government’s endorsement and support of multilateral agencies and loans, and the government’s backing of international development finance facilities such as the European Investment Bank (EIB) facilities and the likes. Other indications relate to the government’s Page 22 of 34
programmes aimed at poverty alleviation and providing succour to those whose jobs could be affected by the current government reforms as well as the proposed establishment of a Credit Guarantee Scheme for loans to Small and Medium Enterprises. Some of the contributions of entrepreneurship to economic development are outlined hereunder: (i) Employment generation: entrepreneurs help create employment for other citizens of their country. For production to take place there is always the need for the employment of labour. Also for more output to be produced there is the need for additional labour to be employed. The entrepreneur therefore, generates employment for himself and others within his country. (ii) Wealth creation: in producing goods and services, the entrepreneurs combine (or add value to) the existing resources. It is in this process of value addition that the entrepreneurs create more wealth for themselves and the society at large. This additional wealth created usually comes in the form of profit which is usually repatriated back to the business. (iii) Improving standard of living: entrepreneurs are innovators in a society. They bring their discoveries into the society which benefits all. They discover new ways of doing things which give birth to production of variety of products that improve the standard of living of people. Through research and development (R&D) new products are produced that make life better and easier. (iv) Increase in national income: entrepreneurship increases the national income of a given country. Aside creating more wealth to the entrepreneur (value added approach of computing national income), the government Page 23 of 34
gets more tax revenue which could be used for other sectors of the economy. This tax revenue adds to the national income of the country. (v) Improving favourable balance of payment: when there are few entrepreneurs in a country, the country has to depend on foreign countries for variety of products which weakens the balance of payment position of a nation. But if there are many entrepreneurs, there will be variety of products for consumption and even exports which improves the balance of payment position of a nation. 7.0
ENHANCING
THE
DEVELOPMENTAL
IMPACT
OF
ENTREPRENEURSHIP Given the “grand ideas” in development economics, the main policy considerations
for
enhancing
the
developmental
impact
of
entrepreneurship are to improve the quality and allocation of entrepreneurial
ability;
and
reduce
the
need
for
necessity
entrepreneurship. Both considerations require better quality and quantity of research and data-generation. Improving the quality of entrepreneurial ability means not only improving the skills and education of entrepreneurs, their ‘human capital’, but focusing on the innovative abilities of entrepreneurs. It is innovative entrepreneurship that is most desirable for growth. Innovation policy ought therefore to be a central focus of entrepreneurship promotion in developing countries as it is in advanced economies. Entrepreneurs in developing countries have a much greater propensity for innovation than is often recognized in the literature or by policy-makers.
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Stimulation of innovation has not been paramount in most development agencies or donor’s private-sector development programs, nor in national entrepreneurship support programmes. The only innovation relevant aspects of such support programs have been their concern to improve the general business environment, a prerequisite for innovation, and to argue for patent protection - and to a lesser extent basic research. Such policies tend to be more concerned with improving static and allocative efficiency, and not dynamic efficiency, which is more important for job creation and growth (Evenett 2005). Attempting to improve dynamic market efficiency through raising innovation, and aiming to limit necessity entrepreneurship, may have implications for policy that runs counter to many current policies. In the absence of financial markets, firms can only finance innovation through profits. If too much competition erodes their profits, it will also erode their innovative activities. Reducing the need for necessity entrepreneurship may also imply policies to encourage job creation and provide social security, policies not popularly associated with an entrepreneurial economy. Promoting innovative entrepreneurship in developing countries runs into further difficulties in that there is a broad lack of sufficient impact evaluations with which to judge what works and what does not (Lerner 2009). Lopez-Acevedo and Tinajero (2010:2) mention that most existing evaluations typically do not consider biases due to unobserved firm heterogeneity or self- selection. Evaluations of entrepreneurship policy tend to be qualitative rather than quantitative, and cannot keep track with continual changes in programs over time. Many ‘impact’ studies also do not attempt to attribute impacts or outcomes to interventions, while lack of reliable SME data makes evaluation and cross-country comparisons of programmes difficult. Page 25 of 34
There is thus a need for much more rigorous empirical evidence as to what works and why, with respect to entrepreneurship policies. In the near future, most poor people may reside in so-called fragile states where an understandable lack of rigorous micro-level studies of firms and entrepreneurs limits the contribution of aid and other policies towards private sector development in conflict or post-conflict countries (Brü ck et al, 2011; 2013). Despite the need for, and their contribution, one should be cautious of an undue reliance on randomized field experiments as the sole approach to inform appropriate policy formulation for entrepreneurship development (Deaton, 2009). What are needed are interdisciplinary approaches combining
insights
from
randomized
field
experiments
with
anthropological fieldwork, and with the political economy of development. Such approaches offer promise for further evolution of the scientific field demarcated
by the intersection of development economics and
entrepreneurship. 7.0
THE ROLE OF UNIVERSITY ENTREPRENEURSHIP EDUCATION TO ECONOMIC DEVELOPMENT OF NIGERIA: THE CASE OF KADUNA STATE UNIVERSITY.
University Entrepreneurship education is a recent development in Nigeria, just barely a decade old and still evolving. A directive from the National Universities Commission for Universities in Nigeria to establish Entrepreneurship Centres across the nation and in compliance to this directives both public and private universities in Nigeria have established Centres where students are taught the art and science of business making. Kaduna State University has blazed the trail in this direction with the establishment of a befitting Centre to coordinate Entrepreneurship Page 26 of 34
activities in the University with a Trade and Skills Acquisition Centre where students acquire varying skills raging from garments making, footwear, catering, fashion design, make-ups science, crafts and artisanship (in collaboration with the National Association of Scraps, Artisans and Scraps), and most importantly, Export and Import business. Let me quickly add here that Agro Export remains the most untapped entrepreneurship gold mine that we have overlooked for a long time. Aside from creating jobs and wealth thereby bringing our much talk about economic development, agro business and export provide raw material and serve as primary products for seamless industrial production across the globe. For the Kaduna State University to venture into this unique but unexploited area is a right step in the right direction. The University need all the necessary encouragement to boost the export potentials in the country not only in agro products but on other mineral deposits and human skills. The Faculty of Agriculture of the University can come up with innovative ways of packaging the agro products to mitigate the rejection at the point of entry as the case now is with the recent ban by the European Union on some agricultural products emanating from developing countries across Africa due to poor packaging and unprofessional use of pesticides as preservatives. It is noteworthy to single out the Kaduna State University that is barely a decade old but was able to secure endorsement of the National Universities Commission and other peer Universities. When the British Council through its Department for International Development sponsored an African university conference with several universities in attendance, the Kaduna State University was unanimously selected for the onerous task of coordinating the secretariat of the Network of African Students Entrepreneurs to which the University was able to mobilise various Universities in the country for a strategic retreat this year to provide a Page 27 of 34
roadmap for students networking activities across the universities for students to share experiences and improve on their business acumen. I share in the vision of the Kaduna State University in its bit to be a University known for Entrepreneurship. What the University has demonstrated in recent times with the launching of the Network in Abuja which attracted some federal ministers and universities from different region of the country is commendable. With the full participation of the University in the United States Entrepreneurship Practical Tutorship sponsored by the Tertiary Education Trust Fund, I have no doubt in my mind that Kaduna State University will be the leading light in our nation’s quest to be entrepreneurially minded for rapid socio-economic development of our beloved country. The
challenge
of
Unemployment
and
the
necessity
for
Entrepreneurship and skills development for poverty reduction and sustainable development in Nigeria The fact must be accepted that one of the greatest challenges facing governments at all levels in this country is the disturbing rate of unemployment, especially among the able bodied and even educated youths. This has informed His Excellency President Muhammadu Buhari’s insistence that government must do all that it takes to tackle high unemployment rate in this country. Here in Kaduna State, His Excellency Governor El-Rufai has made it clear that his government will promote inclusive education and skills development as twin tools to fight poverty, unemployment and wealth creation. While reflecting over the twin problems of low entrepreneurial initiatives and high unemployment rate in the country generally, the fact is that Page 28 of 34
demographic realities and negative attitudinal tendencies have made things even more disturbing for most parts of the northern part of this country. It is these negative tendencies which find convenient space under cultural excuses that have contributed to make the north, on the average less competitive. Since northern youths are as equally gifted both intellectually and skills-capacity wise, it appears we the leaders at all levels in the north must rise and lead a new attitude to confronting today and more importantly, chart a better course and attitudinal framework to compete with the rest of the world. Something tells me that this must be why a first Class brain, tested technocrat and innovative entrepreneur will accept the clarion call to come and serve the good people of Kaduna State as Governor. 8.0
CONCLUSION
This year, some 73 million young people will be unemployed, an estimated 425 million young women and men will join the labour force between 2016 and 2030. That means the world will need about half a billion jobs by then. This generation of youth is the largest in history. “We need to make a shift from talking about creating jobs for youth to talking about inventing jobs by youth – Ban Ki Moon”. We therefore must invest in their education and empowerment, then we can transform our nation. Entrepreneurship is about innovating, breaking down barriers, taking risks and showing that new business models can tackle longstanding problems. I therefore urge the graduates of today to see the potential job opportunities in all the issues facing us –from waste to hunger, etc. remember that “many large companies started in someone’s kitchen or backyard. A number of those companies are now major corporations giving back to communities”.
Page 29 of 34
Therefore, entrepreneurship is not only concerned with business success, as measured by profits, but also with subjective welfare and non-economic wellbeing
sustained
by
continuous
academic
and
professional
development. I am sure that if we internalize the import of productive education and positive attitude to conquering poverty, our traumatized citizens and communities can revitalize themselves and join the march for a sustainable Positive Change in our country,
Page 30 of 34
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