FFull Project – Impact of small and medium scale enterprise on employment generation

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Small and medium enterprises (SMEs) development has continued to be popular phrases in the business world. This is because the sector serves as a catalyst for employment generation, national growth, poverty reduction and economic development. SMEs world over can boast of being the major employees of labour if compared to the major industries including the multinationals according to Petersen (200), SMEs both in the formal and informal sector employed over 60% of the labour force in Nigeria. More so, 70% to 80% of daily necessities in the country are not high-tech products, but basic materials produced with little or no automation, most of these products come from the small and medium enterprises.

Right from independence in 1960, unemployment has been a rising phenomenon as many Nigerians are jobless to the extent that government itself may not actually know the rate of unemployment today. Many of the jobless person have taken to crimes like armed robbery, drug trafficking and prostitution among others. This unemployment situation has been worsened by various factors peculiar to the Nigerian situation. These include poor planning or no planning at all mono economy, that is, total dependence on oil with its attendant price fluctuations in the world market. Political and civil instability among others OLagunju (2008). It is in realization of the dangers of unemployment that the federal government has put in place policies and programmes such as the establishment of the national directorate of employment (NDE) in 1986 to work out strategies for dealing with the mass unemployment in the country especially among school leavers and university graduates.

The essence of these efforts is to equip unemployed persons to be self-reliant and self-employed through acquisition of relevant skills in any trade of their choice as a means of earning a living. A person who has acquired a skill becomes an employer of labour instead of searching for a white collar job that is hardly available. Consequently, many unemployed persons have taken the initiative to be self-reliant rather than looking up to the government for employment, today there are university or college graduates who established business of their own and are carrying on well. Businesses ventured into include; poultry farming, animal rearing harvesting, barbering, soap making, shoe production, baking, commercial transportation, distributive trade, estate agency, tailoring, laundry and dry cleaning, office and industrial cleaning. Etc. all these enterprises are established and managed by individuals who desired to be economically independent and want to contribute the quota the development of the economy of the state and the nation at large. Today, such enterprises are spread all over the places, in the cities, towns and villages across the country (Nwoye, 1994).

In Nigeria as a whole, unemployment rate has been on the increase in spite of the fact that government has made frantic effort in creating employment opportunities since the transition to civil rule in 1999. The growing number of graduates and school leavers churned out annually from various institutions of learning in the country makes government effort to have little or no impact as for as the issue of unemployment is concerned. Statistics shows that unemployment rate stands at an average of about 23.9% (NBC, 2011). Furthermore, the ILO (2007) noted that the increase in the number of youths in secondary and tertiary education is another development. However, the labour market in Nigeria is presently unable to accommodate the expanding pool of young graduates. Apparently, the various tiers and arms of government inn Plateau state cannot meaningfully engaged the teaching school leavers that are churned out annually from the various schools and tertiary institutions. In the above situation, small and medium scale enterprises are expected to come to the rescue of both the graduates and the state government by providing the much needed jobs. This study thus examines the extent to which small scale enterprises have impacted on the generation of employment for youths in Plateau state, Nigeria.

1.2 STATEMENT OF THE PROBLEM

Nigeria is currently witnessing an alarming rate of unemployment due to the some factors:

The increasing rate of unemployment among young graduate that is making it difficult for the Nigeria economy to take large number of them into the labour market.
The inability of most of the young graduate to acquire entrepreneur skills that will make them become self employed.
The inability of the government to create more job opportunities to and promotes the private sector in the creation of more small and medium scale enterprises.
The unwilling nature of financial institutions to grant financial aids to young entrepreneurs in the establishment of small scale business.

1.3 OBJECTIVE OF THE STUDY

The primary aim of this study is to ascertain the impact of SMEs on employment generation in Plateau state. The specific objectives include:

To determine the extent to which SMEs have impacted on employment generation in Kogi state, Nigeria.
To identify specific ways SMEs can create employment opportunities in the country.
To determine whether or not the Nigerian small scale enterprises make use of all the credit facilities available to them and the reasons for the stand they take in relation with their initial capital
To identify the problems of small scale enterprises in the state.

1.4 RESEARCH HYPOTHESIS

The main purpose of this research is to determine the impact of SMEs on employment generation in Kogi state. Therefore, the following hypotheses are tested in this study using 5% level of significance.

Ho: Small scale enterprises have no significant impact on employment generation in Kogi state.

Hi: Small scale enterprises have significant impact on employment generation in Kogi State.

Ho: Employment generation has no significant effect on the economic development of Kogi State.

Hi: Employment generation has significant effect on the economic development of Kogi State.

1.5 SIGNIFICANCE OF THE 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 out 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 prospective researcher.

1.6 SCOPE OF THE STUDY

The research work is concerned with the role of small scale business in the creation of employment opportunities using Yisab communication as the case study. Therefore, the researcher shall remain within the range the period covered are between 2012 to 2017.

1.7 LIMITATION OF THE STUDY

In the course of carrying out this research work, the investigator encountered the understated challenges:

The pressure of time caused by the limited time allowed for the investigation.
Limitation on questionnaires: e.g. truthfulness in responses constitute a major challenge.
The effect of financial inadequacies is another constraint that might affect the results of or the outcome of this research undertaking.
Another constraint is lack of modern facilities like internet and some relevant research materials in the polytechnic library etc.

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FFull Project – Impact of small and medium scale enterprise on employment generation

Full Project – The impact of fiscal policy on the Nigeria economy

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