CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Every country wants its citizens to enjoy a better material standard of living, and governments everywhere pursue that goal. In Nigeria, the need to do something for the poor is reflected in the many poverty alleviation programmes that have been launched over the years, yet the average Nigerian still lives close to or below the poverty line. Among the reasons is that earlier development strategies did not deliver what was expected of them. In response, a number of economic reform programmes have been introduced, and more recently special emphasis has been placed on self-reliance through entrepreneurship and the small and medium enterprises (SMEs) that entrepreneurs create. Olaore, Adejare and Udofia (2021) point out that entrepreneurship is closely tied to nation-building because it is a source of employment, and that the economies of developed nations show how strongly entrepreneurship is linked to national development. The same potential exists in developing countries, provided that entrepreneurs are supported to start businesses, create jobs and introduce new ideas.

The economic weight of this sector in Nigeria is considerable. According to the 2021 NBS/SMEDAN national survey, as reported by PwC Nigeria (2024), micro, small and medium enterprises (MSMEs) made up 96.9% of all businesses, provided 87.9% of employment and contributed 46.32% of gross domestic product. Atah and Ushie (2023) likewise describe small and medium enterprises as major sources of innovation, employment, poverty alleviation and wealth creation. Because Nigeria has a large population of unemployed young people, the ability of small enterprises to create jobs is a central concern.

The word "entrepreneur" means different things to different people, so the key concepts used in this study are explained here. In everyday usage, an entrepreneur is a person who starts or organises a commercial enterprise, especially one that involves financial risk. To an economist, an entrepreneur is someone who brings land, labour, materials and capital together in a combination that is worth more than the parts, and who introduces change, innovation and a new order. Entrepreneurs are risk takers who assemble the factors of production to start and run a business in order to make a profit. Schumpeter (1934) gave the idea its classic form by arguing that economic change ultimately depends on the entrepreneur who makes it happen. Entrepreneurship therefore involves initiating changes in production, and it is a process that includes both the entrepreneur and an entrepreneurial career. It can be described as the process of creating something of value by devoting the necessary time and effort and accepting the financial, psychological and social risks, in return for monetary rewards and personal satisfaction. Drawing on Drucker, Olaore et al. (2021) add that entrepreneurs create something new and add greater value, whereas an SME is simply a business that need not introduce anything new, so that an entrepreneur may start as an SME but not every SME owner is an entrepreneur.

In Nigeria, many policies have been implemented to help small enterprises survive so that they can contribute fully to economic development. Their challenges, however, have been worsened by a persistent energy crisis, weak infrastructure, unhelpful import and export policies and tariff structures, among other factors. Olaore et al. (2021) identify financing as the foremost problem of Nigerian SMEs, followed by infrastructure deficiency and the lack of a workable policy framework to drive SME establishment and growth. They also list a harsh business environment, fluctuating policies, irregular power supply, multiple taxation and business registration bottlenecks as factors that hold back entrepreneurship. They cite a UNIDO estimate that only about 20% of Nigerian SMEs survive. These conditions have repeatedly led to the near collapse and failure of small scale enterprises, and government should look into ways of resolving them.

The situation in Nasarawa State has been examined by Gambo, Akpan, Ogwuche and Umeokwobi (2025), who surveyed 375 new entrepreneurs in Lafia, drawn from a population of 1,604. They found that entrepreneurship development, access to micro-credit and the number of new businesses established each had a significant effect on employment creation in the State, and that the main obstacles to entrepreneurship were limited support from governmental and non-governmental organisations, difficulty in obtaining finance and micro-credit, and inadequate training and enlightenment. These findings show that entrepreneurship matters for jobs in Lafia, and they also show why further study of how it works in specific enterprises is worthwhile.

It is against this background that this work sets out to evaluate entrepreneurship development in Lafia metropolis, Nasarawa State, with reference to selected small scale enterprises.

1.2 Statement of the Problem

Several problems are associated with entrepreneurship development and job creation in Nasarawa State. They include, but are not limited to, the following.

Incompetence of management. The greatest hazard facing an entrepreneurial business is the incompetence of its management. A small business owner may know every management principle and theory and still run the business badly. The owner may lack leadership qualities, be unwilling to delegate authority, have weak human relations skills or lack the appropriate management skills, and a business run in this way is likely to fail.

Inadequate infrastructure. Water, electricity, accessible roads and communication facilities are indispensable to the efficient performance of any enterprise. Their absence or inadequacy harms the performance of entrepreneurial businesses, and unreliable power supply in particular raises operating costs and increases the mortality of SMEs (Olaore et al., 2021).

Disasters. Some events are largely beyond the control of a small business owner. Natural disasters such as lightning, fire or accident, and the sudden death of the owner, can seriously disrupt the operation of a small scale enterprise.

High rate of loan diversion and default. Loans obtained from government, banks and individuals are often diverted to personal use instead of the objectives of the business. The failure to repay the loan with interest then affects the business.

Inadequate credit control. Entrepreneurs often have to decide whether or not to sell on credit. Many small enterprises extend credit to friends and relatives, which is hard to recover when the business needs cash, and this worsens the owner’s financial difficulties.

Inadequate planning. Planning a business begins with gathering and evaluating data on resource requirements, operating costs, potential markets and sales, competition, supplies and relevant government regulations. Many eager business owners, however, press ahead impulsively without proper planning, and failure follows. The failure to use modern methods of gathering and analysing data is a weak point in the planning efforts of small businesses.

Poor business accountability. The financial problems of small enterprises are rarely only financial. Often they are a symptom of other weaknesses. Business finances are mixed up with personal finances, and cash and stock are taken for personal needs whenever the need arises without recording the withdrawals. This makes it hard to assess how the business is performing and often starves it of working capital.

These internal weaknesses are made worse by external factors. Olaore et al. (2021) found that government policy had no significant direct effect on SMEs’ access to financial aid, which suggests that support for small businesses is not reaching them effectively. Gambo et al. (2025) also report limited support from governmental and non-governmental organisations in Nasarawa State. Hence the need for this study on the effects of entrepreneurship development on employment generation in Lafia metropolis, Nasarawa State.

1.3 Objectives of the Study

The aim of this study is to recall the pivotal role that entrepreneurs and small and medium enterprises are expected to play in modern economies. The study will therefore make every effort to reveal the various ways of encouraging entrepreneurship development geared towards employment generation in Lafia metropolis, Nasarawa State. The specific objectives are to:

1. identify the constraints encountered by entrepreneurs, whether as sole operators or as larger organisations, and how these challenges can be overcome;
2. determine the level of awareness of people about entrepreneurship development as a tool for employment generation in Lafia metropolis;
3. examine the various ways in which entrepreneurship can be developed in order to achieve the desired result of employment creation and development; and
4. show, by extension and implication, how government at state and national levels, and society, can positively influence entrepreneurship and its development.

1.4 Research Questions

The following questions guide the study:

1. What are the major constraints inhibiting entrepreneurs in Lafia metropolis from carrying out their role as catalysts of economic growth through employment generation, and how can these challenges be overcome?
2. What is the level of awareness of people about entrepreneurship development as a tool for employment generation?
3. What identifiable and specific roles (financial, economic, social, motivational and psychological) do entrepreneurs in Lafia metropolis play in order to achieve the desired result of employment creation and development?
4. In what ways can both government and society influence entrepreneurship development?

1.5 Significance of the Study

The study will be of great significance to students, prospective and practising entrepreneurs, co-operators, chief executives and other practising managers of business and non-business organisations. It will also serve as a background and catalyst for future researchers and scholars who wish to explore the promotion of employment creation and entrepreneurship development in Lafia metropolis.

The outcome of the research will be useful to people in different occupations and professions. Its conclusions could lead to improvement and greater efficiency in entrepreneurial activity in Lafia metropolis, Nasarawa State. Policy makers may also use the findings to design support measures such as micro-credit, training and business development services, which the literature identifies as important for entrepreneurship to create jobs (Gambo et al., 2025; Olaore et al., 2021). Finally, the confidence of people in embarking on entrepreneurship in Nigeria is likely to improve, and more members of the public will be willing to venture into business.

1.6 Scope of the Study

The study focuses on the effects of entrepreneurship development on employment generation in Lafia metropolis, using selected small scale enterprises as a case study.

1.7 Limitations of the Study

The researcher encountered a number of challenges in the course of the study.

Time constraints. The study had to be carried out alongside time-intensive academic coursework, which limited the time available for it.

Access to data. Access to adequate and reliable data for analysis was a limitation.

Geographical restriction. An in-depth study and analysis of the subject was not possible because the study was restricted to a single location, Lafia metropolis in Nasarawa State.

Availability of literature. Some of the materials needed for secondary data were not readily available, although a concerted effort was made to obtain them from valuable sources.

1.8 Definition of Terms

Entrepreneur: The originator of a new business venture, or a manager who tries to improve an organisational unit by initiating productive changes. In other words, an entrepreneur is an individual or group who sees environmental change as an opportunity and uses the factors of production to produce new goods and services (Olaore et al., 2021; Schumpeter, 1934).

Entrepreneurship: The process of creating something different and of value by devoting the necessary time and effort, assuming the accompanying financial, psychological and social risks, and receiving the resulting rewards of monetary and personal satisfaction.

Small scale enterprise: A business that is owned, managed and controlled by one or a few persons, whose decision making is influenced by the family, which has a relatively small share of the market and which employs fewer than 50 people. Under the SMEDAN classification used in Nigeria, firms with 1 to 9 employees are micro, those with 10 to 49 are small and those with 50 to 199 are medium (Enhancing Financial Innovation and Access [EFInA], 2021; Olaore et al., 2021).

Entrepreneurship development: The process through which a class of enterprising individuals comes into being in a society, willing and able to take risks, supported by training, access to finance and an enabling environment.

Employment generation: The creation of job opportunities, whether through entrepreneurial ventures or through government empowerment schemes and similar programmes.

References

Atah, C. A., & Ushie, G. B. (2023). Reengineering small-scale business enterprises as predictors of youth employment and poverty alleviation. Journal of International Cooperation and Development, 6(1). https://richtmann.org/journal/index.php/jicd/article/download/13289/12879/46437

Enhancing Financial Innovation and Access (EFInA). (2021). Research findings from MSME access to finance challenges in Nigeria. https://efina.org.ng/wp-content/uploads/2021/12/Research-Findings-from-MSME-Access-to-Finance-Challenges-in-Nigeria.pdf

Gambo, A. A., Akpan, M., Ogwuche, D., & Umeokwobi, R. (2025). Effect of entrepreneurship development on employment generation in Nigeria: A case study of Nasarawa State. Financial Economics Letters, 4(1), 15–30. https://doi.org/10.58567/fel04010002

Olaore, G. O., Adejare, B. O., & Udofia, E. E. (2021). The gains and pains of small and medium-scale enterprises (SMEs): The way forward for entrepreneurship development in Nigeria. Rajagiri Management Journal, 15(1), 53–68. https://doi.org/10.1108/RAMJ-09-2020-0056

PwC Nigeria. (2024). MSME survey report 2024. https://www.pwc.com/ng/en/assets/pdf/msme-survey-report-july-2024.pdf

Schumpeter, J. A. (1934). The theory of economic development. Harvard University Press.