CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In a free enterprise economy, national development and the sustaining of growth are the joint responsibility of the public and the private sectors. The public sector confronts the obstacles to development and creates an enabling environment, and the private sector responds to that environment by raising its investment in the economy, which is the catalyst for economic development. Where this partnership works, new businesses are formed, jobs are created and incomes rise.

Entrepreneurship plays a vital role in the economic development of nations, even when the economy is depressed. Entrepreneurial ventures, particularly small and medium-sized enterprises (SMEs), are widely recognised as sources of job creation, innovation and sustainable economic progress (Dada, Ihinmoyan & Ologundudu, 2025). They transform traditional industry, offer employment, make more efficient use of raw materials, capital and labour, generate income, link the different parts of the economy and provide a training ground for people at every level. Worldwide, micro, small and medium enterprises (MSMEs) represent about 90% of businesses and more than 50% of employment (World Bank, 2021, as cited in the Small and Medium Enterprises Development Agency of Nigeria [SMEDAN], 2022). In recognition of this, many countries have moved from relying mainly on large corporations and government towards promoting small businesses and entrepreneur development, because technological change and fragmented markets have lowered many of the entry barriers that once protected large firms.

Nigeria is part of this global shift. In pursuit of rapid industrialisation, successive governments introduced incentives to encourage private industry. The early strategy leaned heavily on large-scale industries that depended on imported capital equipment and technical manpower, and it fell short of its goal of high local value addition. In response, government turned to small-scale industry as a route to self-reliant industrialisation. This policy direction produced a series of measures and institutions over the years, among them the Nigerian Enterprises Promotion Decree of 1972, which aimed to increase Nigerian ownership, control and management of certain enterprises, and a range of financing and support agencies such as the Nigerian Industrial Development Bank, the National Economic Reconstruction Fund (NERFUND), the People's Bank, the Family Economic Advancement Programme and the National Directorate of Employment. Today the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is the nodal institution for the sector (SMEDAN, 2022).

The scale of the sector is now well documented. The joint National Bureau of Statistics (NBS) and SMEDAN survey reported that 39,654,385 MSMEs were operating in Nigeria at the end of 2020. They contributed 46.31% of GDP and 6.21% of gross exports, and micro enterprises accounted for 96.9% of businesses and 87.9% of employment (NBS & SMEDAN, 2021, as reported by Daily Trust). A later PwC (2024) survey describes MSMEs as a critical part of Nigeria's economic fortunes.

The same data point to a sector under pressure. The number of enterprises fell from about 41.5 million in 2017 to 39.6 million in 2020, a decline of 4.5%, and the sector's contribution to GDP fell by 3.5% even though its contribution to employment rose by 3.7% (BusinessDay, n.d.; Daily Trust, 2021). Reporting on the survey attributed the closure of more than 1.8 million enterprises to high fuel prices, taxes, electricity tariffs and interest rates, and to insecurity (BusinessDay, n.d.). In a depressed economy, these pressures are intensified by weak demand, scarce capital and uncertain policy. The SMEDAN (2022) competitiveness report scored Nigerian MSMEs at only 47 out of 100 on its competitiveness index.

The numbers of ventures have grown and the range of businesses has become more complex, yet most small and medium-sized businesses do not survive for long. Dada et al. (2025) identify financial limitations, weak institutional support, human capital deficits, infrastructural decay, technological constraints and political instability as the most significant barriers to entrepreneurship development in Nigeria, and they stress that leadership, strategic decision-making, risk-taking and efficient management are essential competencies for success. The environment is therefore both challenging and rewarding. It is challenging because starting a business requires capital at risk and managing it in a weak economy is difficult, and because government regulation can affect performance adversely. It is rewarding because those who succeed create wealth and employment for themselves and others.

Financing remains a central difficulty. An NBS and SMEDAN finding, reported in the press, showed that about 85% of MSMEs had no access to external financing between 2013 and 2017 and that only 5.3% obtained credit in that period (Dataphyte, n.d.). In Enugu State, Oluka (2023) notes that microfinance is widely adopted as the main source of finance for SMEs because it does not require collateral, and that many aspiring entrepreneurs depend on it to start. The success of an enterprise also depends on its owner's attitude to the product or service and to the consumer. An entrepreneur starting a business should consider the problem in the market and the corresponding opportunities, co-ordinate available resources efficiently, and keep products and services up to date.

This study examines these issues in the context of the National Association of Small Scale Industrialists (NASSI), Enugu State Chapter.

1.2 Statement of the Problem

Many private enterprises in Nigeria perform poorly or collapse, and this happens even though they contribute heavily to output and employment. National data show that the number of MSMEs has declined, that the sector's share of GDP has weakened and that large numbers of enterprises have closed under the weight of high costs, limited credit and insecurity (BusinessDay, n.d.; Dataphyte, n.d.). Research on entrepreneurship in Nigeria identifies weak finance, infrastructure, institutional support and managerial capacity as recurring constraints (Dada et al., 2025). Yet few studies assess how these constraints, and the support available from government, affect the members of a specific association of small-scale industrialists in Enugu State.

The researcher therefore intends to carry out a survey aimed at identifying the causes of the non-performance of many private enterprises in Nigeria, with particular reference to Enugu State. The problem to be studied is the need for the development of entrepreneurship in a depressed economy, using the National Association of Small Scale Industrialists (NASSI), Enugu State Chapter, as a case study. The specific objectives the researcher intends to achieve are set out below.

1.3 Objectives of the Study

The objectives of this research are to:

1. assess the management potential of NASSI Enugu entrepreneurs;
2. examine the effectiveness of NASSI Enugu entrepreneurs;
3. assess the development of entrepreneurship in NASSI Enugu;
4. examine the nature of the problems of entrepreneurship development in NASSI Enugu;
5. determine the level of assistance given to NASSI Enugu entrepreneurs by government;
6. verify the willingness and ability of Nigerians to become entrepreneurs; and
7. assess the technological capability of NASSI Enugu entrepreneurs.

1.4 Research Questions

The following research questions will guide the study:

1. How can the management potential of NASSI Enugu entrepreneurs be assessed?
2. How effective are NASSI Enugu entrepreneurs?
3. What are the processes for assessing the development of entrepreneurship in NASSI Enugu?
4. What are the major problems militating against the development of entrepreneurship in NASSI Enugu?
5. To what extent has the Nigerian government assisted the development of entrepreneurship in NASSI Enugu?
6. What are the means of verifying the willingness and ability of Nigerians to become entrepreneurs?
7. What is the ability of NASSI entrepreneurs in terms of new technological trends?

1.5 Research Hypotheses

The hypotheses are stated in null (H₀) and alternative (H₁) form.

Hypothesis One

H₀: NASSI Enugu entrepreneurs have no significant management potential.

H₁: NASSI Enugu entrepreneurs have significant management potential.

Hypothesis Two

H₀: NASSI Enugu entrepreneurs do not perform effectively.

H₁: NASSI Enugu entrepreneurs perform effectively.

Hypothesis Three

H₀: The development of entrepreneurship in NASSI Enugu cannot be assessed.

H₁: The development of entrepreneurship in NASSI Enugu can be assessed.

Hypothesis Four

H₀: There are no problems militating against entrepreneurship development in NASSI Enugu.

H₁: There are problems militating against entrepreneurship development in NASSI Enugu.

Hypothesis Five

H₀: There are no means of examining the willingness and ability of NASSI Enugu entrepreneurs.

H₁: There are means of examining the willingness and ability of NASSI Enugu entrepreneurs.

Hypothesis Six

H₀: NASSI Enugu entrepreneurs have no ability in terms of new technological trends.

H₁: NASSI Enugu entrepreneurs have ability in terms of new technological trends.

1.6 Significance of the Study

Entrepreneurship creates room for people to enter self-employment, make the best use of their potential and show devotion and diligence, which matters most in a depressed economy. The study is therefore significant because it will open the eyes of many Nigerians who have allowed their entrepreneurial potential to go to waste.

Secondly, it will inform government and individuals about the role of entrepreneurship and its contribution to the economy. It will help to appraise government's rationale and indicate its responsibility in developing entrepreneurship, in particular in tackling the finance, infrastructure and institutional constraints that existing research identifies (Dada et al., 2025).

In addition, entrepreneurs will benefit, because the research will suggest solutions to many of their management problems. Finally, it will serve as a stepping stone for further research in this field.

1.7 Scope of the Study

The study is about the need for the development of entrepreneurship in a depressed economy, using NASSI Enugu as a case study. It considers government policies aimed at a self-reliant and self-employed economy and gives an overview of small business. Reference is also made to the role of entrepreneurship in the economic development of other countries. The study is designed to be comprehensive enough for the purpose of clarity.

1.8 Limitations of the Study

The study examines the need for the development of entrepreneurship in a depressed economy, but it cannot cover all entrepreneurs in Nigeria because of constraints of time and money and the distances involved. A sample of entrepreneurs drawn from NASSI Enugu Chapter was therefore selected. Every research project suffers from scarcity of resources. Financial limitations impose their own frustrations, and other resources, such as textbooks and journals, were also in short supply. This study is no exception.

1.9 Definition of Terms

To ensure a common understanding of terms that have a specific use in this study and are open to different interpretations, the key terms are defined below.

Entrepreneur: A person who assumes the risk of organising and managing his or her own business in the hope of making a profit.

Entrepreneurship: The role or function of the entrepreneur, who gives operational expression to new ideas, structures, products and advice in an environment.

Innovation: The introduction of a new idea, product, process or method that adds value.

Development: The process of changing and becoming larger, stronger or more advanced.

Depressed economy: An economy marked by low output, high unemployment, weak demand and weak investment.

NASSI: National Association of Small Scale Industrialists.

References

BusinessDay. (n.d.). How government policies push Nigeria's 1.8m MSMEs to the brink. https://businessday.ng/enterpreneur/article/how-government-policies-push-nigerias-1-8m-msmes-to-the-brink/

Dada, D. A., Ihinmoyan, T., & Ologundudu, G. S. (2025). An empirical analysis of constraints to entrepreneurship development in Nigeria: Policy and practice perspectives. International Journal of Small Business and Entrepreneurship Research, 13(2). https://doi.org/10.37745/ijsber.2013/vol13n2113131

Daily Trust. (2021). MSMEs employment contribution rises by 3.7% – SMEDAN. https://dailytrust.com/msmes-employment-contribution-rises-by-3-7-smedan/

Dataphyte. (n.d.). Mr Tinubu, majority of 40m MSMEs are on life support. https://new.dataphyte.com/posts/mr-tinubu-majority-of-40m-msmes-are-on-life-support

National Bureau of Statistics, & Small and Medium Enterprises Development Agency of Nigeria. (2021). National survey of micro, small and medium enterprises (MSMEs) 2021. Abuja: NBS and SMEDAN.

Oluka, K. U. (2023). Microfinance bank as a catalyst for entrepreneurship development in Enugu North LGA, Enugu State. Nigerian Journal of Social Development, 11(1), 37–47.

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

Small and Medium Enterprises Development Agency of Nigeria. (2022). MSME competitiveness in Nigeria report 2022. Abuja: SMEDAN.