THE ROLE OF SMALL AND MEDIUM ENTERPRISES ON EMPLOYMENT GENERATION

THE ROLE OF SMALL AND MEDIUM ENTERPRISES ON EMPLOYMENT GENERATION

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Nigeria’s unemployment problem, which affects both educated and unskilled workers, has emerged as one of the country’s most pressing and contentious issues. The unemployment scenario has shifted from one of long periods of unemployment and underemployment to one in which graduates from higher education institutions must typically wait for a significant period of time before landing their first job – if they are lucky enough to land one at all. At the turn of the millennium, the most difficult issue afflicting many countries around the world was unemployment. As a result of the ongoing global economic slump and the uncertainty surrounding economic growth expectations, global economic conditions are bleak. Many economies were thrown into deep recession as a result of

as a result, and the ramifications of this have harmed the labor markets (Hassan, 2013).

Surprisingly, Nigeria, like many other developing countries, has one of the highest rates of youth unemployment in the world, with 60-65 percent of the population under the age of 25 unemployed. (2008 Federal Ministry of Labor and Productivity Report). The majority of them are young adults who have recently graduated from universities, polytechnics, or other institutions of higher learning. According to the most recent available estimate, approximately 1.6 million people, primarily young adults, graduate each year. An additional 3.8 million certificate-carrying youths with no formal education, or who have completed elementary and secondary school but have dropped out of higher education, are poured into the labor force.

Every year, an already oversaturated labor market becomes even more so (Federal Ministry of Labour and Productivity Report, 2008).

Many of Nigeria’s youth are unproductive and have been reduced to small merchants and smugglers; in many cases, it is clear that the country’s unemployment rate has reached an unfavorable level in Nigeria. In fact, the Nigerian labor market is on the verge of becoming saturated.

Concerned economists and policy analysts are urging the government to create a conducive environment for the operation of small and medium-sized enterprises (SMEs) because it has the potential to generate employment opportunities for the swarms of job-seeking Nigerians who swarm the streets in search of non-existent white-collar positions. Small and medium-sized businesses (SMEs) account for

According to previous research by Ogujiuba, Fadila, and Stiegher (2013) and Musa and Aisha (2013), much more than half of the total share of employment sales and value created (2012). Small and medium-sized enterprises (SMEs) are the most feasible and dependable vehicle for self-sustaining industrial growth because they have the greatest potential to cultivate an indigenous company culture of any technique. Small and medium-sized enterprises (SMEs) should be given special attention in any significant economic restructuring program aimed at creating jobs, alleviating poverty, ensuring food security, accelerating industrialization, and reversing rural-to-urban migration.

For many years, small and medium-sized enterprises (SMEs) have been a buzzword in the business world. This is because the sector functions as a  a catalyst for the creation of jobs, national growth, poverty reduction, and overall economic development. Small and medium-sized enterprises (SMEs) worldwide can claim to be the largest employers of labor when compared to larger sectors such as multinational corporations (Kadiri, 2012). Because SMEs contribute to employment growth at a higher rate than larger firms, their performance and growth are important drivers and indicators of the level of industrialization, modernization, and urbanization, as well as gainful and meaningful employment for all those who are able and willing to work, equitable distribution of income, welfare, income per capital, and the quality of life enjoyed by the citizenry (Aremu and Adeyemi, 2011). The sector of small and medium-sized enterprises (SME), which has

gained international attention, and is regarded as a key driver of economic growth and job creation in both developing and developed countries (Kpleai, 2009).

1.2 STATEMENT OF THE PROBLEM

Without a doubt, Nigeria’s goal of ranking among the top twenty economies in the world by 2020 will be impossible to achieve in a socioeconomic climate marked by hunger, poverty, and unemployment among a large portion of the country’s population. It is worth noting, however, that the imperialist-inherited age-long formal education produced graduates with job-seeking mindsets rather than job-creation mindsets; as a result, they lack entrepreneurial traits such as self-motivation, drive, and innovation, which are required by the world of work and labor employers (Towobola and Raimi, 2011; Raimi et al., 2011; Simkovic, 2012).

Furthermore, with the country’s population growing at a geometric rate, In terms of job placement, it became clear that the nation’s formal education is fueling unemployment, crime, and the cycle of poverty as graduates were unable to be absorbed. The government then realized that there is an urgent need to address the socioeconomic implications of idleness and hopelessness, with policy observers urging the government to consider entrepreneurship education as a tool for reducing unemployment in Nigeria through the establishment of SME’s, because the strength of any economy in the world requires the birth of a large number of small and medium enterprises. Anyanwu (2019), on the other hand, contended that, despite the existence of SME’s, joblessness still exists in Nigeria, and thus he questions whether SME’s are a viable option.

SME’s have played a significant role in the employment supply. This study seeks to investigate the role of small and medium-sized businesses in job creation based on this premise.

1.3 OBJECTIVES OF THE STUDY

The study’s main goal is to investigate the role of small and medium-sized businesses in job creation in Ogun State. Other specific goals include:

i. To investigate the prevalence of unemployment in Ogun State, Nigeria.

ii. Determine the factors that contribute to Ogun State’s high unemployment rate.

iii. Determine the extent to which Small and Medium Enterprises have contributed to job creation in Ogun State.

iv. To investigate the role of the SMEs sector in empowering youth with self-reliance in Ogun State.

1.4 QUESTIONS FOR RESEARCH

The following research questions will be addressed during the course of this study:

What is the prevalence of unemployment in Ogun State, Nigeria?

ii. What are the factors contributing to Ogun State’s high unemployment rate?

iii. To what extent have small and medium-sized businesses contributed to job creation in Ogun State?

iv. What role does the SMEs sector play in empowering youth in Ogun State to be self-sufficient?

1.5 THE STUDY’S IMPORTANCE

The study’s findings will provide a framework for the government to develop policies capable of encouraging entrepreneurs to establish, finance, and sustain small and medium-sized businesses. The study will educate young people on the importance of being self-sufficient.

Instead of putting yourself through the stress of looking for a government white collar job, get involved in business. Empirically, the study will add to the body of existing literature and serve as a resource for scholars who wish to conduct additional research in a related field.

1.6 STUDY OBJECTIVES

The scope of this study is limited to the role of small and medium enterprises in job creation in Ogun State. The study will go on to discuss the role of the SMEs sector in empowering youth with self-reliance. The study, however, is limited to selected secondary schools in the Ogun State metropolis of Abeokuta.

1.7 STUDY LIMITATIONS

The researchers encountered minor constraints while conducting the study, as with any human endeavor. The limited literature on the subject posed a significant constraint. Because it is a new discourse, the researcher incurred more financial expenses and spent more time sourcing for relevant materials, literature, or information and collecting data, which is why the researcher resorted to a limited sample size covering only youth in Abeokuta metropolis in Ogun State. As a result, the findings of this study cannot be generalized to other states in Nigeria. Furthermore, the researcher’s involvement in this study while also working on other academic projects will impede maximum dedication to the research. Nonetheless, despite the constraints encountered during the research, all factors were minimized in order to provide the best results and make the research a success.