Impacts of Small Business Enterprises on Employment Creations
Chapter One
OBJECTIVES OF STUDY
The major objective of this study is to determine the role played by small business enterprises in generating employment opportunities for the people of Lagos State to enhance the growth and development of the economy.
- To examine the extent to which small business enterprises create employment opportunities in Lagos State.
- To study the mechanism that assists and supports small business enterprises and their contribution to employment generation.
- To examine how small business enterprises create employment opportunities in the manufacturing sector.
- To know if financial institutions encourage small business enterprises to achieve their predetermined objective.
- To study if infrastructural provision helps small business enterprises to grow in Lagos State.
CHAPTER TWO:
LITERATURE REVIEW
Introduction
This chapter aims at reviewing the relevant literature about the Small Scale Businesses and its role in the provision of employment opportunities.
Definition and nature of SSBs
According to De Gobbi (2003), the small scale businesses refer to small and micro enterprises that lack sufficient collateral to cover the particularly high risks involved yet they operate with high transaction costs. To her they represent the large proportion of the economic sector in every country. They sometimes operate in the informal sector since many micro entrepreneurs are illiterate and have limited access to information, they are vulnerable and neglected group commonly composed of home working women.
However, international organizations such as the World Bank and the International Finance Corporations(2002), define Small Scale Businesses as those that require small amounts of capital to establish, small number of employees or in most cases personally handled by the owner, and referred to as micro businesses hence to them they are “mini businesses” or “Bop businesses”.
The European Union (EU) definition is based on the parameters of development, turnover and asset size and Organization for Economic Cooperation and Development (OECD) on employment and sales turnover. This implies that they play a vital role in alleviating poverty and increasing employment attributed to their promotion of competition and dynamism, since they augment government efforts in rural and urban areas thereby improving the household incomes which enables them to access various items for daily use at affordable costs. It is from this perspective that small scale businesses are dubbed as the small scale establishments since they operate at the least levels investment.
In Latin America, Small Scale Businesses are characterized by the dependence on family labor and limited technical and managerial skills. They are commonly not registered, maintain no business records and do not have access to credit from formal credit institutions. They are relatively small, flexible, require low capital needs, modest educational requirements with informal structures that are high labor intensive and do depend on local raw materials.
According to Susanjoekes (1995), the small scale business sector in India has been accorded as a priority sector of the national economy by the national decision makers since it is protected and promoted in various ways by government policies and measures to enhance their growth potential. Small Scale Businesses generate employment at relatively small capital costs, mobilize resources at micro levels and meet the rising demand for various goods and services required by the economy. To the decision makers, Small scale businesses constitute nearly 40% of the total output in the private sector. Much more significant was the employment generation capacity of 70%.
In Ghana, small scale enterprises are officially considered together. Small enterprises are defined as business units that employ a labor force of not more than 9 persons (Mensah et al, 2007, Kwasi Bruks et el, 2005; OECD, 2005).This is so because they augment government efforts to achieve economic growth and reduce poverty in the rural and urban areas through the promotion of competition and dynamism to enhance the development of low and middle income economies and individual.
According to Ayozie Daniel Ogechukwu(2009), small scale businesses are a seedbed of innovations, inventions and employment since they assist in promoting the growth of a country’s economy. Hence at all levels of government policies which promote the growth and sustenance of small scale businesses have been emphasized to enhance economic development.
In Nigeria, UBOS (2006) defines them as components of the informal sector that make up the National economy since they operate with low level of organization, low capital, low technology and often temporary premises. They are not registered with the government and not supported by formal financing institutions. Further these are classified as household enterprises which are economic units owned by the households but without an identifiable location. It is an informal establishment that usually employs about 10 employees as evidenced that 56% of the urban households were operating informal businesses (UNHS 2002).
CHAPTER THREE:
METHODS AND PROCEDURES
Introduction
This section describes the methods that were used for conducting the research. It dealt with the research design, area of study, sample selection, data management procedure, data collection, data analysis, and the anticipated constraints.
Research design
The study was designed in a way that it employed both exploratory and descriptive tools. The qualitative and quantitative methods of data collection were adopted so as to explore and obtain viable data as regards the extent to which SSBs provide employment opportunities despite the challenges they face.
Study area and Target population
The study was carried out in Ojo and Amuwo Odofin Area in Lagos state where Small Scale Businesses have been developed as a way to alleviate poverty through employment provision to the labor force that operates with the business entrepreneurs.
CHAPTER FOUR:
DATA PRESENTATION AND INTERPRETATION OF FINDINGS
Introduction
This chapter highlights the presentations, interpretations and discussions of collected data in tables, graphs and charts among others where 240 respondents were interviewed to provide information about the subject of study.
CHAPTER FIVE:
CONCLUSIONS AND RECOMMENDATIONS
Introduction
This chapter involves a summary of the findings, discussions, and recommendations that are based on the objectives, the problem statement, and well as the recommendations are based on the findings.
Conclusions of the study.
Findings revealed that majority of the different classifications and activities of the businesses were tied shop businesses that operated at a small scale, were managed by own boss and support staffs, had their source of startup capital from own savings, and do not provide opportunities to a great number of the people since they mostly employ less than 5 people compared to the labor force available.
The study revealed that most business owners had challenges that hindered their business operations, taxes and other regulations. Problems in the context acquisition of licenses for registration, duplication of products have been attributed to competition. This has culminated into the widening of markets, emphasizing of the Traditional Guarantee Associations as KACITA, PSF, 360 Network and USSIA so as to focus on the issues that hinder trade and business operations.
That small scale business mostly improve incomes and welfare of individuals, from their businesses knowledge or skills and business partners, competition for jobs associated with social responsibilities encouraged most business people to start businesses, the kind of activities engaged in by the businesses have enabled them to absorb labor force through the provision of employment opportunities. The study revealed that most people owners used own savings as a startup capital for their businesses hence operating at a small level with a structural hierarchy of own boss and support staffs thus leading most businesses to be tied shop businesses with less than 5 employees. Despite the challenges faced by the small scale businesses as taxes and other regulations, competition from similar operations, transportation costs, efforts have been undertaken to increase the role of such businesses in the provision of employment to the labor force.
Recommendations
Small scale businesses need to employ professionals to manage their businesses this will improve on their performance since these will establish and strengthen the internal controls as regards financial resources to reduce on mismanagement and misappropriations. It is through this that small businesses whose startup capital is based on own savings will easily access financial institutions for loans to enhance their business operations towards employment provision.
Small scale business operators should widen their markets so as to reduce competition this should be done by integrating market information into the planning process because marketing is the life blood of a competitive marketplace as it is driven towards the needs and desires of customers in the production decisions. This should be done with the help of the Government through tax exemption strategies for investment and direct financial support to small scale businesses.
Government should introduce motivation incentives in support of the small scale business operations for examples increased salaries, wage tax holidays and other non-monetary rewards. This would improve on the performance of businesses towards development and employment provision.
The decision makers of the small scale businesses should adopt the best form of organization that can address the following issues with help of updated technology;
- The life and continuity of the business
- The operating flexibility of the employees
- The ease and expense of making the business recognized
- The ease with which capital can be acquired to support business operations
- The ability to control the business without jeopardizing other activities in which they are involved
Government should involve draft policy frameworks for small scale businesses that focus on the legal and regulatory conditions, capacity building in support of improving the business environment to increase competition and promote the private sector. Emphasis should be on enabling accessibility through the development of better infrastructure in form of roads for transportation, administrations buildings as well as communication systems.
Areas for Further Research
Further research should be carried out on the following;
The effect of information technology on the performance of Small scale businesses
The role of financial and non financial Institutions in the development of Small scale businesses
The effect of procurement ethics on the performance of Small scale businesses
REFERENCES
- African Development Review, Revue Africaine de D’eveloppement, African Development Bank, Volume 15, Number 1 pages 23-34, June/Juin 2003
- Susanjoekes (1995), Trade related employment for women in Industry and Services in Developing countries, United Nations Research Institute for Social Development
- UBOS (2007), Volume 1, Projection of Demographic Trends in Nigeria 2007 to 2017
- Mlatsheni C and Rospabe S, University of Cape Town: Why is Youth Unemployment so high and unequally spread in South Africa?
- Kilimani N, Nigeria Programme for Trade Opportunities and Policy (UPTOP 2007), The Impact of Nigeria’s Trade Liberalization Policy on Economic Growth
- UBOS (2007), Report on the Labor Market conditions in Nigeria
- UNHS (2002/03), Report on the Labor force Survey 2003
- Ministry of Finance, Planning and Economic Development, Discussion paper 19(June 2009), Employment and job creation in Nigeria: Status and Growth prospects
- Ministry of Finance, Planning and Economic Development, Poverty Eradication Action Plan 2004/5 to 2007/8
- Roy L Crum and Itzhak Goldberg (1998), Restructuring and Managing the Enterprise in Transition, Economic Development institute of the World Bank
