The Role of Small Business in Poverty Alleviation
Chapter One
OBJECTIVE OF THE STUDY
The objectives of these studies are:
1. To access the role of small business in the Nigeria economy
2 To access the impact of small business in poverty alleviation in Nigeria especially in Ubotex Nigeria Limited.
3 The study will also assess the extent of awareness on the part of the poor towards the role of small business as a mechanism in alleviating poverty.
4. Also, whether business has help to change the problems hitter to plagued the poor in Ubotex Nigeria Limited and the country at large or not.
5. to ascertain whether there is any positive and significant relationship between business and poverty alleviation in Ubotex Nigeria Limited.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Poverty is a pervasive phenomenon worldwide. The increasing trend in the level of poverty has been a leading public issue in recent times (Oyesiku, 2002). According to Ajegi (2002), about 2.8 billion people live in absolute poverty. Though noticeable in all parts of the world, the extent, severity and characteristics of poverty may differ greatly within and across countries (Ikoni, 2004). Ajala and Fakoya (2003) confirmed this and stressed that poverty is more pronounced in developing countries such as Nigeria. Alegieuno and Attah (2005) stated that the areas that are hit hardest by poverty are countries in Sub-Saharan Africa and South Asia. In specific terms, 50% of Africa’s population live below the poverty line; while in Nigeria, about 70% of the population are poor. The World Bank (1996) emphasized that Nigeria is rich but its people are poor. According to the National Bureau of Statistics (2008), the national poverty rate of Nigeria increased from 28.1% in 1980 to 70.6% in 2007. UNDP (2009) report estimated the human poverty index (HPI) value for Nigeria as 36 ranking 114 out of 135 countries measured. Triggered by poverty, its consequences, the quest to alleviate it and the need to create jobs for Nigerians, most of the successive governments in Nigeria have instituted poverty alleviation programs and job creation schemes. Some of these programs include Operation Feed the Nation (OFN) in 1979, Green Revolution (GR) in 1980, the National Directorate for Employment (NDE) in 1986, the Directorate for Food, Roads and Rural Infrastructure (DFRRI) in 1987, the Family Support Program (FSP) in 1994, Family Economic Advancement Program (FEAP) in 1998, People’s Bank in 1989, Community Banks in 1990, National Economic Empowerment and development strategy (NEEDS) in 2004, Community Action Programme for Poverty Alleviation (CAPPA) in 1996, and the National Poverty Eradication Programme (NAPEP) in 2001. In spite of the above government efforts and measures at alleviating poverty and creating jobs for Nigerians, the rates of poverty and unemployment are still very high in Nigeria. The unemployment rate in Nigeria increased from 11.9% in 2005 to 23.9% in 2011 (NBS, 2012). Nigeria’s poverty incidence increased from 54.4% in 2004 to 69.0% in 2010, while the population in poverty increased from 68.7 million in 2004 to 112.5 million in 2010. Clearly, poverty and unemployment are the most devastating economic challenges facing Nigeria. Faced with these challenges, there is the need for a paradigm shift in policies and measures of fighting poverty and unemployment in Nigeria. The concept of small scale enterprise offers a viable policy option in the fight against poverty and unemployment in Nigeria. A good example of such an enterprise in Benue State, North Central Nigeria, is burnt bricklaying. The existence of good clay along the river-banks, the favorable climatic conditions, the water lodged nature of Makurdi (the capital of Benue State), the widening market for burnt bricks and the water resisting ability of burnt bricks that encourage their usage indicate that burnt bricklaying could be a veritable tool for poverty alleviation and job creation. Poverty is a living condition in which an entity is faced with economic, social, political, cultural and environmental deprivation. It is a state of involuntary deprivation to which a person, household, community or nation is subjected to. Poverty and weak economic performance are the greatest challenges militating against Nigeria‘s transformation and development today. Gone are the days when Nigerian graduates at all levels could easily secure jobs. Graduates had enough job offers to choose from depending on their qualifications. This trend changed over the years starting from early 80s and 90s because a great number of tertiary institution graduates are in search of white-collar jobs that are no longer available. Again some organizations chose to prune or right size their workforce due to harsh economic conditions occasioned by poor global economy which adversely affected economic and business activities in Nigeria. Nigeria as a country has been described by the World Bank as a paradox in that the enormous wealth of the nation contradicts the poverty level (Obadan, 2001). The data on poverty records rating across different nations indicate that about 1.1 billion people earn less than one or more dollars ($1.00 $2.00) per day, coupled with daily risks and hardships that determine their survival and even existence. Barnes (2010), Omadjohwoefe (2011) and USAID (2011) have shown evidence on how poverty permeates Nigeria‘s society. Issues relating to the development of Small and Medium Scale Enterprises (SMEs) have become very crucial in the development of most third world nations. No nation ever develops without appreciable inputs from the Small and Medium Scale Enterprises segment of her economy. The performance and effectiveness of SMEs as instruments for economic growth and development thereby reducing poverty incidence among the populace is the topic under scrutiny. In the case of Nigeria, SMEs have performed at a very poor level (Ihua, 2009). Their poor performance has added to the level of poverty, unemployment and the low standard of living in the county. Though SMEs provide 70% industrial employment and 60% of agricultural sector employment, it only account for 10 – 15% of the total industrial output with a capacity utilization of a little over 30%. The dearth of funds has further aggravated the start-off operations of many business endeavours. Small and Medium Scale Enterprises are considered globally to be the engine of growth of modern economies and serve to provide more employment to a large portion of the population in a given economy than the big organizations and hence contribute in reducing poverty. According to Fatai (2011), the Nigeria‘s current problems of hunger, poverty and unemployment have been undermined by the capacity of the SMEs. He added that the unfortunate development is the inability of SMEs to provide the mechanism to propel economic growth and development which is the basis for mitigating poverty. The realization of the roles of SMEs in fighting unemployment and hence poverty reduction has been an age long phenomenon in Nigeria but the right policies and incentives coupled with business environment have continued to hamper the pivotal roles of SMEs in addressing Nigeria‘s economic problems. This is justified by Sanni (2009) who looked at historical issues of SMEs in Nigeria which have been on the burner since independence in 1960 in terms of giving attention to this sector through seminars, studies, researches, workshops for its appraisal, importance and the need to institutionalize them. He added that since the introduction of SAP in 1986, attention has shifted from government-led industrialization to SMEs as the potential agent for developing domestic linkages for effective growth and development. In a similar vein, Oni and Daniya (2012) said that governments over the years have formulated several policies with a view to developing SMEs in Nigeria as they have been recognized as organs for achieving self-independence, employment creation, import substitution, effective and efficient utilization of local raw materials and contribution to economic development of the country. It is against this backdrop that this article will investigate the relationship between the employment generation capabilities of SMEs and poverty reduction in the country. It will cover the period of 2001 and 2011, a period of ten years.
CONCEPTUAL REVIEW
Small and Medium Scale Enterprises (SMEs) does not have a single definition or uniform parameters because their activities depend on the industry in which they operate and the personalities and aspirations of those in charge of the businesses. Central Bank of Nigeria (1998) defines small business firms as firms (excluding general commerce) whose total investment (including land and working capital) does not exceed N500,000.00 and whose annual turnover does not exceed 1 million naira. Ajose (2010) has defined SME as an enterprise that has an asset base (excluding land) of between 5 million naira and 500 million naira and labour force of between 11 and 300 in its employ. The National Directorate of Employment (NDE) since 1986 has been supporting the activities of some SMEs; it defines a small scale industry as an establishment with capital investment of N5,000.00 and employing as few as three people (Isemin, 1998). The National Economic Reconstruction Fund (NERFUND) puts its highest amount as not exceeding 10 million naira while the section 37 b (2) of the Companies and Allied Matters Act of 1990 defines it as one with a) An annual turnover of not more than 2 million naira. b) A net asset of not more than 1 million naira. The National Association of Small and Medium Scale Enterprises defines SMEs as businesses employing less than fifty (50) people and with an annual turnover of one hundred million naira. The association further defines a medium scale enterprise as a business with less than 100 employees and with an annual turnover of five hundred million. There are many definitions of SMEs and there is no uniformity among them. However, in Nigeria, it is based mainly on capital which should be revised from time to time due to the devaluation of the Naira and the high inflationary trend in the economy (Osotimehin, Jegede, Akinlabi and Olajide, 2012). When we talk of poverty it has to do with absence of resources to command means of livelihood. Over time, there has been no agreed upon definition of poverty due to its multi-dimensional nature. By using the standard of living as a criterion for poverty, World Bank (1990), Central Bank of Nigeria (1999), Oghene and Achoja (2001), Ifamose (2001) and Magaji (2002), all see poverty as a condition in which resources of individuals or families are grossly inadequate to provide a socially acceptable standard/condition of living. Edoh (2003) and (2010) state that there are two issues that have been consistent in an attempt to define poverty. These are the issue of (a) who are the poor? (b) at what level is poverty defined? Kenkwanda (2003:3) defines poverty as a multidimensional phenomena influenced by a wide range of factors, which include: poor people‘s lack of access to income earning and productive activities and to essential services. Poverty can be manifested in intellect and poverty of ideology (Adejo, 2006). The Copenhagen Declaration of 1995 seems to shed more light on what really constit
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
SOURCES OF DATA COLLECTION
Data were collected from two main sources namely
-Primary source and
-Secondary source
Primary source: These are materials of statistical investigation, which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary data: These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
POPULATION OF THE STUDY
Population of a study is a group of persons or aggregate items, things the researcher in interested in getting information from for the study the role of small business in poverty alleviation. 200 staff of selected small businesses in Akwa Ibom state was randomly selected by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY CONCLUSION RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to investigate the role of small businesses in poverty alleviation.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the role of small businesses in poverty alleviation in Nigeria.
Summary
This study has shown that there are so many lucrative business you can start small in rural areas and yet make it big and interesting as well as running away from poverty and increasing the economic growth of your locality. Staying in rural areas is no reason why you will not be able to succeed if you want to. All you just need is a determined mined set and a good business strategy. It has shown that corruption and political interference are the detrimental factor of achieving the goal of National poverty Eradication programme (NAPEP). The paper thoroughly touches the challenges by poverty and the ways of tackling the challenges by improving small scale business;
Conclusion
This study investigated the role of small scale businesses on poverty alleviation in Nigeria. In specific terms, the study examined if small businesses has significant effect on poverty alleviation in Nigeria; the socio-economic characteristics of small businesses in Nigeria; and the major challenges faced by small businesses in Nigeria. The results indicate that small businesses has significant positive impact on poverty alleviation, job creation, and income generation in, Nigeria. The results further indicate that average annual incomes, number of children sponsored in school and health facility patronized significantly influence the poverty status of the respondents. Besides, the key challenges faced by small businesses in Nigeria were highlighted to include poor infrastructure, low prices of raw materials.
Recommendation
In view of the above, the paper suggests the following;
The need for the government to empower the efficiency of poverty reduction agencies with a view to fight corruption and promote the integrity and accountability with the institutions.
There is need for an effective and efficient enlightenment and awareness campaign in the rural areas on the importance of small scale enterprises as a tool of becoming selfreliant and improve standard of living.
Improving the level of literacy in the rural areas in accepting bank loan and avoid the wrong perception that loan posed a threat to their future.
Promoting the efficiency of basic human needs, infrastructural facilities and social amenities such as good roads in order to ease the transport.
There should be well equipped acquisition centers in every local government area of Akwa Ibom State in order to enhance the training of youths, by engaging them in skills like weaving, carpentry in reducing the rate of unemployment.
In the implementation of the millennium development goals (MDG’s) emphasis should be given to community empowerment of boosting the small scale business.
Community empowerment efforts leading to poverty reduction should be based on community driven development (CDD) in which rural individuals will be involve in decision making on matters affecting them so as to have accurate sustainable development.
Reference
- Ajayi, A.R. (2009). The Role Expectation Agricultural Extension in Poverty Alleviation in a Democratize and Deregulated Economy in: Perspective in Agricultural Extension and Rural Development, J.U Agbamu (ed). Sprinfield Publisher Ltd, Lagos.
- Agumugu, A.C (2000). Poverty Alleviation in Nigeria: Can Agricultural Extension Help? In: Agbamu, J.U (ed) (2009); Perspective in Agricultural Extension and Rural Development, springfield publishers Ltd, Lagos; Pp. 345.
- Aliyu, A. (2001). Natural Poverty Eradication Programme (NAPEP): Completion, Implementation Co-ordination and Monitoring. In Joseph 1.0 (2005). An Assessment of Impacts of Poverty Reduction Programme in Nigeria as a Development Strategy, Ph.D Dissertation of St Clement, University of Truks and Caicoos, Island.
- Delhi (2004). The Role of Small Scale Business in India.Linkedin Co-corporation © 2004. Also Available at www.slideshare.net/ karampanach.
