Impact of government policy on entrepreneurship development in Nigeria
1.1 Background to the Study
One of the goals of economic development strategies pursued by successive Nigerian Governments has been the reduction of poverty through job creation. Many government policies over the years for the achievement of that objective have been based on the development of indigenous entrepreneurship. Of course, Nigeria is not along in pursuing this strategic option. The Reagan administration in the USA also pursued similar policies in the 1980s “Reaganomics” as it was dubbed worked on the supply side of the economy.
The concept of government policy has been analysed by Dye (1965) and Jones (1977) as a public decision to achieve a purpose. However, policy only lays down the general directive rather than detailed instructions or strategies on the line of action to follow to achieve the objective. Basically, government policies are formulated by the three arms of government working in concert. But, policies can be initiated from various institutional sources and from private persons. Ultimately all government policies in Nigeria derive their legitimacy from the constitution (Uchendu, 1989).
Dutz, (2000) simply defines government policy as a guiding principle which governs action especially repetitive actions, it is decision as to what should be done and how, when and where. Chukwuemeka, (2008) defines public policy as the authoritative allocation of value of the whole society. However, public policy is a pronouncement of government intentions by people in positions of public trust, demanding governmental actions or inactions and having impact either negative or positive, on the majority of the members of a given society. Public policy is a statement about future events.
Entrepreneurship on the other hand refers to the activities of the entrepreneur as the initiator, organizer, innovator and risk bearer in production or business, (Vesper 1982). The entrepreneur is the person whose activities create wealth and employment which can be measured either directly or through economic growth rates. This definition is without prejudice to the classification of entrepreneurs on a continuum from small craftsman entrepreneurs to big time opportunistic entrepreneurs adopted by Inegbenebor and Osaze (1999). Whether big or small entrepreneurs are all in business to make profit and grow their enterprises (Carland 1984).
Aruwa (2006) define entrepreneurship as a process of action an entrepreneur undertakes to establish his enterprise. Entrepreneurship is a creature activity. It is the ability to create and build something from practically nothing Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and drive benefits by setting up a venture. It comprises of numerous activities involved in conception, creation and running an enterprise.
According to Mainoma (2008) entrepreneurship can be defined as the process of using private initiative to transform a business concept into a new venture or to grow and diversify an existing venture or enterprise with high growth potential. Entrepreneurs identify an innovation to seize an opportunity, mobilize money and management skills, and take calculated risks to open markets for new products, processes and services.
Entrepreneurship development (ED) refers to the process of enhancing entrepreneurial skills and knowledge through structured training and institution-building programmes. Entrepreneurship development aims to enlarge the base of entrepreneurs in order to hasten the pace at which new ventures are created. Entrepreneurship development focuses on the individual who wishes to start or expand a business. Small and medium enterprise (SME) development, on the other hand, focuses on developing the enterprise, whether or not it employs or is led by individuals who can be considered entrepreneurial. Furthermore, entrepreneurship development concentrates more on growth potential and innovation than SME development does.
Economic growth rates are often attributed to the role of the duo of government and entrepreneurs which is complementary and not mutually exclusive. In Nigeria, like some other economies, the government helps to encourage entrepreneurship development. Furthermore the government provides security to safeguard life and property; maintaining law and order and the freedom to do business. The role of government in entrepreneurship development in Nigeria became significant only after the Nigeria civil war (1967-70). Since the mid-1980s there has been an increased commitment of government to entrepreneurship development especially after the introduction of the Structural Adjustment Program (SAP) in 1986. Added to this is the establishment of the National Directorate of Employment (NDE), National Open Apprenticeship Scheme (NOAS) and the Small and Medium Enterprise Development Association of Nigeria (SMEDAN).
Fundamentally the Nigerian government promotes entrepreneurial culture through initiatives that build business confidence, positive attitude, pride in success, support and encouragement of new ideas, social responsibility, providing technological supports, encouraging inter-firm linkages and promotion of research and development. In the early 2000s, entrepreneurship studies were introduced into the Nigerian educational system especially in higher institutions as a mandatory course. The Centre for Entrepreneurship Development (CED), which has the objective of teaching and encouraging students of higher institutions (especially in science, engineering and technological (SET) to acquire entrepreneurial, innovative, and management skills, was established.
According to Schumpeter capital and output growth in an economy depends significantly on the entrepreneur. The quality of performance of the entrepreneur determines whether capital would grow rapidly or slowly and whether the growth involves innovation where new products and production techniques are developed. The difference in economic growth rates of countries of the world is largely due to the quality of entrepreneurs in those countries. Production factors of land, labour and capital are said to be dormant or indolent without the entrepreneur who organizes them for productive ventures. The entrepreneur is therefore an important agent of innovation growth and technical progress. The development and utilization of their technical and commercial skills create growth potential in micro, small and medium-scale enterprises. The present day global economy is knowledge-driven operating on the pragmatic and innovative thoughts of the entrepreneur. Business set ups have become informal and oriented towards survival and self-employment. Technical progress essentially results in increases in production, employment of labour, stimulation of export and overall growth of GDP.
The contribution of entrepreneurship to the growth and development of Asian countries (China, Malaysia and Singapore) and African countries (South Africa and Nigeria) cannot be over emphasized. In Nigeria entrepreneurship development and innovations have been manifested in all aspects of the economy via; micro business, micro finance, small and medium industries, information/telecom services, personal services in food vending/restaurant, garments making, embroidering, agricultural produce, music and film production. Consequently, government policies at a given period of time is geared towards promoting entrepreneurship development in all sectors of the economy and fostering economic growth and development that will be reflected in an improved living standards of the citizens of the country. It is against this background that this study wishes to investigate the impact of government policies on entrepreneurship development in Nigeria.
1.2 Statement of the Problem
The Nigerian economy has been characterized with a lot of inefficiencies; public sector dominance, over reliance on oil as the major revenue earner and this has typically affected the country’s course of development. However, since the mid-1980s, Nigeria has introduced some structural economic reforms, abolished polices and structures which prevented entry into certain industries, and opened up its markets to competition from domestic and foreign entrepreneurs. The government have also introduced and pursued a number of entrepreneurship encouragement policies aimed at reducing the high rates of unemployment and poverty. Though, Nigeria is still plagued by many development challenges, “preliminary evidence suggests a favourable response by the private sector to the new entrepreneurial opportunities thus created” (Elkan, 1988).
Nigeria is naturally endowed with entrepreneurship opportunities; however the realization of the full potential of these opportunities has been dampened by the adoption of inappropriate industrialization policies at different times. Several policy interventions that were aimed at stimulating entrepreneurship development via small and medium scale enterprises promotion, based on technology transfer strategy, have failed to achieve the desired goals as it led to the most indigenous entrepreneurs becoming distribution agents of imported products as opposed to building in-country entrepreneurial capacity for manufacturing, mechanized agriculture and expert services. Recent developments in the previously less-explored areas of telecom, transport, hospitality, entertainment and food processing has a high probability of success, hence, the need for a concerted effort by government and an organized private sector to create the enabling environment to support the exploration of opportunities in these areas.
Abdullahi (2008) reported that Petrin (1992) opined that for countries to accelerate their economic growth and development, it is necessary for them to build up the critical mass of first generation entrepreneurs because development is now being linked more and more to entrepreneurship. Entrepreneurship as argued by Abdullahi (2008) stands as a vehicle to improve the quality of life for individuals, families and communities and to sustain a healthy economy and environment. However, the acceptance of entrepreneurship as a central development force by itself will not lead to economic development and the advancement of private enterprises until an enabling environment necessary for entrepreneurship to be rewarding is created within communities. The existence of such an environment largely depends on public policies promoting entrepreneurship and according to Petrin, (1994) as cited in Abdullahi (2008); the effectiveness of such policies in turn depends on a conceptual framework about entrepreneurship.
However, Mbaegbu, D.G (2008) humorously observed some of these policies have been like changing one structure for another much like ‘exchanging a monkey for a baboon, recycling of ideas; a duplication of efforts (which) turn out to be of doubtful relevance or simply a money-guzzling machine.” Chukwuemeka, (2008) opined that a cursory look at Nigeria indicates that she either lacks entrepreneurship ability or that government entrepreneurship oriented policies are not effective. Sherif, (2006) argues that most entrepreneurship related policies and programmes in Nigeria fall short of appropriate development frameworks, some of the policies are poor, frequent changing of policies and programmes and lack of clear entrepreneurial development vision and commitment pose serious threat to entrepreneurship in Nigeria. Some of the entrepreneurial pose serious threat to entrepreneurship in Nigeria. Some of the entrepreneurial related policies are good but the issue of poor environmental forces hinders them. For instance electricity supply, water and good road network are not available to encourage entrepreneurs. An easy access to finance, high import tariff and other tariffs of government pose serious threat for the survival of young entrepreneurs.
In the light of the foregoing, this research work will however ascertain if government policies has impacted much on entrepreneurship development in spite of government economic policy trusts in that direction.
1.3 Research Questions
The questions that will form the basis of this research work includes the following;
What has been the impact of government policies on entrepreneurship development as measured by the rate of growth of the key sectors of the economy?
What is the correlation between the growth rates and output of Small and Medium Scale Enterprises as a measure of the co-ordination of the government policy directives?
Is there any causal or bi-directional relationship between government policies and entrepreneurship development in Nigeria?
1.4 Objectives of the Study
The objectives of this research work will include among others the following;
To ascertain if government policies has significantly impacted on entrepreneurship development in Nigeria.
To determine the level of correlation that exists between the growth rate and output of Small and Medium Scale Enterprises as a measure of the co-ordination of the government policy directives.
To evaluate the causal as well as bi-directional relationship between government policies and entrepreneurship development in Nigeria.
To ascertain the long-run relationship that exists between government policy and entrepreneurship development in Nigeria.
1.5 Hypothesis of the Study
The following hypothesis will guide this research work;
H0: Government policies have not significantly impacted on entrepreneurship development in Nigeria.
H0: There is no long-run relationship between government policies and entrepreneurship development in Nigeria.
H0: There is no causal as well as bi-directional relationship between government policies and entrepreneurship development in Nigeria.
1.6 Scope of the Study
This research project which is on the impact government policy on entrepreneurship development in Nigeria will cover the period of 1980 to 2012 and will be guided by the objective stated above.
1.7 Limitation of the Study
The researcher encountered the following constraints in the course of this work, data constraint, financial constraint, limited information due to the type of research work and time constraint. This research work is also limited to the use of secondary data gotten from secondary sources, as such if there are any errors made by those who generated these data; this research work incorporates such errors.