CONTRIBUTION OF
SMALL AND MEDIUM ENTERPRISES ON EMPLOYMENT GENERATION AND POVERTY ALLEVIATION
IN KADUNA METROPOLIS
BY
Nurt9ja
DEPARTMENT OF
ACCOUNTING AND MANAGEMENT
FACULTY OF ARTS
AND SOCIAL SCIENCES
NIGERIA UNIVERSITIES
RESEARCH TOPIC (Nurt9ja)
FEBRUARY, 2020
TITLE PAGE
CONTRIBUTION OF
SMALL AND MEDIUM ENTERPRISES ON EMPLOYMENT GENERATION AND POVERTY ALLEVIATION
IN KADUNA METROPOLIS
Nurt9ja
BEING A PROJECT
SUBMITTED TO THE DEPARTMENT OF ACCOUNTING AND MANAGEMENT, FACULTY OF ARTS AND
SOCIAL SCIENCES,
NIGERIA UNIVERSITIES
RESEARCH TOPIC (Nurt9ja)
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
THE AWARD OF MASTER IN BUSINESS ADMINISTRATION (MBA) DEGREE IN ACCOUNTING
FEBRUARY, 2020
DECLARATION
I hereby declare that this thesis titled
“Contribution of Small and Medium Enterprises on Employment Generation and
Poverty Alleviation in Kaduna Metropolis” is the product of my research effort
and it is original, authors whose works were referred to have been duly
acknowledged in the references.
…………………………. ………………… …………………..
STUDENT Signature Date
MAT NO:
CERTIFICATION
I
hereby certify that this thesis titled “Contribution of Small and Medium
Enterprises on Employment Generation and Poverty Alleviation in Kaduna
Metropolis” by NIGERIA UNIVERSITIES
RESEARCH TOPIC (Nurt9ja) MAT NO. was supervised by me.
………………………… ……………………… …………………..
Lead Supervisor Signature Date
APPROVAL PAGE
This
thesis has fulfilled the partial requirements for the award of Postgraduate
Diploma in Master in Business Administration (MBA) Degree and Management,
Faculty of Arts and Social Sciences, NIGERIA
UNIVERSITIES RESEARCH TOPIC (Nurt9ja) and is hereby approved.
…………………… …………………. …………………..
Lead
Supervisor Signature
Date
…………………..… ………………….. …………………..
Head
of Department Signature Date
…………………… …………………. …………………..
External
Examiner Signature Date
…………………… ………………….. …………………..
Dean,
PG School Signature
Date
ACKNOWLEDGEMENT
All thanks and praise to Almighty God,
for His guidance, protection, mercy and love towards me. I thank Him for the
wisdom, knowledge and inspiration throughout the period of my academic
years. To my …………., I lack words to express my
feelings. Thanks for your love, prayers, and financial support. You are the
best……… anyone can ever ask God for. I love you. Big thanks go to my
supervisor, …………. May God bless you for your kindness, patience and good
supervision, I also use this opportunity to say thank you to all my MBA course
mates.
DEDICATION
I dedicate this project to God Almighty,
my …………, wonderful lecturers and my……….(HOD). May God bless you abundantly, Ameen.
TABLE
OF CONTENTS
PAGE
TITLE
PAGE - - - - - - - - - ii
DECLARATION
- - - - - - - - - iii
CERTIFICATION
- - - - - - - - - iv
APROVAL
PAGE - - - - - - - - v
ACKNOWLEDGEMENT
- - - - - - - - vi
DEDICATION
- - - - - - - - - vii
TABLE
OF CONTENTS - - - - - - - - vii
ABSTRACT
- - - - - - - - - - xi
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study - - - - - - - 1
1.2 Statement of the Problem - - - - - - - 3
1.3 Research Questions - - - - - - - - 5
1.4 Objective of the Study - - - - - - - 5
1.5 Research Hypothesis - - - - - - - - 5
1.6 Significance of the Study - - - - - - - 6
1.7 The Scope of the Study - - - - - - - 6
CHAPTER TWO: LITERATURE
REVIEW
2.1 Introduction - - - - - - - - 7
2.2 Conceptualizing - - - - - - 7
2.2.1 Small and Medium Scale
Enterprises - - - - 7
2.2.2 Employment and Employment
Generation - - - 9
2.3.1 The Vicious Circle of Poverty - - - - - 9
2.3.2 The Unbalance Growth Theory - - - - - 10
2.3.3 The Basic Needs Theory - - - - - - 11
2.3.4 The Classical View - - - - - - - 11
2.3.5 The Keynesian View - - - - - - 12
2.3.6 Financial Growth Theory - - - - - - 12
2.3.7 Pecking Order Theory - - - - - - 13
2.3.8 Contract Theory - - - - - - - 15
2.4 Empirical Literature - - - - - - - 16
2.4.1 Limitations of Previous Studies
- - - - - 24
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction - - - - - - - - 28
3.2 Population of the Study - - - - - - 28
3.3 Sample Size and Sampling
Technique - - - - 28
3.4 Method of Data Collection - - - - - - 29
3.5 Method of Data Analysis - - - - - - 29
3.5.1 Model Specification - - - - - - - 31
3.6 Validation of Instrument - - - - - - 31
CHAPTER FOUR: DATA PRESENTATION
ANALYSIS
4.1 Introduction - - - - - - - - 32
4.2 Data Analysis and discussion- - - - - 32
4.2.1 Descriptive Analysis - - - - - - 32
4.2.2.1 Demographic Characteristics of
Respondents - - - 32
4.2.2 Test of Hypothesis - - - - - - - 38
4.2.3 Discussion of Findings - - - - - - 40
CHAPTER FIVE: SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary - - - - - - - - - 43
5.2 Conclusion - - - - - - - - - 43
5.3 Recommendations - - - - - - - - 44
5.4 Suggestion for Further Study - - - - - - 44
REFERENCES - - - - - - - - - 46
ABSTRACT
This research is to examine the role of
Small and Medium Enterprises (SMEs) in Employment Generation and Poverty Alleviation
in Kaduna Metropolis of Kaduna State, Northern Part of Nigeria. This study
therefore assesses the impact of small business enterprises on job creation; evaluate
the roles of small and medium scale enterprise (SMEs) in alleviating poverty in
Nigeria. The technique used for this study was Random sampling, using random
sampling one hundred and twenty five (125) were gotten sample from the total
population. One hundred and twenty five (125) copies of questionnaire were
administer to the respondents and go back after days for the collection of the
dully filled questionnaire from the respondents. Data were analyzed using
descriptive statistics including arithmetic mean, table, percentage and test
for hypotheses. The questionnaire analysis found out that there is a positive
and significant relationship between the SMEs and employment generation in
Nigeria. Secondly, micro finance policy made a positive significant impact on
employment generation in Kaduna metropolis, because it increases and expands
and boots small and medium scale enterprises development in Kaduna metropolis
and helps finance small business in Kaduna metropolis. SMEs have been fully
recognized by government and development expert as the main engine of economic
growth and a major factor in promoting private sector development and
partnership. The development of the section therefore represents an essential
element in the growth strategy of moist economies and hold particular
significance in the case of Nigeria. SMEs not only contributed significance to
improve living standards employment generation and poverty reduction but they
also bring about substantial domestics or local capital formation and achieve
high level of productivity and capability. There is need for supporting and
strengthening SMEs productive capacities and market competitiveness of SMEs in
the country; the merger capital requirement of small-scale enterprises makes
them to promote an even distribution of income in the economy.
CHAPTER
ONE
INTRODUCTION
1.1 Background
of the Study
Small
and medium enterprises are businesses whose personnel numbers fall below
certain limits. Small and medium enterprises (SMEs) are used by international
organizations such as the World Bank, the United Nations and World Trade
Organization among others. Globally, small and medium enterprises (SMEs) have
been recognized as a driver of economic growth and development. According to
Ofoegbu, Akanbi and Joseph (2013), the Federal Government of Nigeria and indeed
developing countries like Ghana, Pakistan, Malawi, among others, over the year
have emphasized the importance of small and medium enterprises (SMEs) in the
development of their economies. Small and medium enterprises (SMEs) is now
recognized worldwide as key source of dynamism, innovations and flexibility in
advance industrialized countries as well as in emerging and developing
economies. Interest on SMEs has equally been hinged on their potentiality to
contribute to creation of jobs, reduction production of goods and services in
the economy, as well as providing a fertile ground for skill development and
acquisition, serve as a mechanism for backward integration and a vehicle for
technological innovation and development especially in modifying and perfecting
emerging technological breakthroughs (Ofoegbu, Akanbi and Joseph, 2013). Kilby
(1965) stated that with the small enterprise inventions, adaptations and
general technological development are possible. Steel and Takagi (1982) noted
that small enterprises have potential for absorbing labour, while maintaining
output. Other reasons to justify the need for serious efforts in the
development of small and medium scale industries are; low level of capital
required in their establishment; large number of organizations and the labour
intensive mode of operation. Thus, industrial diversification and relatively
more balanced regional development afforded; general enhancement of tempo of
industrial development is visible among small and medium scale enterprises
(SMEs); small and medium scale enterprises often become feeders for large-scale
enterprises and also service products made by large scale enterprises.
According to Akingunola (2011) SMEs are the panacea for the economic
development of many developing countries including Nigeria. Emphasis has also
been made in contemporary Nigeria on SMEs because of the expected contribution
they could make in providing training ground for development and growth of indigenous
entrepreneurs.
Muritala,
Awolaja and Bako (2012) also affirmed that SMEs has contributed to utilization
of local raw materials, employment generation, encouragement of rural
development, development of entrepreneurship, mobilization of local savings,
linkages with bigger industries, provision of regional balance by spreading
investments more evenly, provision of avenue for self-employment and provision
of opportunity for training managers and semi-skilled workers. The vast
majority of developing countries rely on dynamism, resourcefulness and risk
tasking of small and medium enterprises to trigger and sustain process of
economic growth. In overall economic development, a critically important role
is played by the small and medium enterprises. Small and medium enterprises
advocates, firstly, it endurance competition and entrepreneurship and hence
have external benefits on economy wide efficient, and productivity growth.
According
to Akingunola (2011), Small and Medium Enterprises (SMEs) constitute the
driving force, in which industrial growth and developed. This is basically due
to their great potential in ensuring diversification and expansion of
industrial production as well as the attainment of the basic objectives of
development. SMEs utilize local raw materials and technology thereby aiding the
realization the goal of self-reliance. Also, governments at various levels
(local, state and federal levels) have in one way or the other focused on the
performance of Small and Medium Enterprises for economic gains. While some
governments had formulated policy aimed at facilitating and empowering the
growth and development and performance of the SMEs, others had focused on
assisting the SMEs to grow through soft loans and other fiscal incentives in
order to enhance the socio-economic development of the economy like poverty
alleviating, generation employment, enhance human development, and improve
social welfare of the people. Akingunola (2011) argued that SMEs expansion
boosts employment more than large firm growth because SMEs are more labour
intensive thereby subsidizing SMEs may represent poverty alleviation tools, by
promoting SMEs in the country and the international community make progress on
reducing poverty level by year 2020 i.e. to reduce poverty level by half and
becoming among 20 largest World Economies (Nigeria Vision 20:2020).
Entrepreneurial development is therefore important in the Nigeria economy which
is characterized by the following heavy dependence on oil, low agricultural
production, and high unemployment, low utilization of industrial capacity, high
inflation rate, and lack of industrial infrastructural base. These constraints
limit the rate of growth of entrepreneurial activities in Nigeria.
1.2 Statement of the Problem
Despite
the contribution of SMEs in Kaduna economy, the financial constraints they face
in their operations are daunting and this has had a negative impact on their
development and also limited their potential to drive the national economy as
expected. This is worrying for a developing economy without the requisite
infrastructure and technology to attract big businesses in large numbers.
Most
SMEs in the country have inadequate capacity in terms of qualified personnel to
manage their activities. As a result, they are unable to publish the same
quality of financial information as those big firms and as such are not able to
provide audited financial statement, which is one of the essential requirements
in accessing credit from the financial institution. This is buttressed by the
statement that privately held firms do not publish the same quantity or quality
of financial information that publicly held firms are required to produce. As a
result, information on their financial condition, earnings, and earnings
prospect may be incomplete or inaccurate. Faced with this type of uncertainty,
a lender may deny credit, sometimes to the firms that are credit worthy but
unable to report their results (Coleman, 2000).
Generally,
the Small and Medium Enterprises (SMEs) has become very popular entity in
Nigeria due to their important role they play in terms of reducing unemployment
rate among people. The government of Nigeria has undertaken various measures
and programmes to establish and sustain the SMEs in order to contribute towards
poverty reduction. This action has caused many people to formulate and engage
in SMEs. Despite a rapid increase to the establishment of SMEs in Nigeria, most
of them are performing below its expected potential of reducing poverty due to
many reasons (Nigeria SME development policy 2006). Therefore, it is not clear
whether the undertaken measures to strengthen SMEs have significant
contributions in reducing poverty or not. It has been reported that about 51
percent of people in the rural areas of Nigeria live below the basic needs
poverty line as compared with about 36 percent in urban areas. Similarly, 16.8
percent of people live below the food poverty line in the rural areas of
Nigeria as compared with about 8 percent in the urban areas (Kessy & Omar
2014). This study examined the roles of SMEs in poverty alleviation in Nigeria
including its relationship between the role, contribution and challenges faced
SMEs in alleviating poverty in Nigeria.
1.3 Research Questions
i.
What extent do SMEs generate employment?
ii.
What extent do SMEs help in alleviating
poverty?
1.4 Aim and objective of the Study
The
aim of this study is to examine the role of small and medium enterprises (SMEs)
in employment generation and poverty alleviation in Kaduna Metropolis of Kaduna
State, Nigeria.
The
specific objectives of the study are to:
i.
assess the impact of small business
enterprises on job creation in Nigeria
ii.
evaluate the roles of small and medium
scale enterprise (SMEs) in alleviating poverty in Nigeria
1.5 Research Hypothesis
The following
hypothesis guided the study.
H01
Small and medium scale enterprise (SMEs) do not significantly generate
employment opportunity.
H02
Small and medium scale enterprise (SMEs) do not significantly help in
alleviating poverty.
1.6 Significance of the Study
It
is expected that the findings of this research would be of immense importance
to the policy makers, stakeholders, researchers and the government at large
because they would help in formulating policies on the contributions of small
business enterprises to the development of Nigerian economy.
The
study is broad and would help the
stakeholders to sit up and make sure that the money that is being spent by
finance houses on small and medium scale business are channeled properly to the
purpose in which is being releases. It would help for further deliberations and
to know the strategy to adopt to make sure that the real poor in the society
benefit from government programme. It would also help them to advice the
government properly.
The
study would help other researchers as it will enable them to get information
and data from this research to assist them to carry out further research. It
would help the policy makers to formulate good and lasting policies that will
not only help business sector but also to improve small and medium scale
business productivity and for effective implementations of policies. This study
would contribute to knowledge, be useful as reference material for scholars and
researchers in their field of work.
1.7 The Scope of the Study
The study focus on small and medium
enterprises (SMEs) for its role in generating employment, poverty alleviation
and economic development in Kaduna due to budget and time constraints, the
study was restricted to small and medium enterprises (SMEs) operating in Kaduna
State of Nigeria.
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