Project Materials

ASSESSING THE RELATIONSHIP BETWEEN ENTRERENEURSHIP AND UNEMPLOYMENT RATE IN ABUJA MUNICIPAL AREA COUNCIL (AMAC), FCT, ABUJA

CHAPTER ONE

INTRODUCTION

1. 1. Background Of The Study

Entrepreneurship can be said to be the process of setting up a business or businesses, leveraging on inherent financial risks thereto in order to make profit. Although very small in size, entrepreneurial process exemplified by micro, small and medium-sized enterprises (MSMEs) appears the most important enterprises in any economy evaluated on the basis that when all their specific contributions are aggregated, they exceed that of large enterprises. MSMEs (often referred to as SMEs) act as a catalyst for growth and development of the economy by way of their positive effects on job creation and poverty reduction. According to Omonigho (2017); Taiwo, Falohun and Agwu (2016), MSMEs make up over 90 percent of all companies outside the ‘white-collar’ job sector by adding value that develop variety of goods and services, generate employment, improve living standards and contribute significantly to gross domestic product (GPD) of global economies.

Unemployment is one of the pain areas and prickly issues being faced by any economy. Unemployment not just in uneducated but also has branched its roots in the educated sectors. India being a young country constitutes a major chunk of its population be youth and to tap their full potential we need to empower our youth with the right set of skills and opportunities.

Entrepreneurship is our greatest weapon to counter act this issue and to empower our youth. Youth by default are energized and empowered, they are willing to explore new territories and take up new challenges and risks.

While working as an entrepreneur, an individual gets to work on multiple things, juggle different roles and turn them into better leaders and better individuals. Put aside the fact that Entrepreneurship brings big money from investors and even foreign clients, it also has a key role to play in building a character.

When battling unemployment, entrepreneurship is a solution, entrepreneurs open doors to new ventures, new business, new alliances etc. When an investor puts money into a startup or a venture, the entrepreneur automatically gets to expand its team to scale the venture and hence providing employment to more people. These days entrepreneurs are willing to hire to even resources who do not have formal education or a degree but have the right attitude, skillset and willingness to learn, which is a big shift in the thought process in comparison to corporate or big companies who are adamant on hiring from Ivy League colleges or shortlist candidates on the basis of qualifications not capabilities.

In the 1970s, Nigeria was quoted among the richest 50 countries of the world and just a few years after, she became one of the 25th poorest countries in the World (United Nations Development Programme Report on Nigeria, 2006). Nigeria, as the sixth largest exporter of petroleum products in the world, it is hard to believe that more than 60 percent of her citizens live below US$2 (about N700) a day, going by the current naira exchange rate, with the majority of the people living in the rural areas where access to electricity, clean water and sanitation, good roads, other government essential services, etc, are almost non-existent. Also, despite the alleged strong economic growth, Chukwubuikem (2008) observes that youth’s full-time unemployment rate has continued to increase rapidly. Similarly, a recent United Nations Human Development Report for Nigeria (2012), indicates that poverty persists in Nigeria because past Nigerian leaders, instead of focusing on how to deliver essential services to the people assumed control of major sources of national income to the advantage of only a few. Thus, researchers and other scholars have started prescribingentrepreneurship development as the feasible and permanent solution to the extreme hunger and poverty which accompanies unemployment in Nigeria.

Overtime, Nigeria as a nation has experienced several forms of economic, political and social unrest. In recent times, unemployment level which is caused by individuals and government forces had joined the list of the social evils we experience as a country today. The issue of unemployment has become a world malady demanding for massive attention, though the impact is more devastating in third world nations like Nigeria. In fact, unemployment is one of the major challenges impeding the Nigeria-economic growth and development. The menace of unemployment in Nigeria both now and in the recent past has been an issue of great concern to the economists, policy makers, economic managers, individuals, government and many others (Bello, 2010). Unemployment can be said to be a situation where people who are willing and capable of working are unable to find suitable paid employment (Fajana, 2011). The same writer went further to say that, the higher the rate of unemployment in an economy, the higher the level of poverty.

Entrepreneurship improves economic growth and development because it serves as a means for economic change. Studies on the menace of unemployment have created a huge vacuum in the mind of many scholars both in Nigeria and the world at large. This is so because the rising rate of poverty and other social vices have stimulated the economic and political crises experienced in recent time. World Bank (2014) in its report predicted that poverty in Sub-Saharan Africa is set to rise and by 2015 constitute 50% of the world poorest people. However, Nigeria is naturally gifted with both material, human and entrepreneurship skills but the realization of the full potential of these opportunities has been inhibited by the implementation of inappropriate and unsustainable industrialization policies at different periods (Thaddeus, 2013; Adebobola, 2015). Government at all levels have come up with several policies designed to stimulate entrepreneurship development via small and medium scale enterprises based on technology transfer strategy, were unsuccessful in the achievement of the desired goals as it led to the most indigenous entrepreneurs turning to distribution agents of foreign products in contrast to building in-country entrepreneurial capacity for manufacturing, mechanized agriculture and expert services (Adebobola, 2015). According to Chu, Kara, Benzing (2011); Nwaka (2010); OyelolaAjiboshin, Raimi, Raheem and Igwe (2014), between 45 and 60 percent of the urban labour force engage in small private enterprises which is believed to have contributed greatly to the reduction of unemployment in Nigeria. Entrepreneurship on the other hand has been beneficial because the Nigerian private sector comprising of small and medium enterprises provides diverse employment opportunities for over 60 percent of the country’s population and 50 percent of the industrial output (Ariyo, 2009; Oyelola et al, 2013). Many other countries have been able to strengthen and transform entrepreneurship sub-sector to such a vibrant and exciting industry such that they have been able to reduce considerably their unemployment and poverty level because of the huge and enormous contribution of the sub-sector to their economic growth and development (Onugu, 2011). Unfortunately, this cannot be said about Nigeria as the case is different. Citizens particularly youths in Abuja are said to be confronted with poverty and unemployment which is caused by lack of capacity and essential productive skills for both creative employment in existing organizations and for self-employment (Sagagi, 2013). Many people are unemployed because they have not acquired the kind of skills that are frequently demanded in the environment they operate. Others are unemployed because their skills have been rendered obsolete by technological changes or because they have no skills at all (Kpakol, 2009). With inadequate skills and few opportunities, Residents particularly the youths in the FCT face a future of low-wage employment, unemployment and underemployment in the informal sector with little security and prospects (Dandago& Muhammad, 2014). The expansion of employment opportunities in the country is far below the growth in population because of lack of productive skills and investments. This reality leaves youth in the country without any sustainable means of livelihood, as a result of which, poverty and unemployment have become the ugly twin faces of the state’s economy. There is no doubt that one of the problems confronting many nations is how to combat the challenges of unemployment, with entrepreneurship development seen as a remedy to this problem.

Entrepreneurship enhances growth because it serves as a means for change, and a conduit for knowledge spill over.In this era, the major advantages of modern economies are moving towards knowledge based economic activity, not only do entrepreneurship play a more vital role, but also a recommendation for economic growth. Education remains a vital transformational tool and undisputable instrument for socio-economic empowerment, wealth creation, and employment generation, poverty alleviation and value orientation which government has talked about for so long now. Education, skill acquisition training and experience can increase the supply of entrepreneurs by making available more skills which are suitable for entrepreneurial endeavor. Entrepreneurship education involves the ability and willingness of persons to consistently pursue the opportunity to create wealth. This is done through innovative creation of products or services that will meet customers’ needs, using scarce resources consciously in a way that results in the growth of enterprise which satisfies the expectation of stakeholders. Education in Nigeria should emphasize entrepreneurship consciousness for it to be relevant in achieving the right type of value and attitudes for the survival of the individual and the Nigeria society. Having been properly equipped with necessary entrepreneurial skills through persistent and improved education, one is ready to contribute positively in reducing unemployment by being self-employed. Entrepreneurship education stands out to be the only solution to unemployment. Entrepreneurship education enables the acquisition of necessary and important skills for profitable and gainful self-employment. It’s an important training given to students to acquire needed skills, ideas and managerial abilities and capabilities for self-employment stands as a remedy to unemployment problem in Nigeria (Ezema, 2015). The aim of entrepreneurial education was for knowledge acquisition by students to enable them setting up and floating a business with other skills needed for its survival and also to become successful entrepreneurs. Maina (2013) sees entrepreneurial education as part of the total educational system that involves the acquisition of skills, ideas and management abilities necessary for job creation.

In the opinions of Anyadike, Emeh and Ukah (2012), the great need for entrepreneurship development in Nigeria today, more than ever is necessitated by the rate of unemployment and its effect on both the people and the nation and the need for micro and small scale enterprises. To Idemobi (2015), as an employment strategy, entrepreneurship can lead to self-sufficiency and economic buoyancy for the people. He reiterates that self-employment provides entrepreneurs and their families with the potential to create and manage businesses in which they function as the employer or boss, rather than merely being an employee.

1. 1. Statement Of The Problem

Unemployment overtime has been an issue of national discourse in Nigeria. Unemployment rate is so high that the situation cannot be addressed by mere campaign or words of mouth (Nwankwo&Ifejiofor, 2014). Unemployment rate in Nigeria requires the combined efforts of both individuals and the government at all levels to formulate a lasting strategy to curb this menace.

Unemployment is a socio-economic problem and every nation deals with it within their respective capacities. As could be seen from individual research reports and other government statement, the situation in Nigeria has gone out of hand as about 75 percent of those who are willing to work cannot find gainful employment in Nigeria, especially among the school leavers and graduates of tertiary institutions. As a result, many youth have taken to various crimes including robbery, kidnapping, drug and child trafficking and all kinds of armed banditory all in a bid to earn their living. It does not matter anymore whether the means is legitimate or not. The situation appears to have gone beyond remedy. Every year, new sets of graduates and school leavers add to the stock of unemployed youth; resulting to increased frustration and aggression against the society that have refused to provide for them. Successive governments have made several efforts to combat the menace of youth unemployment but it appears that the efforts have not impacted significantly on the level of unemployment as it has continued to be on the increase in the country.

Unemployment rate in Nigeria has negatively affected the youth and the economic growth and development of the country from a broad spectrum of socio-economic perspective. It is obvious that the situation especially that of youth unemployment rate has impeded Nigeria’s progress in several ways. Apart from the economic waste it brought to the nation, it also constitutes political and social unrest for the country (Ipaye, 1998). According to Ezie (2012), the high unemployment situation in Nigeria is disturbing and even more disheartening that the country’s economic condition cannot absorb an optimal proportion of its labor force. This situation has resulted in the continuous increase in crimes and other social vices experienced in our society in recent time. To salvage this ugly situation, several strategies have been developed in all spares of human endeavors. These strategies are all found in entrepreneurship.

Unemployment is a socio-economic problem and every nation deals with it within their respective capacities. As could be seen from individual research reports and other government statement, the situation in Nigeria has gone out of hand as about 75 percent of those who are willing to work cannot find gainful employment in Nigeria, especially among the school leavers and graduates of tertiary institutions (NBS, 2014). As a result, many youth have taken to various crimes including robbery, kidnapping, drug and child trafficking and all kinds of armed banditory all in a bid to earn their living. It does not matter any more whether the means is legitimate or not. The situation appears to have gone beyond remedy (Ideyi, 2010). Every year, new sets of graduates and school leavers add to the stock of unemployed youth; resulting to increased frustration and aggression against the society that have refused to provide for them. Successive governments have made several efforts to combat the menace of youth unemployment but it appears that the efforts have not impacted significantly on the level of unemployment as it has continued to be on the increase in the country. Studies such as (Ekong and Ekong, 2016; Akanwa and Akpanabia, 2013; Anyadike et al, 2012; Emeh, 2012; Ibrahim, 2010; Kaegon and Nwogu, 2012 and Udeorah, 2014), have all prescribed entrepreneurship development as a sure means of tackling the growing rate of unemployment in Nigeria. However, the prescriptions are devoid of the specific roles the government is expected to play to make the intervention effective and result oriented.

1. 1. Objectives of the study

The major aim of the study is to assess the relationship between entrepreneurship and unemployment rate in Abuja Municipal council Area Abuja. The specific objectives of the study are;

1. 1. To examine how Job creation has affected unemployment rate in AMAC FCT, Abuja.

1. 1. To evaluate how government policy has affected unemployment rate in AMAC, FCT Abuja.

1. 1. To evaluate how access to credit has affected employment rate in AMAC FCT Abuja.

1. 1. To access how human resources have affected unemployment rate FCT, AMAC, Abuja
      1. 1. Research Questions

       

       

1. 1. To what extent has job creation affected unemployment rate in AMAC, FCT Abuja?

1. 1. To what extent has government policy influenced affected unemployment rate in AMAC, FCT, Abuja?

1. 1. To what extent has access to bank credit affected unemployment rate in AMAC, FCT, Abuja?

1. 1. What is the effect of human capital on unemployment rate in AMAC, FCT, Abuja?
      1. 1. Research Hypotheses

       

       

The study tested the following hypothesis:

Ho1:    There is no significant relationship between Job creation and unemployment rate in AMAC, FCT, Abuja

Ho2:    There is no significant relationship between Government policy and unemployment rate in AMAC, FCT, Abuja

Ho3:    There is no significant relationship between Bank credit and unemployment rate in AMAC, FCT, Abuja

Ho4:    There is no significant relationship between Human Capital and  unemployment rate in AMAC, FCT, Abuja

1. 1. Significance of the study

The study will enrich the body of literature thereby expanding knowledge in the area. As could be seen from past studies in the area, entrepreneurship development has been the popular prescription for reducing the increasing rate of unemployment in Nigeria. Also, the policy dialogue that will arise from the findings would be of immense benefit to different categories of people and they include the government, the practicing and prospective entrepreneurs, the students, researchers and the general public:

· Highlight the importance of entrepreneurship training and its impact on unemployment reduction in Nigeria. One of the SDG (Sustainable Development Goal) goals highlights entrepreneurship education (training) as a critical factor to reducing unemployment or under-employment.

· Allow the identification of the concept and framework of entrepreneurship development and its contribution to employment generation and by extension the Nigerian economy.

· Generate greater awareness among the general public on the need of having proper and practical strategies for acquiring entrepreneurial skills so as help reduce unemployment in Nigeria.

· Provide useful knowledge on factors that might have impact and contribute to the successful adoption of entrepreneurship training by all Nigerian youths which is key towards reducing the unemployment rate in Nigeria.

In exploring the effect of entrepreneurship on unemployment rate in Nigeria, I aimed at influencing policy makers to change or update the current government policies to improve entrepreneurship education and skills acquisition programs and boost the intention of the students to pursue entrepreneurial activities. I also aimed at revealing the challenges that young entrepreneurs face and the resources that are needed to help them transition from college to the workforce, thereby increasing the number of entrepreneurs and reducing the unemployment level in Nigeria (Kareem, 2015; Nwekeaku, 2013; Olorundare&Kayode, 2014).

1. 1. Justification of the study

The justification for the study is because of the consequences of unemployment on the socio-economic development of the country.  Unemployment in Nigeria has come at an expensive cost for the economic growth and development. All spheres of the economy have been affected by the alarming rate of unemployment and underemployment in Nigeria. The social and civil unrest occasioned by the unemployment rate has also reached an alarming rate; Nigeria as a result of unemployment is no longer safe as security has deteriorated resulting to security issues like terrorism, oil bunkering, kidnapping, banditry and a host of other social vices.

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1. 1. Scope of the study

This study is centered on the assessment of the current unemployment rate in Nigeria, entrepreneurship development and its relationship using Abuja Municipal Area council, CT Abuja as a case study. The Area council comprises of small business, medium scale enterprises like restaurants, sachet/bottle water factories, printing press and tailoring shops thus its justification as the scope of the study. The Area council (AMAC) consists of civil servants in all levels but the scope of this work will focus on civil servants from level 10 to 14.

1. 1. Definition Of Terms

Government Policy: Government policy is a plan or course of action, as of a government, political party, or business, intended to influence and determine decisions, actions, and other matters

Job creation:  Job creation is the process of creating new jobs, especially to provide work for people who are unemployed

Bank Credit:  The term bank credit refers to the amount of credit available to a business or individual from a banking institution in the form of loans. Bank credit, therefore, is the total amount of money a person or business can borrow from a bank or other financial institution

Human Resource:  Human resource is the set of the people who make up the workforce of an organization, business sector, industry, or economy.

Entrepreneur: Is an entity which has the ability to find and act upon opportunities to translate inventions or technology into new products. The entrepreneur is able to recognize the commercial potential of the invention and organize the capital, talent, and other resources that turn an invention into a commercially viable innovation.

Entrepreneurship education:  Is the type of education that seeks to provide students with the knowledge, skills and motivation to encourage entrepreneurial success in a variety of settings. Variations of entrepreneurship education are offered at all levels of schooling from primary or secondary schools through graduate university programs.

Unemployment: Is a situation in which the able bodied people who are looking for a job cannot find a job.

Unemployment rate: The unemployment rate is the percent of the labor force that is jobless. It is a lagging indicator, meaning that it generally rises or falls in the wake of changing economic conditions, rather than anticipating them. When the economy is in poor shape and jobs are scarce, the unemployment rate can be expected to rise. When the economy is growing at a healthy rate and jobs are relatively plentiful, it can be expected to fall.

Entrepreneurship: Entrepreneurship is the process of discovering new ways of combining resources. When the market value generated by this new combination of resources is greater than the market value these resources can generate elsewhere individually or in some other combination, the entrepreneur makes a profit.

Underemployment: Underemployment occurs when a person does not work full time or takes a job that does not reflect their actual training and financial needs. That is, their job doesn’t use all their skills and education, or provides less than full time work. This is not the same as unemployment.

Economic Development: Economic development is the process whereby low income national economies are transformed into modern industrial economies. It is related to an increase in output coupled with improvement in the social and political welfare of people within a country.

Entrepreneurship development: Entrepreneurship development is the process of improving the skills and knowledge of entrepreneurs through various training and classroom programs.

Entrepreneurship Skills:  Entrepreneurship skills are ‘an individual’s ability to turn ideas into action. It includes creativity, innovation and risk-taking, as well as the ability to plan and manage projects in order to achieve objectives.