INFLUENCE OF SMES ON UNEMPLOYMENT REDUCTION IN ANAMBRA STATE (A CASE STUDY OF THE YOUNG SHALL GROW MOTORS IN ONITSHA)

ABSTRACT

The study was aimed at assessing the influence of small and medium scale enterprises on unemployment reduction in Anambra state, a case study of the young shall grow motors in Onitsha. The survey research was used in this study to sample the opinion of respondents. This method involved random selection of respondent who were administered with questionnaires. The target population of the study comprised selected staff from selected units in The Young Shall Grow Motors, Onitsha, Anambra state. The questionnaire administered was one hundred and ten (110) copies and one hundred copies retrieved which constitute the sample size. The descriptive and analytical approach was adopted using Chi-square to test and analyze the hypotheses earlier stated. The findings revealed that there is a significant influence of small and medium scale enterprises on unemployment reduction in Anambra state and that small and medium enterprises provide training ground, harnesses utilization of local resources and also act as a pillar hold of Anambra state. It was therefore concluded from the findings that Small and Medium Scale Enterprises have significant impact on employment generation and remains one of the most viable tools for job creation in Anambra State. Therefore it was recommended that the federal government should hasten the power sector reforms and re-stabilize the power sector to end the looming energy crisis in Nigeria in order to encourage entrepreneurial activities which are believed to be the remote cause of unemployment problem in Nigeria.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The growth of Small and Medium Enterprises (SMEs) has remained a common term in the business world. This is due to the sector’s position as a generator of employment, national growth, poverty reduction, and economic development. As compared to the big industries, including multinational corporations, SMEs can boast of being the world’s largest employers of labour. Small and medium-sized enterprises (SMEs) have proven to be a key method used by developing countries to address the issue of unemployment. Small-scale enterprises are now widely regarded as the backbone of every nation’s modern economy. Prior to the late nineteenth century, the economy of Europe was dominated by cottage industries, mostly small and medium-sized businesses. The industrial revolution ushered in a new era of mass manufacturing and altered the status quo (Thomas in Zacheus&Omoseni, 2014). The twin oil shocks of the 1970s shattered the mass manufacturing paradigm, prompting a surprising rethinking of the role and value of small and medium-sized enterprises in the global economy (Wendrell, 2013).According to Peterise (2013), SMEs in both the formal and informal sectors employ more than 60% of Nigeria’s workforce. More importantly, basic materials generated with little to no automation account for 70 to 80 percent of daily necessities in the world. The majority of these items are produced by small and medium-sized businesses.

Since Nigeria’s independence in 1960, unemployment has been on the rise, with many Nigerians unemployed to the point that the government does not even know the current unemployment rate. Unemployment is on the rise in Nigeria, especially among the youth. This is because white-collar jobs are rapidly disappearing as financial institutions and manufacturing companies, which used to be the coveted sectors, fold or merge as a result of the bank consolidation crisis, as well as intermittent power supply, insecurity, inconsistency in government policies, poor or dilapidated infrastructures, and high interest rates, to name a few factors. These factors boost production costs, raise commodity prices, erode firms’ profit-making capacity, and result in job layoffs, all of which increase unemployment (Ogunjimi and Amune, 2019). Many unemployed people have turned to crimes such as armed robbery, drug trafficking, and prostitution. Various factors unique to the Nigerian situation have exacerbated the unemployment situation. Weak or no planning, mono-economy, or absolute reliance on oil with its accompanying price volatility in the global market, political and civil uncertainty, and so on are among them (Olagunju, 2018). The federal government has implemented policies and programs in response to the dangers of unemployment, such as the establishment of the National Directorate of Employment (NDE) in 1986 to devise strategies for dealing with mass unemployment in the country, particularly among school leavers and university graduates. The aim of these efforts is to empower unemployed people to become self-sufficient and self-employed by acquiring relevant skills in any trade they want as a source of income. Instead of looking for a white collar position that is hard to come by, someone who has learned a talent becomes a labor employer. As a result, many unemployed people have taken the initiative to become self-sufficient rather than relying on the government for work. There are now university or college graduates who have started their own businesses and are doing well. Poultry farming, animal rearing, hairdressing, barbering, soap manufacturing, shoe manufacture, baking, commercial transportation, distributive trade, estate agency, tailoring, laundry and dry cleaning, office and industrial cleaning, and other businesses have been pursued.Both of these businesses are started and run by people who want to be financially self-sufficient while also contributing to the growth of the state’s and nation’s economies.

Today, such businesses can be found in all parts of the world, in cities, towns, and villages (Nwoye, 1994). What’s interesting is that the government (at different levels) is increasingly realizing that these businesses have the potential to be the cornerstone of Nigeria’s economic greatness. Perhaps this is why various governments are promoting and encouraging the growth of SMEs as a solution to youth unemployment in one way or another. Anambra State, one of the thirty-six states that make up the Federal Republic of Nigeria, has taken steps to facilitate and encourage the growth of small and medium-sized businesses. These include, among other things, funding, infrastructure provision, policies, and moral encouragement. It is against the above background that this study seeks to ascertain the exact impact of these efforts on employment generation in Anambra State. This study thus examines the influence of small scale enterprises on unemployment reduction in Anambra State, Nigeria.

1.2 STATEMENT OF THE PROBLEM

Despite the government’s frantic attempts to create job opportunities since the transition to civil rule in 1999, the unemployment rate in Nigeria as a whole has been rising. Because of the increasing number of graduates and school leavers graduating each year from various institutions of learning across the country, government efforts to combat unemployment have little or no impact. According to statistics, the unemployment rate is around 23.9 percent on average (NBS, 2011). Another development, according to the ILO (2017), is the increase in the number of youths enrolled in secondary and tertiary education. However, the Nigerian labor market is currently unable to accommodate the growing number of young graduates. The various tiers and arms of government in Anambra State, it appears, are unable to meaningfully engage the swarms of school leavers who are churned out annually from various schools and tertiary institutions. In the above situation, small and medium scale enterprises are expected to come to the rescue of both the graduates and the state government by providing the much needed jobs. This study thus examines the extent to which small scale enterprises have influenced unemployment reduction in Anambra State, Nigeria.

1.3 OBJECTIVES OF THE STUDY

The major purpose of this study is to examine the influence of small and medium scale enterprises on unemployment reduction in Anambra state. Other general objectives of the study are:

1. To determine the extent to which SMEs have influenced on unemployment reduction in Anambra State, Nigeria.
2. To identify specific ways SMEs can create employment opportunities in Anambra State.
3. To highlight some specific small scale enterprises opportunities available for Anambra State residents
4. To identify the problems of small scale enterprises in Anambra State
5. To determine if government has a key role to play in ensuring that small scale industries help in quelling unemployment.

1.4 RESEARCH QUESTIONS

1. To what extent does SMEs influence unemployment reduction in Anambra State, Nigeria?
2. What are the specific ways SMEs can create employment opportunities in Anambra State?
3. What are some specific small scale enterprises opportunities available for Anambra State residents?
4. What are the problems of small scale enterprises in Anambra State?
5. Do government have a key role to play in ensuring that small scale industries development help in quelling unemployment?

1.5 RESEARCH HYPOTHESIS

H0: There is no significant influence of small and medium scale enterprises on unemployment reduction in Anambra state.

H1: There is a significant influence of small and medium scale enterprises on unemployment reduction in Anambra state.

1.6 SIGNIFICANCE OF THE STUDY

 It is worthwhile to lay great emphasis on the significance of this study target groups and potential recipients showing how it will add knowledge, contribute to knowledge or aid practice. Hence, this study will be indispensable to many. To the entire Nigerian populace, this study will broadly enlighten them on the concept of entrepreneurship and how small industries development brings about unemployment reduction in Nigeria scale.

Also, the Nigerian government is not left out. This promising research piece will clearly show the public authorities and government officials how to effectively develop small scale industries as they have been identified as engine of economic growth and development hereby providing employment for the teeming unemployed youth. The study will help the policy makers to recognize the importance of small scale industries in the provision of employment to the labour force for economic development. This shall further guide them to make trade policies to enhance the performance of small scale industries as regards their activities to accommodate mushrooming population that is attributed to high birth and fertility rates as well as rural urban migration within the country.

 Also, to students and other scholars where intend to widen their knowledge in the study of the small scale industries development as a panacea for unemployment reduction, this study shall be a basis of reference since it focuses on the cause of the establishments, how the unique characteristics of the industries have facilitated their role in the provision of employment undertaken to harness their activities and how their activities contributes to economic growth and development.

1.7 SCOPE OF THE STUDY

The study focuses on the influence of small and medium scale enterpriseson unemployment reduction in Anambra state, a case study of the young shall grow motors in Onitsha.

1.8 LIMITATIONS OF THE STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.     

1.9 DEFINITION OF TERMS

Unemployment: Unemployment refers to a situation where people who are willing and capable of working are unable to find suitable paid employment.

Entrepreneurship: This is the willingness and ability of an individual to identify and successfully carry out investment opportunities in and environment.

Development: This means new stage or event, new product or invention. It is when a country is able to provide initially.

Economic Growth: This is a term that is generally refers to the sustained, concerted efforts of policy makers and living and economic health of a specific area or is a phenomenon of marked productivity and increase in gross domestic product (GDP).