Subsidy Removal: Prospects for Entrepreneurial Development
Small and Medium-Scale Enterprises [SMEs] especially entrepreneurial activities have played important roles in the development process in most of the developed economies, and proved to be one of the most viable sectors with economic growth potentials. SMEs have such a crucial role to play in the development of an economy that they cannot be ignored by the government. Entrepreneurial development is therefore important in the Nigeria economy which is characterized by the following heavy dependence on oil, low agricultural production, 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. Consequently, the government must develop policies to remove these constraints and enhance the growth of the economy.
Since Nigeria's political independence in 1960, the country has been working tirelessly to achieve economic independence. Several policies aimed at capacity building and utilization has been introduced by both civilian and military regimes in the country. At the forefront of recent effort to modernize and improve Nigeria's ailing economy have been a strong focus on macroeconomic stabilization, and the pursuance of a massive trade and investment liberalization programme to encourage foreign direct investment in the country. In achieving this, the country has relaxed most restrictions on current and capital transfers, introduced tax relief for that multi-national willing to invest in the country, and improved access to foreign exchange at near market rate. Another focus in the liberalization programme is the ongoing massive privatization campaign of public institution, which is again aimed at attracting foreign investment with the hope that this would help increase economic activity and bring in much needed revenue to accelerate economic growth.
Nigeria is a richly endowed country with abundant human and natural resources. The country is blessed with a variety of mineral deposits including petroleum, natural gas, uranium, tin, columbite, coal, precious metals and gemstones. Over the last three decades, the country has earned over US$300 billion from oil sales. However, this has not reflected in the standard of living of its citizenry. Nigeria remains among the poorest countries of the world and still carrier of the world and still carries the tag of a 'developing, 'or worse 'underdeveloped,' nation
In recent times however, the government has come to recognize the importance of entrepreneurship in economic development: that industrial and economic development is fostered not by few large-scale industries, but numerous entrepreneurial ventures or small-scale enterprises, which have the capacity to provide employment and aid growth in an unprecedented manner. Research has shown that small-scale enterprises are crucial to the development of any economy. Industrialized nations like the US and Japan owe their development to the activities of small scale enterprises rather than the few large-scale companies that operate in their economies
In Nigeria, there is a tendency to confuse entrepreneurship with small-scale enterprises. This tendency is not far-fetched because Nigerian owned enterprises are invariably small-scale enterprises. These enterprises abound in the country and cover almost every sector of the economy- occupying position in agro-based and allied industries, rubber based, leather and shoe industries, chemical, electronics, general merchandising, restaurants, dress making, hair dressing, cane chairs, leather products, pomade and toiletries, animal feeds and husbandry, printing, etc. a study done by the federal office of statistics show that 97% of all businesses in Nigeria employ less than 100 employees each, which means that 97% of all businesses in Nigeria are small-scale enterprises. A major characteristic of a Nigerian entrepreneur therefore is that they are relatively small in size. Although a number of them are large, their establishments are, on the average small, both in terms of capital investment, turnover, and number of people employed.
Underdevelopment is a macro-economic term used term used to describe the underdevelopment economies/countries of the world. Underdevelopment usually suggests unused potential, i.e., an economy that has not developed as it could, or an economy that has a long way to go in achieving full capacity. A developing country is a country with good potential prospects for using more capital or more labour, or more available natural resources, or all of these to support its present population to achieve a higher level of living standard. It is important to note that underdevelopment is a relative concept. It makes sense only by comparison. In this sense, we may consider an underdeveloped or a developing economy as one whose levels of development-economics and social- is low, relative to that of advanced economics like the USA, UK, Germany and Japan.
The primary goal of an underdeveloped/developing society is to achieve economic development. Economic development is the process of structural transformation of an economy towards a modern, technologically advanced economy based on services and manufacturing. This process involves not only qualitative changes to the nature of an economy, but also accompanying quantitative changes in terms of the productivity and output per person. If these quantitative changes result in unambiguous improvement in human welfare, it is generally seen as economic 'development'. Vision 2020 for example, is an economic blue print with which Nigeria intends to actualize her dream of becoming one of the twenty most developed economies of the world in the year 2020. In the both the quantitative as well as the quantitative dimension of economics development entrepreneurship could make a significant contribution to realizing that dream. Thus, entrepreneurship has been recognized all over the world as a veritable tool for accelerating the development process of nations
As has earlier been mentioned, industrial and economic development is fostered not by few large scale industries, but by numerous small-scale enterprises, which have the capacity to provide employment and aid growth in an unprecedented manner. It is erroneous to believe that entrepreneurship in developing countries constitutes only a transitional phase in development and that entrepreneurship development is a temporary expedient or a ''second best'' alternative. This seems to be based on the assumption that as a country moves from a traditional to a modern economy, it will have no more need or place for entrepreneurs/small-scale enterprises. But the experience of the most industrially advanced countries clearly shows that while some enterprises start small and grow into large establishments in terms of capital, output and employment, small-scale enterprises as such continue to constitute a large and important sector of their industrial structure. In the United states, Germany, the United Kingdom, the Netherland and Japan industrial enterprises employing less than 100 persons account for the overwhelming majority of small-scale industrial enterprise. In the United States, small establishment have a predominant position. There are approximately 23 million small businesses in the US. These altogether employ more than 50% of the private sector workforce, and generate more than half of the nation's gross domestic product (GDP). In the European Union, SMEs are seen as largely essential for European employment. Each year, one million new SMEs are set up in the European Union. SMEs account 99.8% of all companies and 65% of business turnover in the European Union.
In the popular press, entrepreneurship is depicted as important for economic development; seen to create jobs, ease fiscal burden, and provides competition. Essentially however, the role that entrepreneurship plays in a developing society can be summarized as follows:
§ Generates employment,
§ Increases productivity through innovation,
§ Facilitates the transfer/adaption of technology,
§ Ensures increased resource utilization,
§ Stimulates growth in those sectors which supplies it with inputs,
§ Reinvigorates large-scale enterprises and public enterprises,
§ Encourages and sustains economic dynamism that enables an economy to adjust successfully in a rapidly changing global economy,
§ Enables individual to use their potentials and energies to create wealth, independence and status for themselves in society and
§ Increases private sector participation in the manufacturing sector.
The developed economies of the world are evidences of the role entrepreneurship plays in economic development. There is a strong positive relationship between the level of entrepreneurial activity in a country and economic growth. The United States for example, though a developed country, has continued to call for more support for entrepreneurs, which is seen as indispensable for the United States to regain a competitive lead in the world economy. In developing societies like Nigeria, the need for entrepreneurship development cannot be gainsaid. If the country must progress in its structural transformation from low income, primary-sector based society into a high income and technology-based society; it must embrace and develop entrepreneurial, as research has shown that no country with high levels of entrepreneurial activity experienced low levels of growth.
Lastly, the GEJ led administration must recognize that the harmony and happiness of man yields to the wealth of any nation and that the wealth of any nation is the total sum of the individuals comprising it. It is my conviction and hopes that investment in entrepreneurial development with a view to getting the unemployed Nigerians will go a long way in averting the looming doom of unemployment crisis which is currently being experienced in the country. Freedom in a holistic sense, is reserved for the man who lives by his own work and in that work does what he wants to do.
Andy - A public Affairs Commentator contributed this piece from Benin City