THE RIGHT TREATMENT TO SMEs AND ENTREPRENEURSHIP EDUCATION UNDER THE DEMOCRACY OF PRESIDENT...

THE RIGHT TREATMENT TO SMEs AND

ENTREPRENEURSHIP EDUCATION UNDER THE

DEMOCRACY OF PRESIDENT MUHAMMADU BUHARI

Mande Samaila, PhD.(Associate Professor)

National Open University of [email protected]

08033285472

Outline O Introduction O Small and Medium Scale Enterprises (SMEs) O The Case for SMEsO Regulatory Environment for SMEsO What is Entrepreneurship Education?O Entrepreneurship Education O Entrepreneurship versus Small and Medium Scale

Enterprises O The role of SMEs in National Development O The role of the Government in Developing SMEs and

Entrepreneurship Education O Conclusion O RecommendationsO References

Introduction O It is our desire as a Nation to stimulate growth in the

various sub-sectors of the economy. It is only when this is achieved that we can begin to record significant improvement in the living standard of Nigerians indeed, during the pre-independence period, majority of Nigerians were farmers.

O Self-employment and self-reliance were the order of the day. Nonetheless, towards the beginning of independence, many Nigerians, particularly the educated elite took to white-collar jobs by taking over the posts left by the colonial masters.

O This coupled with the oil boom of the 1970’s, made our economy to depend solely on oil at the neglect of the other sub-sectors of the economy.

Introduction O It was in an attempt to revive the battered economy that

successive governments had come up with different rolling plans; such as the austerity measures of the Muritala/Obasanjo’s Administration (1976-1979) and the structural adjustment programme of Babangida’s regime (1985-1993), the deregulated and partially regulated strategies of the Abacha’s (1993-1998) and the Abubakar Abdulsalam’s Administration (1998-1999) respectively.

O Nevertheless, all these national policies fail to encourage the expected economic and industrial growth; rather the economy witnessed significant increase in our external portfolio. It is imperative to note that majority of these policies suffer from one reason to the other, ranging from policy contradictions, policy somersault, non-continuity to lack of purpose and vision.

Introduction O It is on this backbone, that the Obasanjo’s regime (1999-

2007) made for restructurings of the Nigerian economy, her policy focus. Thus, his economic reforms were primarily centered on market orientation, private sector led, self-employment, self-reliance and technological driven.

O To this end, one of the instruments that Obasanjo’s regime used was the promotion of the small and medium scale enterprises (SMEs) and the development of creative and entrepreneurial ability of its citizenry.

O The immediate past administration of Dr. Goodluck Jonathan also contributed its quota to the development of SMEs in the Country.

O All these leaves much to be expected of the new administration of President Muhammadu Buhari.

Small and Medium Scale Enterprises (SMEs)

O In Nigeria and worldwide, there seems to be no specific definition of small business. Different authors, scholars, and schools have different ideas as to the differences in capital outlay, number of employees, sales turnover, fixed capital investment, available plant and machinery, market share and the level of development. These features equally vary from one country to the other.

O In Nigeria, the Third National Development plan defined a small scale business as a manufacturing establishment employing less than ten people, or whose investment in machinery and equipment does not exceed six hundred thousand naira.

O The Federal Government Small Scale Industry Development Plan of 1980 defined a small scale business in Nigeria as any manufacturing process or service industry, with a capital not exceeding N150,000 in manufacturing and equipment alone.

Small and Medium Scale Enterprises (SMEs)

O The small scale industries association of Nigeria (1973) defined small scale business as those having investment (i.e. capital, land, building, and equipment of up to N60,000 pre-SAP Value) and employing not more than fifty persons.

O The Federal Ministry of Industries defined it as those enterprises that cost not more than N500,000 (pre-SAP Value) including working capital to set up.

O The Centre for Management Development (CMD) view of small industry in the policy proposal submitted to the federal government in 1982, defined small scale industry as, “a manufacturing processing, or servicing industry involved in a factory of production type of operation, employing up to 50 full-time workers.

The Case for SMEsO Small and Medium Scale Enterprises (SMEs) are

generally acknowledged as having huge potentials for employment generation and wealth creation in any economy. Hence interest in their development continues to be in the forefront of policy debates.

O Small and medium scale enterprises (SMEs) have been recognised as indispensable components of national development in both developed and developing economies (Abrie and Doussy, 2006; Lai and Arifin, 2011).

Regulatory Environment for SMEs

O The regulatory environment constitutes an important component required to ensure the growth and development of a viable and vibrant SME sub-sector of the economy.

O Policies and regulations targeted at the promotion of SMEs in Nigeria can be traced to include:O The Nigeria Enterprises Promotion Act No. 3 of

1997; O Patent Right and Design Act No. 60 of 1979; O Industrial Development Tax Act No. 2 of 1971,

among others.


O Some micro lending institutions established to enhance capacity and development of SMEs were identified in Ogechukwu (2006) as including O The defunct Nigerian Bank for Commerce and

Industry (NBCI), O National Economic Reconstruction Fund

(NERF), and O The National Export and Import Bank (NEIB).


O Others are the O Bank of Industry (BOI), O Small and Medium Scale Enterprises

Development Agency of Nigeria (SMEDAN), O National Poverty Eradication Programme (NAPEP), O National Economic Empowerment and

Development Strategies (NEEDS), O Small and Medium Industries Equity Investment

Scheme (SMIEIS), O Small and Medium Enterprises Credit Guarantee

Scheme (SMECGS), and O The Microfinance Development Fund (MDF).

What is Entrepreneurship Education?

O The Commission Communication (2006) defined entrepreneurship education as the individual 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. This support everyone in day to day life at home and in society, makes employees more aware of the context of their work and better able to seize opportunities, and provide a foundation for entrepreneurs and enabling a social and commercial activity.

O O UNESCO (2008) stated that entrepreneurship education is

made up of all kinds of experiences that give students the ability and vision of how to access and transform opportunities of different kinds. It goes beyond business creation. It is about increasing student’s ability to anticipate and respond to societal changes.

What is Entrepreneurship Education?

O It is also seen by UNESCO as education and training which allows students to develop and use their creativity and to take initiatives, responsibility and risks. To Lee & Wong (2008) entrepreneurship education is a catalyst for economic development and job creation in any society.

O The above views show that entrepreneurship education

by its scope, nature and characteristics is a rebranding education culture meant to guarantee a comprehensive educational system re-engineering arising from the obvious deficiencies of the existing education system. It is aimed at equipping the students with requisite skills and capacities needed in the world of work.

Entrepreneurship Education

O According to Cole (2005), an entrepreneur is an organisation builder whose entrepreneurship perception is not restricted sequence of decisions of an individual or group of associated individuals, undertaken to initiate and maintain a profit oriented business unit for the production and distribution of economic goods and services.

O Similarly, Koontz and O’Daniel in Afolaranmi (2003) posited that an entrepreneur is a person who sees a business the opportunity, obtains the needed capital, know how to harness the operation successfully and has the willingness to take a personal risk of success or failure.

Entrepreneurship versus Small and Medium Scale Enterprises

O The term ‘entrepreneurship’ is quite different small and medium enterprises (SME). Entrepreneurship is used to describe the ability to be creative, innovative, risk taking and organizational process and functions of individuals who initiate, run and nurture a business venture.

O It involves of identifying opportunities, creating or improving a new or existing technologies, products or services, bearing the accompanied risk and receiving resultant rewards.

O Drucker, (1985) in his work, ‘Entrepreneurship and Innovation’, explained how entrepreneurship is different from SME. Entrepreneurship, according to Drucker, is all about creating a new thing, with added value and it involves a great deal of innovation. This invariably means not every new or small business can be said to be entrepreneurial.

The role of SMEs in National Development

O Small scale industries have a lot of important contributions to make to the economic development of the country. Shokan, (2000) enumerated some of them as follows:O The provision of employment amongst the youth: a lot

of youths… retired workers and out of school graduates, are now gainfully employed, thereby reducing the unemployment rate, and its attendants social complication of armed robbery and white collar crimes.

O It helps to bring about new goods and services and supply the needs of large industries, which have to rely on the small scale operators for business success. It satisfies the convenience of consumers at any given time, with the availability of products


O They represent the overwhelming majority of industrial capacity in developing countries.

O They promote the development of indigenous manpower as well as increasing local participation in the manufacturing sector.

O The activities of small business firms have resulted in the mobilization of the resources of the environment and thereby improving on the standard of living of the population.

O They contribute to the development of the labour market by absorbing an ever growing supply of goods, services and labour.


O They have accounted for a large percentage of all businesses and a favourable percentage of the nation’s gross national product.

O Other noticeable impacts are its contribution to the development of indigenous entrepreneurship.

O Mention is being made of the Dantatas, Fajemirokuns, Igbinedions, Ekene Dili Chukwus, Ilodibes, Dankabos, Dangotes, Adenuga and the Amazus of Nigeria. These are successful entrepreneurs.

The role of the Government

O There is a kind of relationship between business and government and it is imperative for business operators to understand that manner of relationship. This is because the type of relationship that exists between the government and business goes a long way to determine the existence, growth and development of the small scale business operator.

O The government is a super-body that exerts enormous power in a given nation state. By this implication, it has the capacity and ability to influence almost every institution under its jurisdiction for good.


O Government acts as a business regulator with the overall aim of helping to maintain a climate of confidence, sanity and to stimulate the activities of the enterprises, so that they can have the respect for the rule of competition. Obitayo (2001) identified some of usual justification for government regulatory activities in business including what they hope to achieve. Among these are: O To achieve an environment permitting the enterprise to exist in

an atmosphere of stability and cooperation; O To fix and distribute public and social burden in a supportable

and equitable manner, taking into consideration the differences in sizes of various enterprises and the economic activity of the country;

O To protect the interest of the consumer against exploitative actions of business or specific measures against sub-standard or dangerous products; etc.


O Experts argue that the infrastructural facilities created by government helps in the growth of small scale business, by facilitating the acquisition of required inputs. These facilities are, the essential infrastructures that assist and promote investment and growth of the SMEs. Some of them are;O Provision of access roads;O Increased improvement in communication facilities like

telephone, postal services, and other telecommunication facilities like internet and mobile phones.

O Provision and expansion of electricity supplyO Water expansion schemes to service industrial of business

sites.O Construction of industrial layouts and estates;O Establishment and maintenance of an Export Processing Zone

(EPZ)


O The provision of all these facilities helps the small scale business to expand, through quick movement of goods and services, expansion of markets for products, and leads to a relatively cheaper investment cost.

O The government has assisted small scale business through the provision of some helpful research institutions.

O The Nigerian Government often gives direct financial assistance to business organization

Conclusion O The secret behind the success of self-reliant strategy

is mainly in peoples positive attitudes to enterprise, and in the extent to which the right incentive is adequate enough to make risks worth taking, rather than in any particular political philosophy.

O In the early stages of Japan’s Industrialization, her economy was dominated by a large number of small scale enterprises, who drew their strength not from an abundance of capital, but rather from her vast supply of labour, and the abundant advantages of small scale industries.

O Nigeria and Nigerians need to learn and follow Japan’s footsteps.

Recommendations O The government ought to make a practical approach to

poverty alleviation by emphasising on the strength of the poor and their productive capacity and not their weaknesses. For example the country has an active vibrant young population, fertile land, good social structures and good markets that could demand the goods of these SMEs. All that is needed is invest in these assets of the poor.

O There should be urgent and pragmatic effort to address lack of funding and weak infrastructure among the constraints facing SMEs. In this regard government should be apt and consistent in its policies pertaining to SMEs to avoid policy summersaults. Periodic evaluation of policies and engagement of experts in designing policies will assist.

RecommendationsO The following policy recommendations are also proffered:

O The government is advised to assist the small scale producers by improving infrastructural facilities and environmental infrastructures such as road network, water, electricity, and communication. Inefficiencies in these areas create additional costs to small-scale manufacturers, and limit their growth.

O The Government efforts on entrepreneurship development should move from the drawing board of dailies to concrete and practical steps, that are physical and graphical

O Government should encourage willing entrepreneurs to establish Small-Scale Foundries in various parts of Nigeria

O Government should sensitize the people through the re-branding campaign programme on the use of Locally Made Goods as a matter of urgency

O There should be a stable industrial policy on Small and Medium Enterprise (SME) devoid of party colorations.

O Apart from entrepreneur education, there should be entrepreneurship and vocational centres in our tertiary institutions-Universities, Polytechnics etc.

References O Abrie, W., and Doussy, E. (2006): “Tax Compliance Obstacles Experienced by

Small and Medium Scale Enterprises in South Africa”. Meditari Accountancy Research, Vol. 14(1), pp. 1-13.

O Adebayo, Ola (2008), Entrepreneurship – “What Is It About”; Proceedings of International Conference on Development Studies Vol. 2 No 5, March 12-13, 2008 Pp 78-83

O Afolaranmi, O.M (2003), Entrepreneurship Development-Theory and Practice. Offa, Nigeria. Kola Salau Press.

O Ayozie D. O. (2001), Small Scale Business and National Development Conference paper delivered at the CAB, Kaduna Polytechnic, Management Conference. Kaduna Nigeria.

O Ayozie D. O., and Asolo A. A. (1999): Small Scale Business for Nigerian Students (Danayo Inc. Coy) Ogun State Nigeria.

O Commission Communication (2006). “Fostering entrepreneurial Mindsets through education and learning”. Com.33 final.

O Drucker Peter F (1985), Innovation and Entrepreneurship, William Heinman, London.

O Inegbenebor, A.U. (2006): “Financing Small and Medium Industries in Nigeria - Case Study of the Small and Medium Industries Equity Investment Scheme (SMIEIS): Empirical Research Findings”. Journal of Financial Management and Analysis. Vol. 19, No. 1, January-June 2006.

ReferencesO Lai, M. L., and Arifin, M. Z. (2011): “Small Business Enterprises and Taxation: A Case

Study of Corporate Clients of a Tax Firm”. Academy of Accounting and Financial Services Journal, Vol. 15(1), pg. 11.

O Lee, L. & Wong, P. (2005), Entrepreneurship Education A compendium of Related Issues. NUS Entrepreneurship Centre Working paper, July, 2005.

O Obanya, P. (2010), System Re-Engineering and Institutional Rebranding for building a world class University: The Nigerian Perspective. A paper presented at the 4th annual lecture of Professor Grace Mbipom Foundation, University of Calabar.

O Obitayo K. M. (2001): Creating and Enabling Environment for Small Scale Industries. Bullion Publication of CBN. Vol. 25 No. 3. pp. 116 – 127.

O Ogechukwu, A. (2006): “The Role of Small Scale Industry in national development in Nigeria”. Texas Corpus Christi. November 1-3 Issue.

O Olorunshola, J. A. (2003): “Problems and Prospects of Small and Medium-Scale Industries in Nigeria”. Being A Paper at CBN Seminar on Small and Medium Industries Equity Investments. Lagos. August, No. 4, pp. 34-49.

O Oluboba, O. (2011): “Career Crises and Financial Distress: The Way Out”, in Joseph Ajayi, J., and Adesina, S. “Experts Highlight Problems Militating against SMEs in Nigeria”. Tribune Business. Wednesday, 16 February, 2011.

O Onugu, B. A. N. (2005): “Small and Medium Enterprises (SMEs) in Nigeria: Problems and Prospects”. St. Clements University Dissertations and Theses, in (http://stclements.edu/grad/gradonug.pdf). Accessed 12/09/2012.

References O Onwuchuruba, G. U. (2001) The role of marketing in small scale business in Nigeria. Paper

delivered at the second school of management studies conference. The Federal Polytechnic Ilaro.

O Osalor, P. (2012): “Contributions of SMEs to the Nigerian Economy”, available online at: (http://www.successinyourbusiness.com/contribution_of_smes_to_the_nigerian_economy)..

O Oyekanmi, R. (2003): “Concepts of Equity Financing and its Implications for SMIEIS”. Being a paper presented at the Central Bank of Nigeria (CBN) Seminar on Small Scale and Medium Industries Equity Investments. Lagos, August, 2003. 4, pp.66-84.

O Oyelaran-Oyeyinka, B. (2003): “Financing and Development of Small-scale Industries in Nigeria”. Central Bank of Nigeria Economic and Financial Review. 24(4), December 2003.

O Sanusi, J. (2004): “Revamping Small and Medium Industries”. Keynote Address by the Governor of the Central Bank of Nigeria, Chief (Dr.) Joseph Sanusi at the National Summit organised by the Manufacturers Association of Nigeria (MAN), Ikeja, Lagos on March 4, 2004, available online at: (http://www.cenbank.org/OUT/SPEECHES/2004/GOVADD-4MAR.PDF)..

O Shokan O. (2000) Small Scale Business in Nigeria. (Shona Publishers, Lagos Nigeria).O Uko, N. S. (2012): “FG sets up N200bn SME Guarantee Fund”. Finance Business. July 13, 2012,

available online at (http://www.nigerianbestforum.com/blog/?p=117622). Accessed 13/09/2012.O UNESCO (2008), Promoting Entrepreneurship Education in Secondary Schools. Final report of

UNESCO inter-regional Seminar on promoting entrepreneurship education in Secondary Schools, held in Bangkok, Thailand on 11th – 15th February, 2008.

O Volkmann, C, Wilson, K.E, Mariotti, S, Rabuzzi, D, Vyakarriam, S.& Sepulveda, A (2009). Educating the Next wave of Entrepreneurs: unlocking entrepreneurial capabilities to meet the global challenges of the 21st century. A report of the Global Education Initiative presented at the World Economic Forum, Switzerland, April, 2009.

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