The Impact on of Entrepreneurial and small business on Economic Growth of Nigeria

THE IMPACT OF ENTREPENEURIAL
AND SMALL BUSINESS ON ECONOMIC
GROWTH OF NIGERIA
BY
ODEBUNMI ADEKUNLE TIMOTHY
MATRIC NUMBER NOU060316319
A PROJECT SUBMITED TO
THE SCHOOL OF HUMAN RESOURCE MANAGEMENT,
NATIONAL OPEN UNIVERSITY OF NIGERIA
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE
AWARD
OF BACHELOR OF SCIENCE (B.sc) ENTREPRENUERIAL AND
BUSINESS MANAGEMENT
NATIONAL OPEN UNVERSITY OF NIGERIA
LAGOS, NIGERIA.
OCTOBER, 2011

ii
DECLARATION
“I ODEBUNMI, ADEKUNLE TIMOTHY, humbly declare that this work
entitled THE IMPACT OF ENTREPRENEURIAL AND SMALL BUSINESS
ON ECONOMIC GROWTH OF NIGERIA is as result of my research effort
carried out in the school of Human Resource Management National Open
University of Nigeria, under the supervision of MR E. O KEHINDE.
I further wish to declare that, to the best of my knowledge and belief, it contains
no material previously published or written by another person nor material which
to a substantial extent has been accepted for the award of any other degree or
diploma of any university or other institute of higher learning, except where due
acknowledgment has been made in the text.
_____________________
“(Signature/name/Date)”

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CERTIFICATION
This is to certify that this research project entitled THE IMPACT OF
ENTREPRENEURIAL AND SMALL BUSINESS ON THE ECONOMIC
GROWTH OF NIGERIA was carried out by Odebunmi Adekunle Timothy in the
school of human Resource Management, National Open University of Nigeria,
Lagos for the award of B.sc Entrepreneurial and Business Management
__________________ _________________
Name & Signature of Name of Signature of
Supervisor Programme leader
_______________ _____________
Date Date
_________________
Name & Signature of Dean

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DEDICATION
I dedicate this project to God almighty whom gave me grace and life.

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ACKNOWLEDGMENT
I give God the Glory, WHOM have help me, give me grace and favour to
pursuit this programmed. I bless his name in life, life is beautiful and lovely. Also
my special thank to my wonderful supervisor MR E O Kehinde, who lead me and
mentor me during the course of this research. In spite of his heavy academic work
load devoted his time to give audience, correction and encouragement. My
greeting to twins my supervisor sons.
My appreciation goes to the Vice Counselor NOUN Prof. Vincent A. Tenebe.
My appreciation also goes to my Prof V A Adisa, the school centre manager, the
staffs of Noun Ibadan study centre. I special thanks to my parent Mr. & Mrs.
Odebunmi, Mr. Oluwaseyi Adewale Odebunmi (brother) Oluwasenu Odebunmi,
(Brother) Folashade Odebunmi (Sister).
Also I appreciate my fiancée pastor Victoria Kemi Alabi, I appreciate Rev.
Dr. Ademuyiwa for their encouragement, Mr. Femi Osungade Mrs. Badmus
Bunmi, Mrs. Bunmi Matilukuro for their support.
Also, Appreciate Mr. Adisa B.A, Senu Ojeogwu, Kemi Fajuyitan,
Adewumi Adeleke Mrs. Adebowale , Mrs. Abidogun,Mrs C Akinjo my
colleagues in NOUN.

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Also appreciate Mr. Kayode Ajibade, and Mr. Tunde Ijasenu for their
encouragement . I also express my gratitude to all my facilitator especially Mr.
Smart Olaiya . TO GOD BE THE GLORY.

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ABSTRACT
This study was conducted on the role and contribution of entrepreneur and
small business organizations to the economic growth and development in Nigeria
The main objective and significance of the study are to review the role of
entrepreneur and small business organization as a veritable tools for economic
development and growth and to potently blend the theoretical frame work linking
entrepreneurships and small business to economic growth and development.
To obtain the result needed for the study, a sample of responses were taken
from some selected entrepreneur and small business organizations in ibadan
metropolis and its environment. The questions were centered on the relevance of
small business organization to the national of small business organization to the
national economy growth and development
An extensive study was carried out to put the research together. Relevant data
were gathered through the process of non-experimental process of physical
process of physical observation and questionnaire administration.
Hypothesis were formed for the study and simple percentage and chi-square
statistical method were used for the analysis, this help to arrive at a final
conclusion drawn through test of hypothesis and the interpolation of such tests.
The researcher found out that, the contribution of small business
organization to employments generation are immense and which in turn will have

viii
reinforcement effect on economic development of a nation. And it was also affirm
that with the rising population, economic growth is the only sustainable
mechanism for increasing a society’s standard of living and also subscribe to the
view that, it can only be achieved by creating a good investment climate which in
turn, drives growth by encouraging investment and higher productivity.
Finally, large percentage of total number of respondents were in favour of the
alternative hypothesis.

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TABLE OF CONTENT
PAGES
TITTLE i
DECLARATION ii
CERTIFICATION iii
DEDICATION iv
ACKNOWLEDGEMENT vi-vi
ABSTRACT vii-viii
TABLE OF CONTENTS ix
LIST OF TABLE xiii
LIST OF FIGURES xv
CHAPTER ONE
1.1 INTRODUCTION 1
1.2 STATEMENT OF THE PROBLEM 4
1.3 SCOPE OF THE STUDY 5
1.4 PURPOSE OF THE STUDY 6
1.5 OBJECTIVE OF THE STUDY 7
1.6 RESEACRCH QUESTIONS 7
1.7 RESEARCH HYPOTHESIS 8
1.8 SIGNIFICANCE OF THE STUDY 8

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1.9 OPERATIONAL DEFINITION 9
CHAPTER TWO
2.0 LITERATURE REVIEW 10
2.1.1 INTRODUCTION 10
2.1.2 HISTORY OF ENTREPRENEURSHIP 13
2.1.3 THE NATURE OF ENTREPREUR 13
2.1.4 CONCEPTUALIZING ENTREPRENEURSHIP 14
2.1.5 TYPES OF ENTREPRENEURS 18
2.1.6 ENTREPRENEURS MYTHS 19
2.1.7 ROLE OF ENTREPENEURSHIP TO ECONOMIC GROWTH 19
2.1.8 DIAGRAM SHOWING FRAMEWORK FOR
LINKING ENTREPRENEURSHIP TO ECONOMIC GROWTH 20
2.1.9 PROBLEM OF ENTREPRENEURIAL IN NIGERIA 21
2.1.10SOLUTION TO ENTREPRENERIAL IN NIGERIA 21
2.1.11 BENEFITS OF ENTREPRENEURSHIP 22
2.2.1 SMALL BUSINESS IN NIGERIA 23
2.2.2 THE CONCEPTS OF SMEs 24
2.2.3 OVERVIEW OF PERFORMANCE OF THE SMES IN
NIGERIA 29

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2.2.4 THE ROLE OF SMALL BUSINESS IN THE NIGERIA
ECONOMY 32
2.2.5 PROBLEMS OF SMALL BUSINESS IN NIGERIA 33
2.2.6 THE RELEVANCE OF SMALL BUSINESS TO ECONOMIC
GROWTH 35
2.2.7 THE SMEs SCHEME IN NIGERIA 37
2.2.8 GROWTH PERFORMANCE 38
2.2.9 ECONOMIC STRUCTURE 42
2.2.10BUSINESS ENVIRONMENT 45
CHAPTER THREE
3.1 INTRODUCTION 51
3.2 RESEARCH DESIGN 52
3.3 RESEARCH METHODOLOGY 52
3.4 SAMPLING AND SAMPLING SIZE 52
3.5 SOURCES OF DATA 53
3.5.1 PRIMARY DATA 53
3.5.2 SECONDARY DATA 54
3.6 DATA COLLECTION INSTRUMENT AND PROCEDURE 54
3.6.1 INTERVIEW 54
3.6.2 QUESTIONNAIRE 55

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3.7 ANALYSTICAL TOOL 55
3.8 LIMITATION AND VALIDITY OF DATA 56
CHAPTER FOUR
4.0 PRESENTATION OF DATA ANALYSIS AND
INTERPRETATION 58
4.1 INTRODUCTION 58
4.2 COLLECTION OF RESPONSES 58
4.2.1 CHARACTERISTICS OF RESPONDENTS 59
CHAPTER FIVE
5.0 SUMMARY OF FINDING, CONCLUSION AND
RECOMMENDATION 81
5.1 SUMMARY OF FINDINGS 81
5.2 IMPLICATION OF FINDINGS 82
5.3 LIMITATION OF THE STUDY 83
5.4 RECOMMENDATION 83
5.5 CONCLUSION 85
5.6 SUGGESSTION FOR FURTHER STUDIES 86
BIBLOGRAPHY 87
APPENDIX 1 QUESTIONNAIRE 95

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LIST OF TABLES
TABLE 1 THREE TYPES OF ENTREPRENEURS
4.2.1 SEX DISTRIBUTION OF THE RESPONDENTS
4.2.2 AGE DISTRIBUTION OF THE RESPONDENTS
4.2.3 MARITAL STATUS OF THE RESPONDENTS
4.2.4 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS
4.2.5 JOB TITTLE MOF THE RESPONDENTS
4.2.6 NUMBER OF EMPLOYEE THE ORGANISATION CURRENT
EMPLOY/NUMBER
4.2.7 NUMBER OF YEARS IN BUSINESS
4.2.8 INVESTMENT IN THE BUSINESS
4.2.9 HOW DO YOU AIM TO ACHIEVE YOUR LONGER TERM
GROWTH PLAN
4.2.10TOTAL TURNOVER
4.2.11CAN YOU TELL ME, WHATEVER THE MAIN OBTACLES OF
STARTING YOUR BUSINESS
4.2.12WHEN STARTING UP THE BUSINESS/TAKING CONTROL OF THE
BUSINESS WHERE DID YOU SEEK ADVICE OR
INFORMATION

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4.2.13a RESPONDENTS VIEWS ABOUT THE RELATIONSHIP BETWEEN
ENTREPRENEURSIP AND SMALL BUSINESS ACTIVITIES AND
ECONOMIC DEVELOPMENT
4.2.13b HYPTHESIS ONE
4.2.13c CHI SQUARE FOR HYPTHESIS ONE
4.2.13d HYPOTHESIS TWO
4.2.13e CHI SQUARE FOR HYPOTHESIS TWO

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LIST OF FIGURES
Figure 1 INTRODUCTION FRAMEWORK
Figure 2 DIAGRAM SHOWING FRAMEWORK FOR LINKING
ENTREPRENEURSHIP TO ECONOMIC GROWTH
Figure 2.1 GDP GROWTH
Figure 2.2 Percentage of Population living on Less than SI PPP per Day
Figure 2-3 Economic, Structure
Figure 4.3 Business Cost of Crime Violence

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CHAPTER ONE
1.0 INTRODUCTION
1.1 BACGROUND OF THE STUDY
Small business is a business that is privately owned and operated with
small number of employers and relatively low volumes sales. Small Business are
normally privately owned corporation, partnership, or Sole Proprietorship. The
legal definition of Small Business varies by country and by industry, ranging from
that 15 employers under fair work Act 2009, 50 employee in European Union and
Fewer than 500 employee to qualify for many U.S Small Business Administration
programme. Small business can also be classified according to other method such
as sales, assets or net profits.
These Small business are largely important because they employ, a lot of
people and thereby contribute in a no small measure to the economic development
of Nigeria e.g Sport barber shops, meat shops, mechanic workshops and other
owned and operated by what we had earlier described proprietors. Small business
one is independently owned and operated for profit and is not dominant in its
field. The Small business Administration (SBA) has developed the Follow
Specific “Smallness guideline for various industries.
Manufacturing – a maximum of 500 to 1500 employer, depending on the
product manufactured. Wholesaling – a maximum of 100 employee e.t.c

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Ayyagan and Beck (2003) have reviewed the contribution made by Small
business to economic in 76 countries. They found that in low-income countries
just 18% of the population was employed by Small business.
Brouwer (2002) state that Entrepreneur is a person who has possession of
a new enterprise venture or idea and is accountable for the inherent risk and the
outcome. The term was originally a loan word from French and was first defined
by Irish French economics Richard Cantillon (1755). A female entrepreneur is
sometimes known as a entrepreneurse.
However with the word “entrepreneurs” being the French Famine form of
entrepreneur, it useage in English in delinaating Sexes detracts from the meaning
of the word entrepreneur”.Entrepreneur in English is a form applied to the types
of personality who is wiling to take upon herself or himself a new venture or
enterprise and accepts full responsibility for the out come. Blinks,
M and Vale, P. (1990) say, the research data indicate that successful entrepreneurs
are actually risk averse. They are successful because their passion for an outcome
leads them to organize available resources in new and more valuable ways.
They effectively use the factor of production. The factor are land (nature
resources), labour (human Input into production using available resources, capital
(any types of equipment used in production i.e machinery intelligence and
knowledge and creativity.

3
Joseph Schumpeter saw entrepreneur as innovator. Joseph Schumpeter is a
prominent theorists of the Austrian School 1934. Entrepreneurship is at the heart
of national advantage (Porter 1990). Schumpeter’s theory predict that an increase
in the number of entrepreneurs lead to an increase in economic growth.
Economic growth is positive change in the level of production of good and
services by a country over a certain period of time.The increase of per capital
Gross domestic Product (GDP) or other measure of aggregate income, typically
reported as the annual rate of changes in real GDP. It usually brought about by
technological innovation and positive external forces. Schumpeter who defined
growth as gradual and steady changes in the long-run which come about by a
gradual increase in the rate of saving and population. Friedman also defines
growth ‘as an expansion of the system in one or more dimensions without a
changes in its structure. The World Bank argues that with rising population,
economic growth is the only sustainable mechanism for increasing a society’s
standard of living and subscribes to the view that “this can only be achieved by
creating a good investment climate which in turn, drives growth by encouraging
investment and higher productivity.

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1.2 STATEMENT OF THE PROBLEM
Economic growth is positive change in the level of production of good and
services by a country over a certain period of time.
World Bank stressed that the rising population and economic growth is the only
sustainable mechanism for increasing a society’s standard of living and subscribe
to the view that “it can only be achieved by creating a good investment and
climate which in turn drives growth by encouraging investment and higher
productivity. The small and medium business are important because they employ
labour and thereby contribute in no small measure to the economic development
of a nation.
Albeit, entrepreneur and small business find it difficult to have full control on the
economic because of multiple reasons.
The burden of this research work is to review and analyse the role and
contribution of entrepreneur and small business ventures to the economic growth
and development in Nigeria
1.3 SCOPE OF THE STUDY
The bulk of this research work is to examine the role of entrepreneur and
small business organisation as an important tools for economic growth and
development using some selected small business organization within lbadan

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metropolis as the main areas of research.
A total of thirty respondents were sampled and their responses was analyse within
the aid of simple percentage and chi-square statistical analysis.
1.4 PURPOSE OF THE STUDY
The research attempts to give an insight into impact of enterprenuerial and
small business on economic growth. Entrepreneurs play an important role in
building and nurturing organization learning and initiating organization change.
The change vision of the entrepreneur to enhance the team spirit of his
subordinate to the economic growth. Entrepreneurship and small business has
been acknowledge as a fundamental component of economic growth. The
recognition of small business entrepreneurial significance couple with wide
spread dissatisfaction in traditional business programs has spurred tremendous
growth in entrepreneurship courses at all level of post-secondary
education(Solomon,Dugay and Tarabishy,2002). Entrepreneurship education has
enjoyed more than 50 years of growth, with accelerated growth in the 1990’s
(Katz2003). The economic growth of the national depend on entrepreneur spirit.

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1.5 OBJECTIVE OF THE STUDY
The major aim of this research work is to review the role of entrepreneur
and small business organization as a veritable tools for economic development
and growth. other are:
1 To review the nature and concept of entrepreneurship and small business
organization.
2 To examine the role of government in creating enabling and conductive
environment for the establishment of entrepreneurship and small business
organization.
3 To know the importance of SMI/entrepreneurs in reducing poverty, through
employment generation.
4 To know and review how they source and utilize capital.
5 To ldentify and analyse some of the obstacles and hindrances that is directing
effecting their activites.
6 To analyse it’s reinforcement effect on increasing Gross domestic
Product(GDP) and Gross National Product(GNP) in a nation.

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1.6 RESEARCH QUESTIONS
1 The presence of a small business has not been able to bring about reduction
in poverty level, inequality (between the rich and the poor) and
unemployment in Nigeria economy?
2 Do entrepreneurial and small business contribute greatly to economic
growth of a nation ?
3 Do you think tax reduction, improve electricity,political stability will create
enabling environment for the establishment of small business enterprises?
4 Is government performing his duties in interm of enabling environment,
regulation, policies and finances to small business?
1.7 RESEARCH HYPOTHESIS
HYPOTHESIS ONE
H1: (Alternate hypothesis): There is a positive relationship between
entrepreneurial and small business activities and economic development.
HO: (Null hypothesis) : There is no positive relationship between
entrepreneurship and small business activities and economic development.
HYPOTHESIS TWO
H1: (Alternative hypothesis) : creating an enabling environment by government
have a significant effect on the activities of entrepreneurships and small business
activities.

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HO: (Null hypothesis): creating an enabling environment by government does not
activities.
1.8 SIGNIFICANCE OF THE STUDY
The study of entrepreneurial and Small Business is of great importance to
economic growth. It will links entrepreneurship and small business with economic
growth. That is the theoretical framework linking entreneurship to growth as well
as severe constraints in measuring entrepreneurships in a Cross-national context.
The study tried to highlight the role of entrepreneurship, and small
business for natural development. Beside it, the study will try to provide some
basic knowledge of the entrepreneurship and small business. The study also help
to gain some information about it to student, researchers, businessmen and other
ordinary people. The study will also give technical assistance generally in
business planning and development and with preparing grant applications (usually
for those entrepreneurs who are involved in the research and development of new
technologies training and managing staff, financing, marketing and product
development, improving the design of product or the manufacturing process and
accounting and other record keeping function.

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1.9 OPERATIONAL DEFINITION OF TERMS
Small Business: A small business is a business that is privately owned and
operated, with a small number of employer and relative low volume of sales.
Entrepreneur: is a person who has possession of a new enterprise venture or
ideas and accountable for the interest risk and the outcome.
Economic Growth: The increase of per capita gross domestic product (GDP)
other measure of aggregate income, typically reported as the annual rate of
changes in real GDP.
Entrepreneurships: is a person who has possession of a new enterprise venture
or ideas and accountable for the Internal risk and the outcome.
Manufacturing: The use of machine, fool and labour to produce good for use or
sale.
Firms: The firm consist of a number of economic theories that describe the
nature of the firm, company or corporation, including it existences, behaviour
structure to the market.
Innovation: mean renewal or improvement, with novelty being a consequence of
this improvement.
SWOT Analyses: The strategic planning method used to evaluate the strengths,
weakness, opportunities and threats involve in a project or in a business.
TEA: Total entrepreneurship activity.

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CHAPTER TWO
2.0 LITERATURE REVIEW
2.1.1 INTRODUCTION
Entrepreneurial and small business among scholar and researchers seem to
differ considerably. At one extreme is the view that for one reason or the other
entrepreneurial talent involves the establishment and creative, innovation and
formation of industries like manufacturing industries for productive activities in
the real sector of the economy. The small businesses are regulated by small
medium scale in Nigeria. The roles of SMES are similar to role of small business.
2.1.2 HISTORY OF ENTERPRENEURSHIP
In the last century, many writers have identified entrepreneurship with the
function of uncertainly and risk bearing and others with the coordination of
productive resources, the introduction of innovation and the provision of technical
know how (Hosehtz, 1952) cited in Burnet, (2000). During the sixteen century,
people who organized and managed military and exploration expeditions in
France were called “entrepreudre”. The word entrepreneur originated from the
French verb “entrepredre” and the German word “unternehmen” both of which
means to undertake (Afonja 1999). The Oxford Dictionary define an entrepreneur
as one who organizes, manages and assumes the risks of a business enterprise.

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The early 18th
century, French economist Richard Cantillon (Grca 1755)
introduced the term entrepreneurship. In his writing, he formally defines the
entrepreneur as the agent who buys means of production at certain prices in order
to combine them into a new product. He further defines entrepreneurship as self
employment of any sort where the entrepreneur is the bearer of uncertainly and
risk. The French economist jean Baptize (1824) defined the entrepreneur as
someone who shifts economic resources out of an area of lower to an area of
higher productivity and greater yield. He added to Cantillon’s definition by
including the idea that an entrepreneur is one who bring other people together in
order to build a single productive organization. The definition according to Peter
Drucker (1985), does not tell us who the entrepreneur is. And since coined the
term almost two hundred year ago, there has been lack of consensus over the
definition of entrepreneur and entrepreneurship.
In the 19th
century, British economist such as Adam smith, David Ricardo
and john Stuart Mill defined the concept of entrepreneurship under the broad
English term of business management (Burnett, 2000). However,
Schumpeter(1947) argues that where as the writing of Smith and Ricardo suggest
that they likely undervalue the importance of entrepreneurship, Mill actually
stresses its significance for economic development and growth. He further claims
that entrepreneurship require “ no ordinary skills” and laments the fact that there

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is no good English language equivalent word to encompass the specific meaning
of the French term entrepreneur.
The necessity of entrepreneurship for production was also recognized by
Alferd Manshall in 1890 when he asserted in his treatise of principle of economic
that there are four factors of production i.e land, labour, capital and organization.
Entrepreneurship, both technical and commercial, is the driving element behind
organization. He further argued that the skills associated particular with technical
entrepreneurship are rare and limited in supply and that the ability of entrepreneur
are so great and so numerous that very few people can exhibit them all in a very
high degree.
Another research carried out by Penrose (1959) posit that
entrepreneurship, particularly technical entrepreneurial activity, involves
identifying opportunities within the economic system, filling market deficiencies
through input completing activities including the process of identifying,
developing and bringing a vision to life. This vision may be an innovative idea, an
opportunity or a better way of doing something. The end result of this process is
the creation of a new venture, the expansion of an existing one carried out under
condition of risk and consider able uncertainly (meter et. Al, 1976).
Therefore in recognition of the considerable risk and uncertainly
associated with entrepreneurship, Afonja (1999) made a clear distinction between

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technical entrepreneurship and commercial entrepreneurship. The former involves
product manufacture or the provision of technical service while the later involves
trading buying and selling or provision of non – technical services. The
prerequisites for success and risk factor involved differ significantly for the two
types of entrepreneurship. Therefore, the focus of the study is an impart of
entrepreneurial and small business on the economic growth of Nigeria.
2.1.3 THE NATURE OF ENTREPRENEUR
A number of attributes have been suggested as predicators of central
behaviour with some degree of censuses. These studies intend to examine is some
detail on the synonyms and adjectives used to described entrepreneurs since they
tend to identify what makes an entrepreneurial personality characterized by
certain traits.
For instance Rasheed (2002) suggested that the following are most
relevant; need for achievement, creativity and initiative, risk taking and selling
objective, self – confidence and internal locus of control, need for independence
and autonomy, motivation, energy, commitment and persistence. The
entrepreneur is the individual that identifies the opportunity, gather the necessary
resources, creates, and is ultimately responsible for the performance of the
organization.

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However, the above definition should not be taken to discount the
importance of the traits and characteristics of the entrepreneur from the
perspective of their propensity to act and the influences of the social, cultural,
psychological, political and economic contextual factors.
“Entrepreneurship as the ability and willingness of individual both on their
own and within organization to”.
Perceive and create new economic opportunities (new products new
production method, new organization schemes and new product – market
combinations):
Introduce their idea in the market, in the face of uncertainty and other
obstacles, by making decision on location, form and the use of resource and
institutions;
Compete with others for a share of that market (Wenneker, Thurik and
Buis, 1997, p. 54)4
2.1.4 CONCEPTUALIZING ENTREPRENEURSHIP
Entrepreneurship is an ill – defined multidimensional concept. The
difficulties in defining and measuring the extent of entrepreneurial activities
complicate the measurement of their impact on economic performance.
Understanding their role in the process of growth required a frame work because

15
there are various intermediate. Variables or linkages to explain how
entrepreneurship influences economic growth. Examples of these intermediate
variable are innovation, variety of supply, entry and exit of firm (competition),
specific efforts and energy of entrepreneurs etc. see figure 1 where also some
condition for entrepreneurial are provided. The condition include personal traits
that lie the origin of entrepreneurship and cultural and institutional elements.
Figure 1 Introduction Framework
Conditions (personal, cultural, institutional
entrepreneurship (multidimensional).
Intermediate linkages (innovation, variety, competition, entrepreneurial
effort
Economic growth.
Source Wennekers and Thurik (1999)
Entrepreneurship has to do with activities of individual persons. The
concept of economic growth is relevant at level of firms, region, industries and
nation. Hence, linking entrepreneurship of economic growth mean linking the
individual level to aggregate level. In order to considers this link we first pay

16
attention to a definition of entrepreneurship” inspired by Hebert and link (1989),
Bull and Willard (1993) and Lumpkin and Dess (1996), the following definition
of entrepreneurship can be proposed. Entrepreneurship is the manifest ability and
willingness of individuals on their own or in teams, within and outside existing
organization to perceive and create new economic opportunities ( new product,
new production method, new organization schemes and new product – market
combinations), and to introduce their idea in the market, in the face of uncertainly
and other obstacles their ideas in the market decision on location,form and the use
of resources and institution ( Wennkers and Thurih 1999).
Entrepreneurship is synonymous with small business. Certainly, small
firm are on outstanding veticle for individual to channel their entrepreneurial
ambitious. The small firm is an extensions of the individual in charge (Lumpkin
and Dess 1996, p138). however, entrepreneurship is not restricted to person
starting or operating an (innovative)small firm. Enterprising individuals in large
firm, the so-called “lntrepreneur or corporate entrepreneurs’ undertake
entrepreneurship action as well. In these environmental there is a tendency of
mimicking smallness; for instance using business units, subsidiaries or joint
ventures.
First, between the concepts entrepreneurial and manageral in sense of
organizing and coordinating. Secondly, between business owners or self-

17
employed (including owners-manager of incorporated firm) and employees.
Based on this double dischotomy of self employed versus employee and
entrepreneurial versus managerial three types entrepreneur may be distinguished.
These three types are the Schumpeterian entrepreneurs, the intrapreneurs and the
managerial owners who are entrepreneur in a formal sense only. This is
illustrated in table 1
Tables three Types of entrepreneurs
Self-Employee Employee
Entrepreneurial Schumpeterian Entrepreneur Intrapreneurs
Managerial Managerial business owners Executive Manager
Source: Wennkers and Thurk (1999)
Schumpeterian entrepreneurs are found mostly in small forms. They own and
direct independent firms that are innovative and creatively destroy existing market
structures. Intrapreneurs or entrepreneurial managers also belong to the core
entrepreneurship. By taking commercial initiative on behalf of their employer and
by risking their time reputation and sometime their job in doing so. They are
embodiment of leadership resulting in entrepreneurship venture in large firm.
Managerial business owners (entrepreneur in a formal sense) are to be found in
the large majority of small firm. They include many franchise, shopkeeper and

18
people in professional occupations. They belong to what Kirchhoff (1994) calls
“the economics core and are the seedbed for some of the entrepreneurship
ventures.
2.1.5
TYPES OF ENTREPRENEURS
i. Social entrepreneurs
A social entrepreneurship is motivating a desire to help, improve and
transform social environmental, educational and economic conditions key traits
and characteristics of highly effective social entrepreneurs include ambitions and
a lack of acceptance of the status quo or accepting the world “as its is. The social
entrepreneurs is driven by an emotional desire to address some of the big social
and economic condition in the world, for example, poverty and education
deprivation, rather than by the desire for profit.
ii. Serial entrepreneur
A serial entrepreneur is one who contoriously comes up with new ideas
and starts new business. The serial entrepreneur is represented as possessing a
higher effective and efficiently ideas innovations and creatively. They are
involved in established firm, industry and manufacturing company.

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2.1.6 ENTREPRENEURS MYTHS
 Entrepreneurs are gamblers: they take very careful and calculated risks.
 Entrepreneurs want the whole slow to themselves.
 Entrepreneurs are their own bosses and completely independent.
 Entrepreneurs experience a great deal of stress and pay a high price.
 Starting a business is risky and often ends in failure.
 Money is the most important start-up ingredient
 Entrepreneurs should be young an energetic.
 Entrepreneurs are motivated
 Entrepreneurs seek power and control over others.
 If an entrepreneur is talented, success will happen in a year or two.
 Entrepreneurial IQ is a unique combination of creativity, motivation,
intergiry, leadership, team building, analytical ability and ability to deal
with ambiquity and adversity.
Sources: Tmmons, New Venture Creation (Bun Ridge II Richard D. Irwin
1994)
2.1.7 ROLE OF ENTREPRENEURSHIP TO ECONOMIC GROWTH
Self –Employment as Entrepreneurship.

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New Business starting as entrepreneurship.
The Global entrepreneurship monitor.
Entrepreneurships endogenous growth model.
Entrepreneurs endorse specialization and international trade.
Entrepreneur create value competitively.
Entrepreneur lead to technology economic development.
2.1.8 DIAGRAM SHOWING
FRAMEWORK FOR LINKING ENTREPRENEURSHIP TO ECONOMIC
GROWTH.
Conditional for Crucial elements of Impact of entrepreneurship
Level of Analysis Entrepreneurships Entrepreneurship
Source: Wnneker and Thurik (1999)
Individual
Level
Firm
Level
Macro
Level
Psychological
endowment
Culture
Institutions
Business
Culture
incentives
Culture
Institutions
Attitudes skills
ACTIONS
Starting entry
Into new markets
Innovations
Variety Completion
selection Competiveness
Economic growth
Firm Performance
Self realization
Personal Wealth

21
2.1.9 PROBLEM OF ENTREPRENUERIAL IN NIGERIA
1. Law makers are simultaneously promoting an expansion of government
policies that hinder economic growth and economy opportunity. The
unchecked proliferation of Federal, State and Local Tax and regulatory
requirement that is impending new business formation and business
expansion across the nation.
2. The most entrepreneur are creative imitators rather than innovators” with
low level of entrepreneurial talent (Umo,2001).
3. The low productivity and low quality output. These compound the
increase competition for imports, which has resulted in downsizing or
outright closure of many manufacturing industries.
4. The inability of government to emphasized the crucial role of
technological innovation and technical entrepreneurship.
5. Government in Nigeria does not pay adequate attention to the need for
accelerated economic growth.
2.1.10 SOLUTION TO ENTREPRENERIAL IN NIGERIA
1. The restructuring of the private sectors as the engine of growth of the
economy will succeed depend on the fostering and development of
technical entrepreneurship among the indigenous population.

22
2. The implentation the components of technology policy and economic
planning.
3. The prerequisite for progress in Nigeria is the development of an
institutional framework and enterprise culture capable of creating the
optimum condition for technical entrepreneurship. (Adegbite and Van
hattum 2002).
4. Creating business opportunity by reducing the or reform the tax policy
and the regulation.
5. Encourage entrepreneur training and entrepreneurial perspective that can
develop individual.
2.1.11 BENEFITS OF ENTREPRENURSHIP
1. Encourage and supporting women any young entrepreneurs.
2. Increase provision of government services to and regulation of the
informal business sector.
3. Growing rural economic infrastructure and opportunities.
4. Grant fund buy in from national and international development agencies
and NGOs committed to poverty alleviation, youths empowerment, private
sector business development, fair trade.
5. Enhancing the quality and competitiveness of Nigeria businesses.

23
6. Increased capacity to adopt new business technologies
7. Strengthening the organizational and business linkage between the formal
and informal sectors.
8. Creating and enhancing economic opportunities for school leavers and
University and College graduates.
2.2.1 SMALL BUSINESS IN NIGERIA
Small business are synonymous with small and medium Scale enterprise
(SMEs). SMEs are usually referred to as small business in developed
countries. Although, there is no universal definition of SMEs’ there is a
general consensus regarding variables used in identifying SMEs. Small
business enterprises have been contributing substantially to the national output in
many economic both developed and developing country Oluba (2009:1). He
Observed that they account for 80% of the economic output in the United state
and Japan while sub-sector accounted for 45% in Western Europe.
While explaining the contribution of small business to Nigeria, Ojo
(2004:7 ) noted that the sector accounted for about 70% of nations GDP,
generated mainly in the agricultural services, manufacturing and distributive trade
sectors. Gbadamosi (1995:4) observed that the high population growth rates in
most developing countries and Nigeria have increased the demand for consumer

24
goods Thus, small scale industries produce mostly consumer good which
increase not only the variety to consumer but the products are more accessible to
the poor majority. Small business enterprises serves as a vehicle through which
Ideas for new product and service find their way to the consuming public thus
help in meeting local demand and diversifying and expanding the nations output.
2.2.2 THE CONCEPTS OF SMEs
The criteria include capital investment, annual turnover, gross output and
employment, what constitutes SMEs varies across space and time and each
country tends to derive its own definition based on the SMEs are expected of play
in an economy and the programme of assistance designed to achieve a goal. The
definition of SMEs in Nigeria has varied the years and institutions.
Prior to 1992 in Nigeria both the federal Government and its agencies had
adopted varying definition at the same time due possible to their variation in
developing focus or strategy. For example the 1989 industrial policy of Nigeria
defined this enterprises as follow ;
Small scale: those whose total investment was between N 100 000 and N
2,000 000 excluding land but including working capital .
Medium scale: those with total investment of between N2 ,000,000 and
N5,000 000 excluding land but including working capital. Moreover, the

25
decree establishing the National Economic and Reconstruction Fund
(NERFUND) in 1989 define SMEs as these whose fixed asset excluding land and
including cost investment do not exceed maximum asset base of
N2,00,000,000 exculuding land and working capital and with the number of
Staff employed not less than 10 or more than 300.
* Tenba and kayode (1972) define SMEs by considering size of
employment .However, the difference in factors proporting among
establishment, the complexity of capital and the type of organization are
some of the consideration that reduce their definitions to operational
meaningfulness. They identified some important features as follow:
* Little or no specification in management.
* Close and personal Contact of the manager with employees and clients on
customers.
* Lack access to Credit through an organized securities market and offer
Short term loan.
* Lack of dorminant position in a major market.
In CBN credit guidelines to bank in 1991, which defined small- scale
enterprises as an enterprise whose capital Investment ( including land and
working capital) does not exceed N10,000,000 or whose turnover was not
more than N25,000,000 per annum. Meanwhile initially CBN publication

26
defined SMEs as any enterprise with a maximum asset of
N200,000,000,excluding land and working capital, with no lower or upper limit
of Staff.
Recently CBN defined, SMEs as any enterprise with a maximum asset base
N500,000,000 (excluding land and working capital) and with no lower or
upper limit of Staff. However Since 1990, due to the persistent depreciation in
the exchange rate of the naira, the maximum size of capital investment has been
raised to N5,million and the turnover to N25million.
At the 13 council meeting of the Natural Council on Industry held in
July2001,the different categories of business enterprise that came under the
banner of SMEs in Nigeria contest were listed out. The categorization which is
based on their scale of operation includes :
CLASSIFICATION OF SMALL BUSINESS
Micro/ cottage: An enterprise with total cost (including working capital but
excluding cost of Land) not more than N1.5million, with labour size of not more
than 10 workers
Small Scale: An enterprise with total cost ( including working capital but
excluding cost of land) between not N1.5million to N50 million, with a labour
size of not more than 10 workers.

27
Medium scale: An enterprise with total cost (including working capital but
excluding cost of land)above N50 million but not exceeding N200 million with
a labour size of between 101-300 workers. Under the world banks; small and
medium scale enterprise (SMEs) scheme is defined as an enterprise whose total
fixed assets (excluding land plus cost of investment) do not exceed N10million
in constant 1998 prices. Thus, precisely what constitutes SMEs depends either on
the general scale of enterprise covered or on the legal definition in a country
scheme.
The Classification of Small business in china is based mainly on sale
revenue and total assets. Thus small business have sales revenue not less than
RMB 50million. In Canada, small businesses are those with less than 100
employees in manufacturing and less than 50 employees in the Service Sectors.
The United Kingdom classified business according to number of employees:
Micro 0-9, Small business, 0-49 medium sized business, 50-249 and large
business,250 and above.
In Nigeria, the current classification is base on the number of employees
and asset (excluding land and building).
Some of the classification of small business by various agencies, as noted by
Otiti (2007:236) are

28
1. The Center for Industrial Research and Development (CIRD) of
Obafemi Awolowlo University,-IIe-Ife classified small business as an
enterprise with working capital base not exceeding N250,000 and
employment on full time, 50 workers or less
2. The Nigerian Industrial development Bank (NIDB) now Bank of
Industry) classified small scale enterprise as an enterprise that has
investment and working capital not exceeding N750,000 while it defined
medium scale enterprise as those operating within the range of N750,000
to N3million.
According to the Committee for Economic development (CED) a small business
has as least two or more of the following key features.
1. Management is Independent. Usually the managers are the sole
owners.
2. Capital is supplied and an individual or small group hold
ownership.
3. The area of operation is mainly local
4. The business is small when compared with the biggest units in its
filed.
5. Small share of the market that cannot influence the activity in
most level of the firms

29
6. The Chief Executive generally participate actively in most level of
decision- making process and day- today operation of the firms.
7. The Chief Executive can be know by all employees of the firms.
Section 376(2) of Companies and Allied Matter Decree of 1990 defines
Small scale company as one with:
(a) Annual turnover of not more than N2million
(b) Net assets value of not more than N1million
The European Commission (EC) Coined the term “ Small and Medium
enterprises (SMEs)’ The Three component of the SMEs are
(1) Firms with 0-9 employee are micro enterprises.
(2) Firms with 10-99 employee are small enterprises.
(3) Firms with 100- 499 are medium enterprises .
2.2.3 OVERVIEW OF PERFORMANCE OF THE SMES IN NIGERIA
An appraise of the performance of the SMEs in Nigeria shows that past
government have made some positive effort on the sectors. For example it is
estimate that SMEs account for about 70 percent of the total manufacturing
output. Specifically the agricultural sectors which is the largest consists of SMEs
employs over 60 percent of the gross Domestic product GDP. Furthermore SMEs

30
are knows to be very active in promoting increased in the use of local of inputs
into either intermediate are final outputs.
Similarly many SMEs have successfully adapted imported machinery for
local usage, thus positioning themselves as veritable tools for promoting technical
know low and developing indigenous technology. Their fact is that SMEs are
mostly resource based and therefore, well despersed throughout the country. They
have to an extent facilitated the opening up of rural areas and have large assisted
to mitigated rural urban drift.
The importance of small business sectors in Nigeria be Summarized and
includes the following:
- Employment generation: it bring about industrial expansion and create
employment opportunities which make for a better economy due to high
unemployment rate in the country. ( Storey & Johnson 1987)
- Development of local technology i.e new technology Nigerians are
making new approaches to the provision of machines that can Fabricate
equipment for oil drilling and compressor, block moulder, bakery and soap
making equipment. Farm tools e.g hoes
- Encourage the development and application of local raw materials-:
This sectors has attracted small businessmen into investing in the
processing of farm products and minerals.

31
- The sector promote indigenous enterprises: This is a very vital role in
the area of growth and development. For instance a pure water company
will lead to the need for printer who will print the company’s name,
address, NAFDAC and batch numbers nylon bags production, sign
writing e.t.c
- The sector encourage the growth and training of local skill and
workers: These are young school leavers trained to serve these business in
their communities who could rise to serve bigger organization.
- The SMEs helps in control rural/urban migration i.e with the
establishment of business in local places; The drive for employment
outside that environment is reduced as the companies in that environment
will employ some of the people there.
- It bring about the improvement of the standard of living of the people
and quality of life general i.e the presence of the small business attract
the infrastructure that bring about these development e.g For examples
telecommunication sector.
- This sectors encourage the Utilization and development of available local
resource through improved production storage, reservation or
conservation, processing, recycling, packaging, marketing.

32
- SMEs provides excellent opportunity for developing Youngs talent into a
great entrepreneurs and managers which are necessary for economic
development.
- Foreign exchange is also earned by exporting the technology developed in
“technology cluster” of a country e.g the silicon valley technology in
America and New York, Banking clusters are spring boards for Nigeria
information technical and banking growth.
- SMEs support industrialization policies for a rural- urban economic
balance in a country.
2.2.4 THE ROLE OF SMALL BUSINESS IN THE NIGERIA ECONOMY
The role of SMEs is based mainly on the belief that such enterprise are
likely to:
- Facilitate the development of a broader base indigenous entrepreneurial
culture for the country and a higher value-added to domestic industrial
production i.e basics for the national economy.
- Boost employment as they employ a larger number of people per unit of
investment capital-intensive enterprises.
- Enhance regional economic balance through industrial dispersal, including
rural areas.

33
- Moderate rural-urban migration.
- Promotion of effective domestic resources utilization .
- Facilitate managerial training for the unskilled and semi-skilled labour.
- Produce intermediate goods for use in the large enterprises.
- Mobilize and utilize domestic savings.
- Expand export possibilities and substitute imports effectively .
- Produce import substituting machinery and equipment (copying and
duplicating multiplication of prototype machinery and equipment) for
possible leasing.
2.2.5 PROBLEMS OF SMALL BUSINESS IN NIGERIA
However, small business particularly in Nigeria are faced with so many
problems which inhibit them from being an active agent of economic growth in
Nigeria.
1. Inadequate, inefficient at time and non functional infrastructural facilities
which tend to escalate cost of operation as small business are forced to
resort to private ownership to utilizes such as road, water, electricity,
transportation, communication amongst which often increase cost per unit
price of good and service.

34
2. Lack of easy access to funding/credits, which can be traceable to the
reluctance of banks to extended credit to them owning among the to poor
and adequate documentation of business proposal. Lack of appropriate and
adequate collateral, high cost of administration and management of small
loan as well as high interest rates.
3. Bureaucratic bottlenecks and inefficiency in the administration of
incentives and support facilities provided by the government, which tend
to discourage the would be entrepreneurs of SMEs while shifting existing
ones.
4. Low demand for product; arising from low and dwindling consumer
purchasing power aggravated by lack of patronage of locally produced
goods by the general public as well as those in authority.
5. Unfair practice characterized by the dumping and importation of sub-
standard goods by unscrupulous businessmen. This situation is currently
being aggravated by the effect of globalization and trade liberalization
which make it difficult for SMEs to compete even in the local/home
markets.
6. Weakness in organization, marketing, information-usage, processing and
retrieval personal management according record and processing etc arising

35
from the dearth of such skill in most SMEs due to inadequate education
and technological background in the part of the SME promoters.
7. High incidence of multiple of regular agencies, taxes and levies that result
in high cost of doing business and this discourage entrepreneurs. This is
due to the absence of a harmonized and gazetted tax regime which would
enable manufacturer to build in recognized and approved levies and taxes
payable.
8. Import liberalization: the over generous application of this policy as a
result of the world trade organization (WTO) exposing them to rude and
unfair competition of dumped goods from all over the globe free trade as a
global concept should not be adopted at the expense of our domestic
economy, importance of primary goods that can be produces locally by
our SMEs should be discontinued.
2.2.6 THE RELEVANCE OF SMALL BUSINESS TO ECONOMIC
GROWTH
The operation of small business is like the sole proprietorship though
some are often registered as limited liability companies with limited labour force.
Mostly, they are labour intensive with little provision for on the farming,
machinery of administration viable source of medium and long term capital and

36
high mortality rate. In fact, small business is a big business in Nigeria. Through
their capital investments they create job and new opportunities to promote
community building and social activities. They also contribute to the development
of a diversified economy by absorbing surplus labour resulting from economic
restructuring. The small business are the engines of job creation and economic
growth ( Rosen2weig 1988; Brownetal.1990; heedhlolm and mead 1987).
They create market for their good and service. This occur through the
Gross National Product (GNP) is the total value of the final good and services
product for consumption in society during a particular time period. it rise or fall
measure economic activity based on the labor and production output within a
country. The Gross National Product (GDP) a measure output generated through
production by labor and property which is physically located within the confine of
a country. The gross domestic product GDP and the gross national product (GDP)
of the country is increased as a result of the activities of small scale businesses.
The Gross domestic product of any country is the total wealth created by the
citizen living in that country, the gross national product is the total wealth created
by the national of a given country. The activities of small scale business lead to
growth in the economy.

37
2.2.7 THE SMEs SCHEME IN NIGERIA
The Banker’s committee is a body constituted by representative of Bank in
Nigeria. The scheme was approved at their 246th
meeting on December,21, 1999.
- According to them, this was a response to President Obasanjo concern and
policy measure for the promotion of small and medium industries (SMI)
as a vehicle for rapid industrlisation, sustainable economic development,
poverty alleviation and employment generation. The scheme require all
bank’s in Nigeria to set aside 10% of their profit before tax (PBT) for
equity investment in small business and medium scale industries. The
scheme commenced in June 19th
2001.
- The scheme among other thing assist the establishment of new viable SMI
projects, thereby stimulating economic growth, development of local
technology, promotion and creation of employment and indigenous
entrepreneurship.
- The funds will be available for projects in the real sector of the economy
which includes agro-ached, information technology and
telecommunication, manufacturing, educational establishments
- Service (directly related to production in the real sector to enhance
production) tourism and leisure, sold minerals, construction and any

38
activity as may be determined from time to time by the banker’s
committee.
- To qualify for the scheme and enterprise, in addition to being engaged in
any of the activity listed above, must have a maximum asset base of N200
million excluding land and working capital.
- With the number of staff employed by the enterprises not less than 10 or
more than 300. The enterprise must be registered as a limited liability
company with the corporate Affairs commission and comply with relevant
regulation.
- The companies and Allied Matters Act (1990) such as fact filing of annual
returns including audited Financial Statement. Comply with all applicable
tax and regulation and render regular returns to the appropriate authorities.
Timing of investment exist shall be a minimum of 3 years.
2.2.8 GROWTH PERFORMANCE
Nigeria’s economy has experienced strong growth in recent years. Real
GDP growth averaged 7.8 percent from 2004 to 2007, and growth of 6.4 percent
in 2007 exceeded the low-income sub-Saharan (LI-SSA) media (4.0 percent) the
LI median (6.0 percent) and the rate in Indonesia (6.3 percent), although it was
lower than the rate in Kenya (7.0 percent) (see Figure 2-1). Oil accounts for

39
nearly 40 percent of GDP, but from 2001 to 2006 – except in 2003 – real growth
in other sectors outpaced growth in the oil sector. Sectors that have experienced
particularly strong growth include telecommunications, which has been
liberalized and privatized over the past decade and wholesale and retail trade.
Agriculture has also shown some growth-although in remains far from fulfilling
its potential (see Agriculture).
Despite Nigeria’s relatively high per capital GDP, poverty remains
widespread and there are wide disparities in income (see Poverty and Inequality)

40
Figure 2.1: Read GDP Growth
Real GDP growth has been strong in recent years.
Time series Comparison to Other Countries. Most Recent Year
Source IMF Article IV (Nigeria 2008) and IMF World Economic Outlook
Database (April, 2008)
Nigeria’s labour force grew more productive by an average of 5.1 percent
annually between 2003 and 2006, but growth dipped from 7.5 percent in 2004 to
3.3. percent in 2006 lower than Kenya’s 3.6 percent and Indonesia’s 3.5 percent
Year Valve
2003 10.3
2004 10.6
2005 5.4
2006 6.2
2007 6.4
Summary for 2003 – 2007
Five year average 7.9
12
10
8
6
4
2
0
8
7
6
5
4
3
2
1
Expected value and margin of errors
Global Standing
Highest-five
average
2003 2004 2005 2006 2007
Nigeria LI LI SSA Kenya Indonesia Lowest –live average
CAS Code 11P3
6.4 6.0 4.0 7.0 6.1
NGA
0.6
17.2

41
in 2005 (Most recent year available). Nigeria has significant scope for increasing
labour force productivity by improving health and education, Introducing new
technologies and eliminating protectionist trade policies.
Nigeria may also be able to increase productivity and growth by
improving the business enabling environment and increasing fixed investment
(expenditure on fixed assets such as buildings, equipment and infrastructure) from
both the private and public sectors. Reliable data on Nigeria’s gross fixed
investment are unavailable, but the poor state of the country’s infrastructure
suggests that more fixed investment is needed.
Figure 2.2.
Percentage of Population Living on Less than SI PPP per Day

42
Despite impressive growth, poverty in Nigeria is a major concern.
Comparison to the other Countries, Most Recent Year.
NigeriaL1 indonesia
Source World Development Indicator (April 2008)
2.2.9 ECONOMIC STRUCTURE
Nigeria neglected its strong agricultural and manufacturing base during
the oil boom of the 1970s and 1980s, largely through the appreciation of the real
exchange rate that occurred because of the very rapid expansion of oil exports.
Through various initiatives of the NEEDS and its equivalent at the state level
(SEEDS). Nigeria continues to pursue diversification to reduce dependence on
crude oil production. Growth in non-oil sectors has been strong in recent years
(see Growth Performance), but the sector still accounts for a large share of GDP.
80
70
60
50
40
30
20
10
0
70.8 38.7
7.5
NGA
0.6
Global Standing
Highest-five average
12.3
Lowest-five average
CAS code 12P3a

43
Dominated by oil, industrial output reached 41.7 percent of GDP in 2006. a share
for higher than the median value for LI countries globally (24.0 percent).
Indonesia’s industrial output as a share of GDP is identical to Nigeria’s but output
in Indonesia comes from a more diversified industrial base, which provided
employment for 18.0 percent of the labour force in 2005. By contrast, the entire
Nigerian industrial sector provided employment for only 3.4 percent of the
workforce. This reflects the weak contribution of the oil sector to the job growth
needed to transform the economy, and underlines the need for USAID and other
donors to support non-oil-led growth in Nigeria. See Figure 2-3.
Agriculture is important in the Nigerian economy, not only because it
employs a large share of the labor force (58.6 percents in 2005) but also because
of its importance in the allocation of consumption. Subsistence farming and
agricultural production of food and beverages dominate output, but the federal
government and several state governments want to revive the prominence of
commercial agriculture. The sector has grown in real terms, but its share in GDP
has hovered at about one-third in the past few years as the price of oil in the world
market has increased along with Nigerian’s revenues from oil exports. This share
of GDP for agriculture tracks well the expected value of 33.8percent for a country
with Nigeria’s characteristics and the medians for low-income countries globally
(28.1 percent) and in sub-Saharan African (35.6 percent). These data contrast with

44
figures for Indonesia, where only 11.9 percent of GDP comes from agriculture,
providing an indication of Indonesia’s adjustment to a more industrialized
economic base.
Figure 2-3
Economic, Structure
Although the oil-dominated industrial sector is Nigeria’s largest, agriculture is still very important.
The services sector’s share of output increased from 21.2 percent in 2002
in 26.3 percent in 2006 but remained well below the L.I median (44.6 percent),
100
90
80
70
60
50
40
30
20
10
0
26.3
41.7
32.0
44.6
24.0
28.1
44.1
19.7
35.6
54.8
17.4
27.9
46.3
2
41.7
11.9
Nigeria
LI LI - SSA Kenya Indonesia
Source: IMF Article IV (Nigeria, 2008), Nigeria National Bureau of Statistics &
World Development Indicator (April, 2008)
CAS Code 13P1a-c 13P2 a-c

45
the LI-ASA media (44.1 percent) and the shares in Kenya (54.8 percent) and
Indonesia (46.3 percent). Reforms in the banking and insurance sectors as well as
liberalization and privatization in telecommunications and transport have been
helpful, as have reforms in the aviation and mobile phone industries (see
Economic Infrastructure). Wholesales and retail trading has also grown. In
addition, tourism Nigeria’s movie industry “(Nollywood”) and the entertainment
industry in general show potential for growth and employment generation.
In summary, growth in non-oil sectors has been promising but will need to
outpace oil sector growth for a sustained period to lessen the economy’s
dependence on oil. By supporting Nigeria’s efforts to diversify, donors can help to
create jobs and alleviate poverty.
2.2.10 BUSINESS ENVIRONMENT
Institutional barriers to doing business, including perceived corruption in
government are critical determinants of private sectors development and prospects
for sustainable growth. Backed by donors, the Government of Nigeria has been
engaged in comprehensive investment climate reform at the federal and state
levels over the past four years.
The World Bank’s composite Doing Business indicators for 2007 ranked
Nigeria at an unsatisfactory 108 to 175 world economies. Though this compares

46
favorably to the LI median rank of 147 and Indonesia’s 123. It is far behind
Kenya’s 72. Kenya was labeled a “top 10 reformer “ in 2007.
Government reforms, such as the establishment of the Economic and
Financial Crimes Commission (EFCC). The Extractive Industry Transparency
Initiative, and legislation establishing the National Council on public
Procurement, have institutionalized the fight against corruption, enabling
successful prosecution of high-level cases and substantially reducing instances of
419 advance fee fraud. Graft in the bureaucracy is a problem however and
heighten risk for entrepreneurs. This is reflected in Nigeria’s score of -1.3 in 2006
on the Control of corruption index (-2.5 for poor and 2.5 for excellent) and its
scoring below the global median Zero on the World Bank’s governance indicators
(Rule of Law index, Regulatory Quality Index,Government Effectiveness index).
Score on the Rule of Law index and the Regulatory Quality index, however have
improved since enactment of the seal island Compact of 2004.
Nigeria’s performance on standard indicators of business-government
interface is mixed Administrative reforms at the Cooperate Affair Commission
(CAC), the federal business registry, and other agencies have lowered both the
cost as a percentage of gross national income per capital and number of
procedures necessary to start a business. The cost of starting a business in Nigeria
(56.6 percent of GNI per capital) 48 is lower than in Indonesia (80.0 percent) and

47
the median for LI and LI-SSA countries (103.6 percent and 134.9 percent
respectively) but higher than in Kenya (46.1percent). Nigeria’s score is expected
to improve once the CAC’s computerization initiative is complete and business
registration and tax stamp duty registration and tax stamp duty registration are
fully integrated further streamlining procedures. Still, state and local government
controls create bottleneck in post-registration procedures. In many states,
duplication and lack of transparency about additional requirements for registration
with state authorities (e.g. for business premises) hinder the move from
registration to actual start up of business operations.
Automation of court transcripts, more effective use of alternative dispute
resolution, and reform in judicial summary procedures in Lagos helped reduce the
time to enforce a contract from 730 days to 457 a performance surpassing that of
all comparators and benchmarks. Nigeria enterprises pay 29.9 percent of total
operating costs in taxes as calculated by the doing Business Project-lower that
both LI medians and rates in Indonesia and Kenya. This suggests that relative
formal or official taxes are not a major constraint on business in Nigeria.
Administration of taxes, however, is still a major problem.
Other key weakness in the business environment include serious deficiencies in
property registration and business executives’ perception of crime and insecurity
as constraints on business. The business cost of crime and violence illustrates how

48
insecurity affects business performance (Figure 4-3). On this indicator, Nigeria
performs worse than all benchmarks and better than Kenya, but only because of
social unrest before and after that country’s presidential elections of 2007. Indeed,
Nigeria’s ‘’image problem’’ stems from a perceived lack of security and high
crime rate, two problems that are acute in certain parts of the country such as the
Niger Delta. Recent reforms in land registration have reduced the time it takes to
register in Nigeria from 274 t0 82 days, better than the LI-SSA median of 94
days, but still time consuming in comparison to the LI country median of 72 days,
Kenya’s 64 days, and Indonesia’s 42 days.

49
Figure 4.3
Business Cost of Crime and Violence
Crime and insecurity are a chronic problem in Nigeria.
Comparison to Other Countries. Most Recent Year
1(Significances ) – 7 (No Significant cost)
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
Sources Global Competitiveness Report 2007 – 2008 CAS code: 22S9
Multiple taxation and the often arbitrary manner of tax collection at the
subnational level are not captured in the data but also pose a major risk and create
uncertainty of small business in addition to encouraging unofficial payments.
Donors should continue to support efforts to reduce business environment
constraints at the state and local government levels.
2.9
3.6
3.6
5.7
2.5
Nigeria
LI
LI - SSA
Kenya
Indonesia

50
Of all the problems facing Nigeria’s small business by far the greatest in the cost
of providing private electricity to compensate for deficiencies in the public
supply. A more detailed description of this problem is in the section on Economic
Infrastructure.

51
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 INTRODUCTION
This chapter is concerned with the general approach and method by which
the various data used for the purpose of this research work were collected. It
covers research design, research methodology, sampling and sampling size,
sources of data, data collection instrument and procedure, analytical tool and
limitations and validity of data.
Therefore, research methodology is a set of rules and procedure upon
which a research is based and against which claims for knowledge and
assumptions are evaluated for decision making.
3.2 RESEARCH DESIGN
According to Fabohungbe (1999) research design could be described as the blue
print that allows a research to provide solution to the problem of who to study,
what to study, when to study and how to generate data in a research situation. It is
the plan for collecting and utilizing data so that desired information can be
obtained.
Descriptive survey was adopted for this research because it involves on
empirical research methodology in collection of data having to manipulate the

52
samples to the research hypothesis. The approach was used on the sample of the
target population. The research was conducted among entrepreneur and small
business who are professional innovator and creative in their field. The researcher
focus on selected entrepreneur and small business that are in manufacturing
industries, food processing, textile and weaving apparel, metal fabrication and
foundry, agricultural raw material processing, saw milling, woodwork and
furniture, leather processing, chemical and pharmaceutical and soon on.
3.3 RESEARCH METHODOLODY
The methodology used in this research involves the collection of
quantitative and qualitative data from both primary and secondary sources.
Selected entrepreneurial and small business organisation provide the data
needed to test the hypothesis that were formulated.
3.4 SAMPLING AND SAMPLING SIZE
The purpose of sampling is to obtain external validity. Selected
entrepreneurial and small business with innovation and creativity were test
. Questionnaires were administered to the selected entrepreneurial and
small business owner. The entrepreneur and business owner were sampled
altogether for the purpose of this research work. Subjects were sampled

53
based on their operation level and significance. It was through the
administration of questionnaires.
3.5 SOURCES OF DATA
All relevant data are collected from the primary and secondary sources.
The yardstick used in selecting a particular source of data relied on its
relevance to the research topic. In order to carry out the study successfully,
emphasis will be placed on the relation of both primary and secondary
data.
3.5.1 Primary Data
They are statistical material that are original and correspond to the
objective of investigation in the hand of the investigation for the purpose
of enquiring. Examples are observation, oral interviews, questionnaires.
etc.
Questionnaires were administered to entrepreneur and small business
owners. It is designed to gather valid and relevant information through the
response of the respondent that answers the planned sequence of
questions. Questionnaire are used to obtain facts about past, present and
future events.

54
3.5.2 Secondary Data
In this research, entrepreneurial and small business owner provide their
cash book, receipt, voucher, payment vouchers, journal and other
document use to keep their financial record. Other secondary data use are
textbook, magazine, published articles, specialized journal and trade
association.
3.6 DATA COLLECTION INSTRUMENT AND PROCEDURE
3.6.1 INTERVIEW
This is described as face to face interaction situation in which a person
(the interviewer) asks another person (the interviewee) the questions which he
responded to orally. This method permits the researcher to obtain directly first
hand information about a persons knowledge, his values, experience as well as
his attitudes and beliefs. It is a method that provides immediate feedback and
gives the opportunity of asking question which arises from other questions.
3.6.2 QUESTIONNAIRE
These are sets of questions relating to the aims and objectives of the study
to which respondent are required to answer by writing. Questionnaires are used to
obtain fact about past, present and future events, the prevailing conditions and
practice and to obtain information on people attitudes and opinions. 30

55
questionnaires were given. And all the thirty questionnaire were return
completed.
3.7 ANALYSTICAL TOOL
Simple percentage and chi-square method were used to analyse the
primary data collected and information gather were presented in a tabular form.
Through these method, such question would separately be analysed, based on the
answers supplied. This would be done to foster easy and clear understanding of
the work. Chi-square test was used to test the validity of the hypotheses.
According to Asika (2011) Chi-Square test is applied in the following situation.
1. Where there are two variable drawn from independent sample.
2. Where the data are non-parametric, when the data are expressed in
variable. For instance, these can be categorized in two ways. The
following hypotheses were stated;
H1: (Alternate hypothesis): There is a positive relationship between
entrepreneurial and small business activities and economic development.
HO: (Null hypothesis) : There is no positive relationship between

56
H1: (Alternative hypothesis) : creating an enabling environment by government
activities.
HO: (Null hypothesis): creating an enabling environment by government does not
activities.
X2
= ∑[0 –E]2
E
Where
∑ - Summation
O - Observation
E - Expected frequency
3.8 LIMITATION AND VALIDITY OF DATA
Problems were encountered during the process of this research. The
entrepreneur does not have more time spend with the researcher for the interview.
Although, the questionnaire was fill and submitted early. Also some facts were
regarded as classified document, which is secret which could not be disclosed to
an outsider. The director (entrepreneur) chairman, refuse to disclose this book

57
keeping record but with more effort, it was released, for researcher to work on it
in their office. Despite all these hindrance, results from questionnaire and
interview was gathered and records, alongside with other journal from publication
and textbook were used.

58
CHAPTER FOUR
4.0 PRESENTATION OF DATA ANALYSIS AND
INTERPRETATION
4.1 INTRODUCTION
The chapter discusses the results of this study. It provides a description of the
instrument used in the study and analytical tools adopted. The presentation and
analysis represent the breakdown, order and summary of data collected in a way
that answers the research hypothesis developed for the study.
Thirty questionnaires were administered to the respondents, which were some
selected small and medium organization within lbadan metropolis. The entire
administered intrusments were retrieved by the researcher.
4.2 COLLECTION OF RESPONSES
Thirty questionnaires were administered and the presence of the
researcher helped a lot. All the questionnaires were answered and returned. The
hypothesis proposed earlier was tested.

59
CHARACTERISTICS OF RESPONDENTS
TABLE 1
4.2.1 SEX DISTRIBUTION OF THE RESPONDENTS
SEX RESPONDENTS PERCENTAGE
MALE 17 57
FEMALE 13 43
TOTAL 30 100%
Source: Research Survey, October 2011
Interpretation: From the table above, 43% of the respondents were female while
the remaining 57% were male.
TABLE 2
4.2.2 AGE DISTRIBUTION OF THE RESPONDENTS
AGE RESPONDENTS PERCENTAGE
UNDER 25 NIL 0%
25 – 34 4 13.3
35 – 44 13 43.3
45 AND ABOVE 13 43.3
TOTAL 30 100%

60
Source: Research Survey, October, 2011.
Interpretation: The age distribution of the respondent is spread. From the above
table, one can conclude that the questionnaires were administered among people
of matured mind, hence, their response is reliable.
TABLE 3
4.2.3 MARITAL STATUS OF THE RESPONDENTS
AGE RESPONDENTS PERCENTAGE
SINGLE 5 17%
MARRIED 25 83%
TOTAL 30 100%
Interpretation: From the above table, 17% of the respondents were single, while
83% were married.

61
TABLE 4
4.2.4 EDUCATIONAL QUALIFICATION OF RESPONDENTS
QUALIFICATION RESPONDENTS PERCENTAGE
WAEC & BELOW 4 13.3%
OND/ATS/NCE 5 16.6%
B.SC/HND 17 56.6%
POST GRAGUATE/PROFESSION 4 13.3%
TOTAL 30 100%
Source: Research Survey, October, 2011
Interpretation: From the above table, 13.3% of the respondents hold WAEC
CERT & BELOW QUALIFICATION, 16.6% of the respondents hold OND/ATS
and NCE respectively, 56.6% of the respondents are holder of B.SC/HND, while
13.3% of the respondents were postgraduate and professional Certificate holder.

62
TABLE 5
4.2.5 JOB TITLE OF THE RESPONDENTS
JOB TITLE RESPONENTS PERCENTAGE
OWNER 6 19.8%
PARTNER 2 6.6%
DIRECTOR 22 73.3%
TOTAL 30 100%
Source: Research Survey October, 2011.
Interpretation: The above table show the statistical analysis of the respondents
job tithe 19.8% of the total respondents were owner of the business,6.6% were
partner, while 73.3% of the total respondents were employed directors.

63
TABLE 6
4.2.6 NUMBER OF EMPLOYEE THE ORGANISATION CURRENT
EMPLOY/NUMBER
CATEGORY RESPONENTS PERCENTAGE
BELOW 10 9 30%
11 – 20 10 33.3%
21 – 50 5 16.6%
51 – 100 3 9.9%
101 – 200 3 9.9%
TOTAL 30 100%
Interpretation: From the table above 30% of the respondents employed below 10
staff,33.3% of respondents employed the 11-20 staff,16.6% of the respondents
employed 21-50 staff, 9.9% of the respondents also employed 51-100 staff, while
9.9% of the respondents also engaged 101-200 staff.

64
TABLE 7
4.2.7 NUMBER OF YEARS IN BUSINESS
NUMBER OF YEARS RESPONENTS PERCENTAGE
1 -5 YEARS 4 13.3%
6 – 10 YEARS 10 33.3%
11 – 15 YEARS 9 30%
16 – 20 YEARS 7 23.3%
TOTAL 30 100%
Interpretation: From the above table, 13.3% have been in business for up to 5
year, 33.3% have been in business between 6-10 year,30% have used between 11-
15 year in business, while the remaining 23.3% of the respondents have been
operating between 16-20 years.

65
TABLE 8
4.2.8 INVESTMENT IN THE BUSINESS
TOTAL INVESTMENT RESPONENTS PERCENTAGE
N50,000 – 5,000.000 3 9.95
510,000 – 1,000,000 4 13.35
1,100,000 – 2,000,000 3 9.9%
2,000,000 & ABOVE 20 66.6%
TOTAL 30 100%
Interpretation: The table above show the statistical analysis of the respondents
investment level of the respondents, shows that 9.9% of the respondent have
investment N50,000-500,000, 13.3% of the respondent invest between N510,000-
1,000,000, 9.9% of the respondents invest between N1,100,000-2,000,000, while
66.6% of the respondents invest over N2,000,000 in the business.

66
TABLE 9
4.2.9 HOW DO YOU AIM TO ACHIEVE YOUR LONGER TERM
GROWTH PLAN?
RESPONENTS PERCENTAGE
INCREASE MARKET SHARE 5 16.6%
INCREASE
MANGER/WORKFORCE
8 26.7
REDUCE COST OF
PRODUCTION
2 6.7
INCREASE PRODUCTION 15 50%
TOTAL 30 100%
Interpretation: From the above table 16.6% respondents increase in market
share, 26.7% respondents increase manager/workforce 6.7% respondents in
reduce the cost of production, while 50% response increase in production.
TABLE 10

67
4.2.10 TOTAL TURNOVER
TUNROVER% RESPONENTS PERCENTAGE
0% - 25% 1 3.3%
25% - 50% 17 56.6%
51 – 75% 8 26.6%
75% - 100% 4 13.2
TOTAL 30 100%
Interpretation: The table above show the statistical analysis of the respondent
investment turnover.
TABLE 11
4.2.11 CAN YOU TELL ME, WHATEVER THE MAIN OBTACLES OF
STARTING YOUR BUSINESS?
TUNROVER% RESPONENTS PERCENTAGE
TAX AND REGULATION POLICY 10 33.3%
SHORT MANAGERIAL/
SKILL/TECHNOLOGY
8 26.6%
SHORT CASH FLOW/FINANCIAL 12 40%
TOTAL 30 100%

68
Interpretation: From the table above 33.3% respondents tax is regulation policy
are obstacles, 26.6% respondents shot managerial/skill technology are obstacles,
while 40% respondents that short cash flow/financial is obstacle to start business.
TABLE 12
4.2.12 WHEN STARTING UP THE BUSSINESS/TAKING
CONTROL FOT HE BUSINESS WHERE DIO YOU
SEEK ADVICE OR INFORMATION?
RESPONENTS PERCENTAGE
BANK 4 13.3%
LEGAL ADVICE 11 36.7%
CONSULTANT/EXPERT 10 33.3%
PERSONAL 5 16.6%
TOTAL 30 100%
Interpretation: From the above table, 13.3% respondents seek advice or
information from bank, 36.7% respondent seek advice or information from legal
advice, 33.3% respondents seek advice from consultant/expert, while 16.6%
respondents seek advice from personal source to start up the business.

69
The responses provided by the sample respondents were modified for
easier item by item analysis of the responses. The column for strongly Agree and
Agree were merge to form a new column – YES, while the column for Strongly
Disagree and Disagree were also collapsed into a new column – NO-. The
responses are in the table below:
Table 13a: Respondents views about the relationship between entrepreneurship
and small business activities and economic development.
TABLE 13a
4.2.13
TUNROVER RESPONENTS PERCENTAGE%
YOUR BUSINESS IS A SOLE
PROPRIETORSHIP
18 (59.45) 12 (39.6%)
IS YOUR BUSSINESS A
PARTNERSHIP COMPANY
11 (36.3%) 19 (62.7%)
THERE HAS BEEN A CHANGE
OF OWNERSHIP OF THE
BUSINESS IN THE PAST THREE
YEARS
4 (13.2%) 26 (85.8%)
THE BUSINESS HAS BEEN 18 (59.4%) 12 (39.6%)

70
INCORPORATED BY
CORPORATE AFFAIRS
COMMISSIONS
The Business Venture was able to
maximize it profit performance in the
last financial years
28 (92.4%) 2 (6.6%)
Your business Organisation do use
information and Communication
Technology (Computer, Internet,
Intercall) for Managing the business
record keeping, research and
communication.
27 (89.1% 3 (9.9%)
You can Manager your cash flow
effectively
29 (95.7%) 1 (3.3%)
You do finance your business growth
using internal finances
28 (92.4%) 2 (6.6%)
The organization also make use of
external finance providers
28 (92.4%) (6.6%)
Entrepreneurial contribution greatly 29 (95.7%) 1 (3.3%)

71
to economic growth of a nation
Do you think the creation of more
small business enterprises drastically
reduce unemployment and poverty
27 (89.1%) 3 (9.9%)
Your business take interest in
innovation and creativity
25 (82.5%) 5(16.5%)
Tax reduction, lmprove electricity,
political stability, will encouraged
your business to grow
29(95.7%) 1(3.3%)
TESTING OF HYPOTHESIS
Hypothesis is a statement made about some characteristics of a population
that can either be supported or rejected based on available sample data. The
hypothesis Ho is known to be the NULL HYPOTHESIS which is the negative
hypothesis. The hypothesis H1 is the ALTERNATIVE HYPOTHESIS which is
the positive hypothesis.
The hypothesis formulate earlier would now be tested with the aid of Chi-
Square distribution at 0.05 level of significance. This can be computed using the
formula below

72
X2
=  (oi – ei )2
ei
Where:  = Summation, Qi – Observation, ei – expected Frequency.
HYPTHESIS ONE
Hi: (Alternative Hypothesis): There is a positive relationship between
entrepreneurship and small business Activtieis and economic
development.
Ho: (Null Hypothesis): There is no positive relationship between
To test for this hypothesis, the responses to item 1 – 6 in the questionnaire were
used as a basis for measuring it.
TABLE 13b
4.2.13b
ITEM YES NO TOTAL
Your business is a sole Proprietors 18 (59.4%) 12 (39.6) 30
Is your business a partnership
company
11 (36.3%) 19 (62.7)% 30
There has been a change of
ownership of the business in the past
4 (13.2%) 26(85.8%) 30

73
three years
The business has been incorporated
by Corporate affairs commissions
18 (59.4%) 12 (39.6%) 30
The business venture was able to
maximize it profit performance in the
last financial years
28 (92.4%) 2 (6.65) 30
Your business organization to use
information and communication
technology (Computer, Internet,
Intercall) for managing the business
record keeping research and
communication.
27 (89.1%) 3 (9.9%) 30
106 74 180
To determine the expected values from the above observed value, the formula
illustrated below was used ei = rt x ct
N
Where, rt = row total, ct = Column total.
e.g ei = 106 x 30 = 3180 = 17.7
180 180

74
4.2.13c Table:13c
Oi ei Oi – ei (oi – ei)2
(oi – ei)2
ei
18 17.7 0.3 0.09 5.08
12 12.3 - 0.3 0.09 7.3
11 17.7 - 6.7 44.9 2.5
19 12.3 6.7 44.9 3.7
4 17.7 -13.7 187.7 10.6
26 12.3 13.7 187.7 15.3
18 17.7 0.3 0.09 5.08
12 12.3 -0.3 0.09 7.3
28 17.7 10.3 106 6.0
2 12.3 -10.3 106 8.6
27 17.7 9.3 86.5 4.9
3 12.3 -9.3 86.5 7.03
 (oi – ei)2
Ei
= 83.39
X2
(tab) = 12.592, df = 6,  = 0.05, X2
(CaL) = 83.39
Tabulated Chi Square value (X2
(tab) )= 12.592
Calculated Chi square value (X2
(Cal)) = 83.39
DECISION RULE
Since the calculated value 83.39, is greater than the tabulated value 12.592 at 0.05
level of significance, reject the null hypothesis which is “there is no positive
relationship between entrepreneurship and small business activities and economic
development” is rejected and the alternative hypothesis which is “there is a

75
positive relationship between entrepreneurship and small business activities and
economic development” is accepted.
DISCUSSION
Penrose (1959), posit that entrepreneurship particularly technical entrepreneurial
activity, involves identifying opportunities within the economic, filling market
defiencies through input completing activities including the process of
identifying, developing and bringing a vision to life.
The small business and entrepreneurship are the engines of job creation
and economic growth (Rosens weig 1988; Brown et al 1990; beedlolm and mead
1987). Acs (1992) Small firm play an important role in the economy serving as
agents of change by their entrepreneurial activity, being the source of
considerable innovative activity, stimulating industry evolution and creating an
important share of the newly generated jobs. Entrepreneurship is ‘at the of
national advantage ’(Porte, 1990, p. 125).
HYPOTHESIS TWO
Ho (NULL HYPOTHESIS): Creating an enabling environment by government
does not have a significant effect on the activities of entrepreneurships and small
business activities.

76
Hi (ATERNATIVE HYPOTHESIS): Creating an enabling environment by
government have a significant effect on the activities of entrepreneurship and
small business activities.
The responses of item 7 – 13 in the questionnaire were used a basis for measuring
this.
4.2.13d TABLE: 13d
ITEM YES NO TOTAL
You can manage cash flow
effectively
29 (95.7) 1 (3.3%) 30
You do finance your business growth
using internal finances
28 (92.4%) 2 (6.6%) 30
The organization also make use of
external finance provider
28 (92.4%) 2 (6 .6%) 30
Entrepreneurial contribute greatly to
economic growth of nation
29 (95.7%) 1 (3.3%) 30
Tax reduction, improve electricity,
political stability, will encouraged
your business to grow.
29 (95.7%) 1 (3.3%) 30

77
Do you think the creation of more
small business enterprises will
drastically reduce unemployment and
poverty.
27 (89.1%) 3 (9.9%) 30
Your business take interest in
innovation and creativity
25 (82.5%) 5 (11.5%) 30
195 15 210
To determine the expected values from the above observed value, the formula
illustrated below was used.
ei = rt x ct , where rt = row total, ct = column total
N and N = total number
e.g ei = 195 x 30 = 5850 = 27.9
210 210

78
4.2.13e TABLE 13e
Oi Ei Oi – ei (oi – ei)2
(oi – ei)2
ei
29 27.9 1.1 1.21 0.04
1 2.1 -1.1 1.21 0.6
28 27.9 0.1 0.01 3.6
2 2.1 -0.1 0.01 0.05
28 27.9 0.1 0.01 3.6
2 2.1 -0.1 0.01 4.8
29 27.9 1.1 1.21 0.04
1 2.1 -1.1 1.21 0.6
27 27.9 -0.9 1.21 0.04
3 2.1 0.9 1.21 0.6
27 27.9 -2.9 0.81 0.03
3 2.1 0.9 0.81 0.4
25 27.9 -2.9 8.41 0.3
-5 2.1 2.9 8.41 4.0
 (oi – ei)2
Ei
= 21.4

79
X2
(tab) = 14.067, df = 7,  = 0.05, X2
(Cal) = 21.4
DECISION RULE
The result showed a chisqure calculated value of 21.4 (Cal) as against tabulated
chi-square value of 14.067 (tab). Since the calculated value of X2 exceeds the
tabulated value, the alternative hypothesis is accepted while the null hypothesis is
rejected.
DISCUSSION:
To corroborate the above finding 44. “The world Bank’s composite of doing
business indicators for 2007 ranked Nigeria at an unsatisfactory 108 to 175 world
economics”. Though this compares favourably to the LI Median rank of 147 And
Indonesia 123. It is far behind Kenya’s 72. Kenya was labelled a top reformer in
2007. The World Bank bases its income base group classification on GNI per
capital calculated using the World Bank Atlas method. Low income countries are
those with GNI of $906 to $595. Nigeria released revised national accounts data
in October 2007 that included substaintial upward revisions to GDP figure. The
World Bank’s World Development indicator database reports Nigeria’s GNI per
capital using the Atlas method as $620 in 2006. Nigeria growth rate was strong in

80
2007 and it is possible that Nigeria will “graduate” to lower-middle-income status
in the World Bank’s.
IN CONCLUSION: It was inferred from the open ended questions in the
questionnaire that, the responded express there view on how they intend to
achieve their long term growth plan, some of their responses include, proactive
and aggressive increased of their market share, development of managerial skills,
reduce and minimize cost of production and maximize their profit margin through
increase production.
The respondents also talk about there sources of advice and information which are
through bank, legal practitioner, consultant/expert e.t.c
To comb it up, some of the obstacles of doing business in Nigeria according to the
respondents are tax and regulation policy, socio-political instability, lack of
adequate power supply, access to capital and loan, technological backwardness
and other environmental obstacles.

81
CHAPTER FIVE
5.0 SUMMARY OF FINDING, CONCLUSION AND
RECOMMENDATION
This chapter present, the summary of the project findings and report,
project recommendation, conclusion and suggestion for further studies.
5.1 SUMMARY OF FINDINGS
The researches focus on the impact of small business and entrepreneurial
on the economic of Nigeria. The responses from the questionnaire were analyzed
using the percentage analysis method and chi-square as the statistical tools. The
findings of this research is based on the data gathered from the respondents. From
the data collected the alternative hypothesis “there is a positive relationship
between entrepreneurship and small business activities and economic
development” is accepted while Null hypothesis “there is no positive relationship
between entrepreneurship and small business activities and economic
development is rejected.
The following finding was deducted from data collected, these are:
1. Creating a collective socio-economic atmosphere that encourage
entrepreneurial in its fullest and widest applicability.

82
2. The creation of business has been able to bring about a reasonable
reduction in the level of poverty inequality (between the rich and the poor)
and unemployment in the Nigeria economy.
3. Enhancing tax reduction and access to business capital for entrepreneur
and small business operation by means of promoting lending through
equity instead of debt.
4. Entrepreneurship generate growth, necessary for wealth creation and it
serves as a vehicle for innovation and charge.
5. Small business serves as building blocks in the economic growth and
structural transformation process in Nigeria.
6. Creating an enabling environment by government have a significant effect
on the activities of entrepreneurship and small business Activities.
7. The test the hypothesis that the higher level of entrepreneurial activity
leads to higher growth rate of local economies and strongly positives
associated with higher growth rate.
5.2 IMPLICATION OF FINDINGS
Small business and entrepreneurial were fully recognized as the main
engine of economic growth in Nigeria and a major factor that course reduction in
unemployment and poverty level.

83
Therefore, an increase in entrepreneurship, give rises to more forms
inventing new intermediate goods, enhancing growth, increase in productivity of
good and services.
The invent of small business cause Small Firms to grow faster than large firms
and significant contributors to industry growth, small firm are more innovative
and entrepreneurial firm are greater contributors towards innovation.
5.3 LIMITATION OF THE STUDY
This study attempt to emphasize the Impact of Small business and
entrepreneurial to economical growth. It has not been able to provide a
comprehensive solution to the problems of facing the economic growth, problem
facing entrepreneur to economic growth to acceleration of economic growth.
Evaluative Studies of this nature bordering on financial matters are best with a
number of problem such as: capacity, time frame, poor record and knowledge of
the researcher.
5.4 RECOMMENDATION
In order to increase the Impact of Small business and entrepreneurial to
economic growth: the following key issue involve creating an enabling
environment:

84
1. Specialized training programmes in entrepreneurship should be organized
to expose potential and existing entrepreneurs to risk taking strategies
inherent in self-employment and wealth creation.
2. Education system should incorporate business management course in
schools curriculum through the use of case studies and business plan,
Business Bite, entrepreneurial skill, human resource management, good
leadership and business simulation clinic. To enhance the ability of future
entrepreneurs to be proactive, set goal and objectives.
3. Entrepreneurs should be exposed to various source of information and
business opportunity available both Nigeria and external environment.
4. The above will expose entrepreneurs to source of raw materials, new and
improved profess technologies, domestic and Foreign market and other
information necessary for business survival and growth.
5. Need for transformational growth requires a high level of investment and
rising productivity. This is achieved by establishing a strong enabling
environmental for private sector development, involving multiple element;
a sound legal and regularly, a sound and efficient financial system,
openness to trade and investment and sustainable use of natural resources.
6. There is need to restructure and strengthen the government policies in
favour of rapid growth and development of small business and

85
entrepreneurial so that they could serve as the hub industrial
transformation.
5.5 CONCLUSION
The impact of Small Business and Entrepreneurship on economic growth
of Nigeria is great. For any economic to survive the global economic downturn or
meltdown the impact of Small business and entrepreneur is needed. For example
US president Barack Obama echoed an imperative sentiment when he declared in
his first state of the Union address in February this year that “the future of our
economy relies on the inauguration of our entrepreneurs”. This is no doubt that
the statement holds fundamentally truth for nations across the world in general
and stagnated global economy in particular. Entrepreneurship and small business
is longer seen as being solely (exclusively or alone) applicable to people to start
enterprises but to people involved in any endeavor (effort or attempt). It is
essential to motivate the youths to become self-employed even when they are
studying in schools and colleges.
It is the spirit (Feeling) of entrepreneurship that plays a crucial (important
or essential) role in making the society move towards the new phase of
knowledge economy.

86
A constructive way of contributing to society is by developing
entrepreneurial skills. Innovation is the implantation (act of planting) of creative
inspiration for Entrepreneurs.
5.6 SUGGESSTION FOR FURTHER STUDIES
It is believed that findings brought about by this study will be studied and
digested by all concerned. Also, there are still grounds to be researched this topic.
All prospective researcher are therefore encourage to further exploit and do more
on the topic which is the importance and relevance of small business and
entrepreneurship to the economic development of a nation. Been an explicit and
voluminous topic, the researcher believe there is room for further studies.

87
BIBLIOGRAPHY
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Audretsch, D.B (2000), Entrepreneurship in Germany, in D. L Sexton h.
Landstrom (eds), The Blackwell Handbook Entrepreneurship, Oxford:
Blackwell publishers.
Audretsch, D.B. and A.R. Thurik (2001a), Linking Entrepreneurship to growth,
STI working paper 2001/2, paris: OECD.
Audretsch, D.B. Verhuel and A. R Thurik and S. Wennekers (eds) (2002),
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