IJM, Vol.

1, Issue 2 (December, 2014)

e-ISSN: 1694-2299 | p-ISSN: 1694-240X

ENTREPRENEURSHIP DEVELOPMENT AND

UNEMPLOYMENT IN NIGERIA
AdebobolaZakariyahOlotu
University of Newcastle, New South Wales, Australia

Abstract
A number of policy intermediations in Nigeria that were targeted at inspiring and stimulating
entrepreneurship development through small and medium scale enterprises have botched. In its place of
creating in-country entrepreneurial capacity, entrepreneurs have been converted and become
distribution agents of imported goods. This paper argues the development of entrepreneurship and
stressed that it has been instrumental in economic growth, balanced regional development and job
creation in most vibrant economies, where technology is changing at a faster rate and the product
lifetime cycle is dwindling. This paper also looks at Nigerias growing unemployment situation and how it
increasingly deteriorates the potentials of the country. It emphasizes the prominence and significance of
entrepreneurship as realistic machinery for sustainable economic growth and employment generation in
Nigeria seeing the experiences of developed nations like Australia, the United States and vibrant
economies like China and India. It is in this instance that this paper seeks a lasting solution to the
pervasive and endemic portent in Entrepreneurship development that can assist to regulate
unemployment, generate job opportunities and provides recommendations for its sustainability in
Nigeria.
Keywords: Sustainable Development; unemployment; entrepreneur; Nigeria; employment generation.

1. Introduction
Africa is the poorest region in the world and it was the only major developing region with negative
growth in income per capita during 1980-2000 (Sachs et al, 2004). The World Bank predicts that poverty
in Sub- Saharan Africa is set to rise and by 2015 constitute 50% of the world poor (World Bank, 2004).
Nigeria is naturally gifted with entrepreneurship prospects; however the realization of the full potential
of these opportunities has been inhibited by the implementation of inappropriate and unsustainable
industrialization policies at different periods (Thaddeus, 2012). Several policy interventions that were
designed to stimulate entrepreneurship development via small and medium scale enterprises
advancement, based on technology transfer strategy, were unsuccessful to achieve the desired goals as it
led to the most indigenous entrepreneurs turning to distribution agents of foreign products in contrast to
building in-country entrepreneurial capacity for manufacturing, mechanized agriculture and expert
services. A study appraised that between 45 and 60 percent of the urban labour force engage in small
private enterprises or otherwise referred to as small businesses (Chu, Kara, Benzing, 2010 quoting
Nwaka, 2005, as cited in Oyelola et al, 2013).

Another study reveals that entrepreneurship has been beneficial because the Nigerian private sector
comprising of small and medium enterprises provides diverse employment opportunities for 50 percent
of the country's population and 50 percent of the its industrial output (Ariyo, 2005 as cited in Oyelola et
al, 2013). Many other countries have been able to strengthen and transform entrepreneurship sub-sector
to such a vibrant and exciting industry such that they have been able to reduce considerably their
unemployment and poverty level because of the huge and enormous contribution of the sub-sector to

www.ijm-apm.com

International Journal of Management

their economic growth and development (Onugu, 2005). Unfortunately, this cannot be said about Nigeria
as the case is different.
In respect to this appalling situation, the government has done little to reduce the misery and
frustrations of the citizenry which foisted a state of hopelessness on majority of young people who have
resulted to any means including crime to succeed in life. They result to crimes and other vices because
they are not gainfully engaged, meaning, they are unemployed. They are Unemployed, not necessarily
because they dont have relevant qualification, but because the system has been politically, economically,
socio-culturally and religiously crippled. The agility with which hunger and poverty have shattered lives
and future ambition of youths especially graduates in Nigeria, led to scholars prescribing
entrepreneurship as the lasting remedy for extreme hunger and poverty (Anyadike, Emeh, and Ukah,
2012). Thus, economic displacement is one of the external forces that influence the development of
entrepreneurship despite the fact that entrepreneurship has been regarded as the fortification for
employment generation and technological development in Nigeria.
Against this framework, entrepreneurship if courteously developed in Nigeria will take its pride of
place in crushing unemployment and thus generating employment among Nigerian youths especially the
graduates and subsequently stabilise the economy. It is in this respect that this paper seeks to discuss the
connection between entrepreneurship and employment generation in Nigeria, assess the level of
unemployment in the country and how far entrepreneurship has succeeded, highlight some major
problems of entrepreneurship and thus proposing some credible strategies that can enhance effective
entrepreneurship which will help control unemployment and create job opportunities especially for the
Nigerian youths.

2. Small and Medium Enterprise Development in Nigeria

Entrepreneurship in Nigeria started when people in the villages produced more goods than they
required, as such; they had to exchange these excesses with those who needed them within their
immediate and neighboring communities (Oyelola, Ajiboshin, Raimi, Raheem, and Igwe, 2013). At the
beginning, exchange of goods or services was based on trade by barter, until commodity money was
developed and used. Exchange encouraged specialisation among producers, and when communities
realized that they can concentrate on the areas of production they have comparative advantage,
consequently, the culture of entrepreneurship started in Nigeria (Nicks, 2008; Raimi and Towobola,
2011).
According to Thaddeus, (2012) Entrepreneurship development in Nigeria became significant only
after the Nigerian civil war (1967-70). The early period saw an economic development system of
industrialization as the key source of economic growth, and industrialization itself as the invention of
technical progress and investment. Technical progress or capital growth on the other hand is seen to be a
function of entrepreneurial effort. Precisely, indication from the developed world suggests that economic
growth is entirely due to the quality and efficiency of the entrepreneur (Thaddeus, 2012). Therefore,
after independence in 1960 Nigerian government realized the need to promote indigenous
entrepreneurs. The Government never loses sight of the multilateral relationship between
entrepreneurship, industrialization and economic growth. Entrepreneurship is often carried out by micro
and small scale businesses and therefore Small and Medium Enterprise Development Association of
Nigeria SMEDANs focus is on the development of micro, small and medium-scale enterprises (MSMEs)
where it co-ordinates and integrates MSME activities in order to develop their full potential and
competitiveness.
SMEDAN organizes seminars, workshops at both local and international levels and also encourages the
formation, registration and co-operation of micro, small and medium business associations. These
associations (Nigerian Association of Small and Medium Scale Enterprises (NASME), International
Council of Small Business (ICSB), Abuja Enterprises Agency (AED), Acadia Centre for Small Business and
Entrepreneurship (ACSBE)) inspire development of businesses and industrial organization via
partnership, relationships and licensing of entrepreneurship events. According to Thaddeus, (2012)
Nigeria has developed enterprises in the following areas.
www.ijm-apm.com

International Journal of Management

Agriculture/agro-allied activities: Foodstuff, restaurant, fast food vending etc.

Solid mineral: Quarrying, germ stone cutting/polishing and crushing engineering.

Transportation and power: Power generation and Haulage businesses

Information and telecommunication businesses: Sales and Repairs of GSM accessories.

Hospitality and tourism businesses: Hotels services, accommodation and resort centres,
production of film and home video.

Environmental and waste management businesses: Collection and disposal of refuse, recycling of
refuse, and drainage/sewage.

Financial and banking services: Banking services, insurance policy and stock trading.

Fabrication work and Engineering: Fabrication of Machines and tools.

Building and construction: Planning and design of services and sourcing of material.

The increase of entrepreneurship activity since 2000 is partly due to the increasing rate of
unemployment, a growing service sector, a reduction in regulatory control, increasing
privatization/competition and the introduction of a poverty eradication program in 2001.

3. Unemployment Saga in Nigeria

Unemployment and Poverty remains key developmental challenges in Nigeria over a very long time
(Akwara et al, 2013). According to Udu and Agu (2005), unemployment is a situation in which persons
capable and willing to work are unable to find suitable paid employment. According to the International
Labour Organisation (ILO) (2007), unemployed workers are those who are currently not working but are
willing and able to work for pay, currently available to work and have actively searched for work. Hornby
(2010) defines unemployment as the facts of a number of people not having a job; the number of people
without a job; the state of not having a job. Nigeria does not seem to have credible data on the rate of
unemployment (Udu and Agu, 2005) because no institution has been able to produce accurate figures
showing the current rate of unemployment (Udu and Agu, 2005).
The great need for entrepreneurship development in Nigeria today, more than ever, is necessitated by
the rate of unemployment and its effect on both the people and the nation and the need for small and
medium enterprises. According to Chukwubuikem, (2008) and Salami, (2011) despite the abundant
human and natural resources notwithstanding, Nigeria is still one of the poorest countries in the world
and has one of the highest rates of youth unemployment in sub-Sahara Africa, despite of its alleged strong
economic growth. Going by the study of unemployment in Nigeria, Adebayo (1999), Alanana (2003),
Echebiri (2005), Ayinde (2008), Morphy (2008 and Awogbenle and Iwuamadi (2010) have recognized
some leading causes of youth unemployment in Nigeria;
The first to be identified is the rapidly growing urban labour force arising from rural urban migration.
The factor is aggravated and provoked in Nigeria by the lack of infrastructural facilities, which makes the
rural life unattractive. Youths move to urban areas with the probability of getting lucrative and
productive employment in the industries. In addition, there is the focus of social amenities in the urban
centres. This implies that the rural areas are neglected in the allocation of social and economic
opportunities.
Another factor is the rapid population growth. Going by Nigeria National Bureau of Statistics of 2012,
the total population of citizens in Nigeria was around 166.2 million people, and projections for the future
indicate that the population could be over 180 million by the year 2020, given the annual growth rate of
3.2 percent (National Population Commission and ICF Macro, 2009). With this population, Nigeria is the
most populous nation in Africa and the high population growth rate has resulted in the rapid growth of
the labour force, which is far exceeding the supply of jobs.
www.ijm-apm.com

International Journal of Management

Corruption, which has pervaded the entire social structure of Nigeria, has raided the country of
developing a vibrant economic base. Funds meant for development projects have been misappropriated,
diverted, or embezzled and stashed away in foreign banks, while some ineffectual and corrupt
bureaucrats cum administrators in the public parastatals have discharged these establishments (Okafor,
2010). The ruling (political) class failed since they traded the vision, policy, and strategy, that should be
the thrust of every leadership with dealings (contract award and other mundane money- related
activities), as each successive government patiently took turns to target on the nations wealth, by using
public power, resources, good will, utilities, instrument of abuse, and personal gains (Okafor, 2005 as
cited in Anyadike, Emeh, and Ukah, 2012). As such, this cripples the economy and intensifies
unemployment that generates abject poverty, hunger and frustration which is killing the zeal and means
for entrepreneurship development in the Nigerian youths.
Adeniyi (2013) stated that statistics have shown that with the current drive, on the average, labour force
in Nigeria will be around 65.7 million a year between 2011 and 2020, and around 78.2 million a year
between 2021 and 2030, ceteris paribus (if there is no war, no natural disaster, no disease outbreak, etc.).
This projection may be realistic because it will take at least 20 years before any policy aimed at reducing
population can be effective in Nigeria. Adeniyi (2013) further explain however that, with the present
trend, employment will only be, on the average, 55.8 million a year between 2011 and 2020 and 65.7
million a year between 2021 and 2030 in Nigeria. This projection will cause unemployment in Nigeria to
be around 9.9 million (15.07% rate) and 12.45 million (15.93% rate) on average between 2011 and
2020, and 2021 and 2030, respectively Adeniyi (2013).

4. Entrepreneurship and Economic Development

Tijani-Alawiye (2004) describes entrepreneurship as a method of growing the stream of entrepreneurs
or increasing the number of existing small, medium and big businesses obtainable in the nation by
making and encouraging numerous talented entrepreneurs, that could effectively run inventive
enterprises, develop, grow and sustain them, in order to achieve extensive socio-economic objectives.
One of the aims of this is to sustain employment. Further, Acs and Szerb (2007) opine that
entrepreneurship goes round the blend of the realization of existence of opportunities and the decision to
commercialize them by beginning a new business. Thornton (1999) has referred to this cognitive as
demand and supply viewpoints of entrepreneurship dissertation.
However, Shepherd and Douglas (1997) perceived that the spirit of entrepreneurship development is
the capability to visualize and map a way for a fresh firm by merging data from the internal and the
external environments in the context of the unusual and indistinctness that a new business could face.
According to Anyadike, Emeh, and Ukah, (2012) Entrepreneurship, when treated as enterprisecreation assists to improve fresh talents and skills which can be used in several other exciting aspects of
life. Schnurr and Newing (1997) vindicated the necessity for encouraging entrepreneurship culture on
the premise that youth in every society have attractive qualities such as creativity, resourcefulness,
courage, energy, imagination, eagerness, determination, confidence and bravery that are cherished
characters and personalities for entrepreneurship development. In support of this claim, Bennell (2000)
suggests that agencies, international bodies and government that seek to develop youth employments
could best drive their empowerment goal by investing in the vitality of the youth and consolidate on this
resilient spirit of risk-taking via entrepreneurship development.
Entrepreneurship development has led to employment generation, which is also responsible for
growth of the economy and subsequently sustainable development. Precisely, indication from the
industrialized nations shows that economic growth is completely as a result of efficiency and quality of
the entrepreneur (Thaddeus, 2012). According to Schumpeter, (2008) entrepreneur play important role
in the capital and output growth of an economy. Capital growth is determined by the quality and
performance of entrepreneur, which also determines if the growth includes innovation which will
develop new products and different production techniques (Thaddeus, 2012). The quality of
entrepreneurs is responsible for the significant difference in economic growth rates of many countries of
the globe while factors of production such as land, labour, capital remain inactive and idle if they are not
organise by the entrepreneur for production (Thaddeus, 2012).

www.ijm-apm.com

International Journal of Management

According to Thaddeus (2012) the development of entrepreneurship has shown in various facets of
Nigerian economy through micro finance business, production of film and music, agricultural activities,
food restaurants, small and medium businesses. Thus, entrepreneur has become an important agent for
economic growth and technical progress. Global economy is currently knowledge-driven which operates
on the logical and advanced thoughts of the entrepreneurs, where business activities have become casual
and adapted to self-employment (Thaddeus, 2012).

5. Challenges of Entrepreneurship Development in Nigeria

Regardless of the benefits linked with entrepreneurship, lots of obstacles have disallowed youths from
totally realizing their potentials and assuming responsibilities in the society (Anyadike, Emeh, and Ukah,
2012). Gradually, People had moved out of farming into urban areas for lack of agricultural motivations
and incentives. Even in the urban areas and cities, infrastructure had continued to depreciate, roads not
cared for, irregular water supply, power outage was a regular phenomenon, and even for people who
could afford to use electricity- generating sets, fuel to power them is very expensive and sometimes
might not be available when needed. Instability and high turnover had negatively affected the
performance of primary institutions responsible for policy making, implementation and monitoring
resulting in distortions in the macroeconomic structure and its attendant low productivity. However,
these impediments have been specially classified by different authorities and scholars in their literatures.
The following sub-headings are drawn by Onwubiko (2011) as cited in Anyadike, Emeh, and Ukah,
(2012).

5.1. Lack of Infrastructural Facilities

People believe generally that some fundamental infrastructural facilities boost the development of mind
and the body system which contributes to productivity in a given environment (Anyadike, Emeh, and
Ukah, 2012). Such amenities include but not limited to good roads, good water supply, constant power,
and access to information and communication technology as well as other tools of trade. A situation
where these are missing in a country, the growth of the economy will be consequently affected. In
Nigeria, there is no enabling environment and basic working tools are not provided. Nigerians with
bright ideas and the spirit to bring about positive change in some areas of national life has been
frustrated with this situation. For example, the power sector has continued to be the greatest challenge to
any ambitious entrepreneur in Nigeria. There is irregular power supply and most of the time businesses
have to be run on generators. The cost of generating this alternative source of power often takes away
whatever capital or profit the entrepreneur has invested into the business.

5.2. Inadequate Working Capital

The availability of capital, according to Onwubiko (2011) is central to the creation and continued
existence of any enterprise irrespective of the objective, strategy and structure despite scholars such as
Onugu (2005) opines against lack of capital as the major problem of entrepreneurship development.
Adequate and sufficient fund has been observed to be essential for successful operations of entrepreneur
in Nigeria and where this is not available, it becomes a challenge. This is one of the major issues of
entrepreneurship as Banks are also unwilling to give out loans. They have very cumbersome and
rigorous procedures for accessing such credits with provision of collaterals that the potential
entrepreneur may not have.

5.3. Lack of Adequate Training

Inadequate training and skill for youth such that will prepare them for the future challenges as leaders of
business and agent of change is the consequence of contemporary entrepreneurship development in
Nigeria. Anyadike, Emeh, and Ukah, (2012) observed that the educational curriculum in Nigeria focuses
more on the theoretical aspect of training without a corresponding practical approach. Most employers
are therefore compelled to reorient their workers as a result of lack of fundamental knowledge of work
and ideas. Quality of life has been improved upon by technology through computer and the internet. It is
most unfortunate that in Nigeria except for the cities, the internet and other technology advances are not
www.ijm-apm.com

International Journal of Management

available in the rural areas where majority of the Nigerian youth are located. As such, youth are denied
the opportunity of skill acquisition, information gathering and other merits related to the global village.
This has made employers prefer experienced hired and makes it practically difficult for the young
individuals to gather the much needed experience, skill, familiarity with a work environment to invent a
successful enterprise.

6. Recommendation
Nigeria is a country with numerous business and investment potentials due to the abundant, vibrant and
dynamic human and natural resources it possesses. As good as this sound, Nigeria continues to
experience its bit of social, economic and political disruptions which have often inhibited its growth and
development into the regional economic power that it struggles to accomplish. Consequent to the
problems and incessant omen of entrepreneurship development, some dependable approaches that can
enhance effective entrepreneurship which will help control unemployment are highlighted as follows;
Basic infrastructural amenities should be provided by the government to encourage the
growth/expansion of entrepreneurial businesses in Nigeria. Credit agenda through micro-financing
banks should be made available with reasonable and affordable interest including subsidy to assist
entrepreneurs especially at the start. Government should redirect the educational curriculum to focus
more on practical aspect and also include entrepreneurial/vocational training programs as part of the
tertiary education system to equip youth with necessary entrepreneurial skills that will prepare them for
future challenges. The Nigerian government needs to shift from over-dependence on oil and place more
attention on the development of small & medium sized enterprises for sustainable economic growth in
Nigeria. There should be a sustainable entrepreneurship development in Nigeria if the government can
address and implement these recommendations effectively.

7. Conclusion
Small Medium Enterprises across the globe have been the foremost employer of labour at least in the
private sector and turning point of sustainable industrial development, although, this has not being
possible for the SMEs in Nigeria due to carelessness by the government (Alarape, 2014).
Entrepreneurship development in Nigeria is at the topmost of consciousness, creation and involvement
by the public and people, the controlled private sector and government at all levels. The policies of
government should move to address the problems of infrastructural deterioration and investment. The
problem of power supply remains a critical challenge. The issue of entrepreneurial training, skill and lack
of essential education remain unresolved. Innovation by Nigerian entrepreneurs transforms into efficient
production techniques and increase levels of output or economic growth. However, Nigerian
entrepreneurs still face problems and challenges in their struggle for growth and development.

8. References
Acs, Z. J. and Storey, D. J. (2004). Introduction: Entrepreneurship and Economic Development. Regional Studies, Vol.
38, No. 8, pp. 871-877
Adeniyi, J. A. (2013). Persistence of Unemployment in Nigeria. The Role of Output Growth and Population. The IUP
Journal of Applied Economics, Vol. 12, No. 4
Alarape, A. A. (2014). Developing the Entrepreneurial Orientation of Owner-Managers of Small and Medium
Enterprises in Nigeria. Ife PsychologIA ,Vol. 22, No. 1, pp. 218-231
Anyadike, N., Emeh, I. E. and Ukah, F. O. (2012). Entrepreneurship Development and Employment Generation in
Nigeria: Problems and Prospects. Universal Journal ofEducation and General Studies, Vol. 1, No. 4, pp. 088102
Apostol, T. and Jatuliaviien, G. (2009). Evaluation of Entrepreneurship Development Possibilities by Example of
Small And Medium Enterprises In The Republic Of Moldova. Vol. 19, No. 1, pp. 100-124
Ariyo, D. (2005). Small firms are the backbone of the Nigerian economy. http://www.africaeconomicanalysis.org.
Last Accessed 1 Nov. 2014
Binks, M. and Vale, P. (1990).Entrepreneurship and Economic Change. London: McGraw Hill.
Chu, H. M. Kara, O. and Benzing, C. (2008).An empirical study ofNigerian entrepreneurs: Success, motivations,
problems,
and
stress.
International
Journal
of
Business
Research,
Find
http://findarticles.com/p/articles/mi_6773/is_2_8/ai_n31121252/ Last Accessed 16 Aug, 2010.
Hornby. A. S. (2010). Oxford Advanced Learners Dictionary of Current English. Oxford: Oxford University Press.
International Labour Organisation, (2012). Global employment trends for youth 2012.
www.ijm-apm.com

International Journal of Management

http://www.ilo.org/wcmsp5/groups/public/...dgreports/comm/documents/publication/wcms-80976.pdf
Last Accessed 27 June 2014
Nicks, (2008): The History of Entrepreneurship in Nigeria.
http://bizcovering.com//history/the- history-of-entreprenership-in=-Nigeria. Last Accessed 30 Oct 2014
Onwubiko, C. M. (2011). Entrepreneurship and leadership; Nigeria and the Imperative For Youth Entrepreneurial
Development. Univers. J. Edu. and Gen. Stud. Vol. 1, No. 3, pp. 55-70
Oyelola, O. T., Ajiboshin, I. O., Raimi, L., Raheem, S. and Igwe, .C. N. (2013). Entrepreneurship for Sustainable
Economic Growth in Nigeria. Journal of Sustainable Development Studies, Vol. 2, No. 2, pp. 197-215
Raimi, L. and Towobola, W. L. (2011). Open Distance Learning (ODL): A Catalyst For Educational
and
Entrepreneurship Development in Nigeria. Continental Journal of Education ResearchVol. 4, No. 3, pp. 111
Schumpeter, J. A. 1934 (2008), The Theory of Economic Development: An Inquiry into Profits, Capital, Credit,
Interest and the Business Cycle, translated from the German by Redvers Opie, New Brunswick (U.S.A) and
London (U.K.): Transaction Publishers.
Sachs. J, Mcarthur. J, Schmid. T-Traub.G, Kruk. M, Bahadur. C, Fayem and Mccord, G. (2004): Ending Africas Poverty
Trap. Economics Studies Program, The Brookings Institute, Vol. 35, No. 1, pp. 117-240
Salami, C. G. E. (2011). Entrepreneurial Interventionism and Challenges of Youth Unemployment in Nigeria. Global
Journal of Management and Business Research, USA, Vol. 11, No. 7,
Schnurr, J. Newing, (1997). A Conceptual and Analytical Framework for Youth Enterprise and Livelihood Skills
Development. Defining an IDRC Niche, IDRC, Canada.
Thaddeus, E. (2012). Perspectives: Entrepreneurship Development & Growth of Enterprisesin Nigeria.
Entrepreneurial Practice Review, Vol. 2, No. 2
Thornton, P. H. (1999). The Sociology of Entrepreneurship. Annual Review of Sociology,Vol. 25, pp. 19-46.
Tijani-Alawiye, B. (2004). Entrepreneurship Processes and Small Business Management, Ilaro, Nigeria.
Udu, E. &Agu, G.A. (2005).New System Economics. Onitsha; Africana First Publishers Ltd.
World Bank, (2004). Partnership in Development: Progress In The Fight Against Poverty. Washington DC: World
Bank
AUTHORS
First Author AdebobolaZakariyahOlotu M.sc Candidate, University of Newcastle, Australia. MBA,

Nigeria.
E-mail address: olotubolaz@yahoo.com

www.ijm-apm.com

International Journal of Management