THE RIGHT TREATMENT TO SMEs
AND ENTREPRENEURSHIP
EDUCATION UNDER THE
DEMOCRACY OF PRESIDENT
MUHAMMADU BUHARI
Mande Samaila, PhD.
(Associate Professor)
National Open University of Nigeria
mandesamaila@yahoo.com
08033285472
Outline
Introduction
Small and Medium Scale Enterprises (SMEs)
The Case for SMEs
Regulatory Environment for SMEs
What is Entrepreneurship Education?
Entrepreneurship Education
Entrepreneurship versus Small and Medium Scale Enterprises
The role of SMEs in National Development
The role of the Government in Developing SMEs and
Entrepreneurship Education
O Conclusion
O Recommendations
O References
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Introduction
O It is our desire as a Nation to stimulate growth in the
various sub-sectors of the economy. It is only when this
is achieved that we can begin to record significant
improvement in the living standard of Nigerians indeed,
during the pre-independence period, majority of
Nigerians were farmers.
O Self-employment and self-reliance were the order of the
day. Nonetheless, towards the beginning of
independence, many Nigerians, particularly the
educated elite took to white-collar jobs by taking over
the posts left by the colonial masters.
O This coupled with the oil boom of the 1970’s, made our
economy to depend solely on oil at the neglect of the
other sub-sectors of the economy.
Introduction
O It was in an attempt to revive the battered economy that
successive governments had come up with different rolling
plans; such as the austerity measures of the
Muritala/Obasanjo’s Administration (1976-1979) and the
structural adjustment programme of Babangida’s regime
(1985-1993), the deregulated and partially regulated
strategies of the Abacha’s (1993-1998) and the Abubakar
Abdulsalam’s Administration (1998-1999) respectively.
O Nevertheless, all these national policies fail to encourage the
expected economic and industrial growth; rather the economy
witnessed significant increase in our external portfolio. It is
imperative to note that majority of these policies suffer from
one reason to the other, ranging from policy contradictions,
policy somersault, non-continuity to lack of purpose and vision.
Introduction
O It is on this backbone, that the Obasanjo’s regime (1999-
2007) made for restructurings of the Nigerian economy, her
policy focus. Thus, his economic reforms were primarily
centered on market orientation, private sector led, selfemployment, self-reliance and technological driven.
O To this end, one of the instruments that Obasanjo’s regime
used was the promotion of the small and medium scale
enterprises (SMEs) and the development of creative and
entrepreneurial ability of its citizenry.
O The immediate past administration of Dr. Goodluck Jonathan
also contributed its quota to the development of SMEs in the
Country.
O All these leaves much to be expected of the new administration
of President Muhammadu Buhari.
Small and Medium Scale
Enterprises (SMEs)
O In Nigeria and worldwide, there seems to be no specific
definition of small business. Different authors, scholars, and
schools have different ideas as to the differences in capital
outlay, number of employees, sales turnover, fixed capital
investment, available plant and machinery, market share and
the level of development. These features equally vary from one
country to the other.
O In Nigeria, the Third National Development plan defined a
small scale business as a manufacturing establishment
employing less than ten people, or whose investment in
machinery and equipment does not exceed six hundred
thousand naira.
O The Federal Government Small Scale Industry Development
Plan of 1980 defined a small scale business in Nigeria as any
manufacturing process or service industry, with a capital not
exceeding N150,000 in manufacturing and equipment alone.
Small and Medium Scale
Enterprises (SMEs)
O The small scale industries association of Nigeria (1973)
defined small scale business as those having
investment (i.e. capital, land, building, and equipment of
up to N60,000 pre-SAP Value) and employing not more
than fifty persons.
O The Federal Ministry of Industries defined it as those
enterprises that cost not more than N500,000 (pre-SAP
Value) including working capital to set up.
O The Centre for Management Development (CMD) view of
small industry in the policy proposal submitted to the
federal government in 1982, defined small scale
industry as, “a manufacturing processing, or servicing
industry involved in a factory of production type of
operation, employing up to 50 full-time workers.
The Case for SMEs
O Small and Medium Scale Enterprises (SMEs) are
generally acknowledged as having huge
potentials for employment generation and
wealth creation in any economy. Hence interest
in their development continues to be in the
forefront of policy debates.
O Small and medium scale enterprises (SMEs)
have been recognised as indispensable
components of national development in both
developed and developing economies (Abrie and
Doussy, 2006; Lai and Arifin, 2011).
Regulatory Environment for
SMEs
O The regulatory environment constitutes an important
component required to ensure the growth and
development of a viable and vibrant SME sub-sector
of the economy.
O Policies and regulations targeted at the promotion of
SMEs in Nigeria can be traced to include:
O The Nigeria Enterprises Promotion Act No. 3 of
1997;
O Patent Right and Design Act No. 60 of 1979;
O Industrial Development Tax Act No. 2 of 1971,
among others.
Regulatory Environment for
SMEs
O Some micro lending institutions established to
enhance capacity and development of SMEs were
identified in Ogechukwu (2006) as including
O The defunct Nigerian Bank for Commerce and Industry
(NBCI),
O National Economic Reconstruction Fund (NERF), and
O The National Export and Import Bank (NEIB).
Regulatory Environment for
SMEs
O Others are the
O Bank of Industry (BOI),
O Small and Medium Scale Enterprises Development
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Agency of Nigeria (SMEDAN),
National Poverty Eradication Programme (NAPEP),
National Economic Empowerment and Development
Strategies (NEEDS),
Small and Medium Industries Equity Investment
Scheme (SMIEIS),
Small and Medium Enterprises Credit Guarantee
Scheme (SMECGS), and
The Microfinance Development Fund (MDF).
What is Entrepreneurship
Education?
O The Commission Communication (2006) defined
entrepreneurship education as the individual ability to turn
ideas into action. It includes creativity, innovation and risk
taking, as well as the ability to plan and manage projects in
order to achieve objectives. This support everyone in day to day
life at home and in society, makes employees more aware of
the context of their work and better able to seize opportunities,
and provide a foundation for entrepreneurs and enabling a
social and commercial activity.
O
O UNESCO (2008) stated that entrepreneurship education is
made up of all kinds of experiences that give students the
ability and vision of how to access and transform opportunities
of different kinds. It goes beyond business creation. It is about
increasing student’s ability to anticipate and respond to
societal changes.
What is Entrepreneurship
Education?
O It is also seen by UNESCO as education and training
which allows students to develop and use their creativity
and to take initiatives, responsibility and risks. To Lee &
Wong (2008) entrepreneurship education is a catalyst
for economic development and job creation in any
society.
O The above views show that entrepreneurship education
by its scope, nature and characteristics is a rebranding
education culture meant to guarantee a comprehensive
educational system re-engineering arising from the
obvious deficiencies of the existing education system. It
is aimed at equipping the students with requisite skills
and capacities needed in the world of work.
Entrepreneurship Education
O According to Cole (2005), an entrepreneur is an
organisation builder whose entrepreneurship perception
is not restricted sequence of decisions of an individual
or group of associated individuals, undertaken to initiate
and maintain a profit oriented business unit for the
production and distribution of economic goods and
services.
O Similarly, Koontz and O’Daniel in Afolaranmi (2003)
posited that an entrepreneur is a person who sees a
business the opportunity, obtains the needed capital,
know how to harness the operation successfully and has
the willingness to take a personal risk of success or
failure.
Entrepreneurship versus Small
and Medium Scale Enterprises
O The term ‘entrepreneurship’ is quite different small and
medium enterprises (SME). Entrepreneurship is used to
describe the ability to be creative, innovative, risk taking and
organizational process and functions of individuals who
initiate, run and nurture a business venture.
O It involves of identifying opportunities, creating or improving a
new or existing technologies, products or services, bearing the
accompanied risk and receiving resultant rewards.
O Drucker, (1985) in his work, ‘Entrepreneurship and Innovation’,
explained how entrepreneurship is different from SME.
Entrepreneurship, according to Drucker, is all about creating a
new thing, with added value and it involves a great deal of
innovation. This invariably means not every new or small
business can be said to be entrepreneurial.
The role of SMEs in National
Development
O Small scale industries have a lot of important
contributions to make to the economic development of
the country. Shokan, (2000) enumerated some of them
as follows:
O The provision of employment amongst the youth: a lot of
youths… retired workers and out of school graduates, are
now gainfully employed, thereby reducing the
unemployment rate, and its attendants social complication
of armed robbery and white collar crimes.
O It helps to bring about new goods and services and supply
the needs of large industries, which have to rely on the
small scale operators for business success. It satisfies the
convenience of consumers at any given time, with the
availability of products
The role of SMEs in National
Development
O They represent the overwhelming majority of industrial
capacity in developing countries.
O They promote the development of indigenous manpower as
well as increasing local participation in the manufacturing
sector.
O The activities of small business firms have resulted in the
mobilization of the resources of the environment and
thereby improving on the standard of living of the
population.
O They contribute to the development of the labour market by
absorbing an ever growing supply of goods, services and
labour.
The role of SMEs in National
Development
O They have accounted for a large percentage of
all businesses and a favourable percentage of
the nation’s gross national product.
O Other noticeable impacts are its contribution to
the development of indigenous
entrepreneurship.
O Mention is being made of the Dantatas,
Fajemirokuns, Igbinedions, Ekene Dili Chukwus,
Ilodibes, Dankabos, Dangotes, Adenuga and the
Amazus of Nigeria. These are successful
entrepreneurs.
The role of the Government
O There is a kind of relationship between business and
government and it is imperative for business
operators to understand that manner of relationship.
This is because the type of relationship that exists
between the government and business goes a long
way to determine the existence, growth and
development of the small scale business operator.
O The government is a super-body that exerts
enormous power in a given nation state. By this
implication, it has the capacity and ability to influence
almost every institution under its jurisdiction for
good.
The role of the Government
O Government acts as a business regulator with the overall aim
of helping to maintain a climate of confidence, sanity and to
stimulate the activities of the enterprises, so that they can
have the respect for the rule of competition. Obitayo (2001)
identified some of usual justification for government regulatory
activities in business including what they hope to achieve.
Among these are:
To achieve an environment permitting the enterprise to exist in an
atmosphere of stability and cooperation;
O To fix and distribute public and social burden in a supportable and
equitable manner, taking into consideration the differences in
sizes of various enterprises and the economic activity of the
country;
O To protect the interest of the consumer against exploitative actions
of business or specific measures against sub-standard or
dangerous products; etc.
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The role of the Government
O Experts argue that the infrastructural facilities created by
government helps in the growth of small scale business, by
facilitating the acquisition of required inputs. These facilities
are, the essential infrastructures that assist and promote
investment and growth of the SMEs. Some of them are;
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Provision of access roads;
Increased improvement in communication facilities like telephone,
postal services, and other telecommunication facilities like
internet and mobile phones.
Provision and expansion of electricity supply
Water expansion schemes to service industrial of business sites.
Construction of industrial layouts and estates;
Establishment and maintenance of an Export Processing Zone
(EPZ)
The role of the Government
O The provision of all these facilities helps the
small scale business to expand, through quick
movement of goods and services, expansion of
markets for products, and leads to a relatively
cheaper investment cost.
O The government has assisted small scale
business through the provision of some helpful
research institutions.
O The Nigerian Government often gives direct
financial assistance to business organization
Conclusion
O The secret behind the success of self-reliant strategy
is mainly in peoples positive attitudes to enterprise,
and in the extent to which the right incentive is
adequate enough to make risks worth taking, rather
than in any particular political philosophy.
O In the early stages of Japan’s Industrialization, her
economy was dominated by a large number of small
scale enterprises, who drew their strength not from
an abundance of capital, but rather from her vast
supply of labour, and the abundant advantages of
small scale industries.
O Nigeria and Nigerians need to learn and follow
Japan’s footsteps.
Recommendations
O The government ought to make a practical approach to poverty
alleviation by emphasising on the strength of the poor and
their productive capacity and not their weaknesses. For
example the country has an active vibrant young population,
fertile land, good social structures and good markets that
could demand the goods of these SMEs. All that is needed is
invest in these assets of the poor.
O There should be urgent and pragmatic effort to address lack of
funding and weak infrastructure among the constraints facing
SMEs. In this regard government should be apt and consistent
in its policies pertaining to SMEs to avoid policy summersaults.
Periodic evaluation of policies and engagement of experts in
designing policies will assist.
Recommendations
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The following policy recommendations are also proffered:
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The government is advised to assist the small scale producers by
improving infrastructural facilities and environmental infrastructures
such as road network, water, electricity, and communication.
Inefficiencies in these areas create additional costs to small-scale
manufacturers, and limit their growth.
The Government efforts on entrepreneurship development should move
from the drawing board of dailies to concrete and practical steps, that
are physical and graphical
Government should encourage willing entrepreneurs to establish SmallScale Foundries in various parts of Nigeria
Government should sensitize the people through the re-branding
campaign programme on the use of Locally Made Goods as a matter of
urgency
There should be a stable industrial policy on Small and Medium
Enterprise (SME) devoid of party colorations.
Apart from entrepreneur education, there should be entrepreneurship
and vocational centres in our tertiary institutions-Universities,
Polytechnics etc.
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