THE ROLE OF SMALL AND MEDIUM ENTERPRISES ON EMPLOYMENT GENERATION

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Nigeria's unemployment problem, which affects both educated and unskilled workers, has emerged as one of the most pressing and contentious challenges facing the country today. The unemployment scenario has shifted from one characterized by protracted periods of unemployment and under employment to one in which graduates from higher institutions must typically wait for a considerable period of time before landing their first job – if they are lucky enough to land one at all. At the start of this millennium, the job problem has emerged as the most difficult issue affecting many countries throughout the world. Global economic conditions are bleak as a result of the ongoing global economic slump and the uncertainty surrounding economic growth expectations. Many economies were thrown into a deep recession as a result, and the ripple effects of this have harmed the employment markets (Hassan, 2013).

Bizarrely, Nigeria like other developing country has one of the appalling  rates of youth  unemployment in the world, with 60-65 percent of the population under the age of 25. (Federal Ministry of Labour and Productivity Report, 2008). The majority of them are young adults who have graduated from universities, polytechnics, or other institutes of higher learning in the past several years. Approximately 1.6 million people, largely young adults, graduate each year, according to the most recent available estimate. There are an additional 3.8 million certificate-carrying youths who have no formal education, or who have finished elementary and secondary school but have dropped out of higher institutions, who are poured into an already oversaturated labor market each year(Federal Ministry of Labour and Productivity Report, 2008).

Many of Nigeria's youngsters are not productive and have been reduced to small merchants and smugglers; in many instances, the development in the phenomena of it is apparent that the country's unemployment rate has reached an undesirable level in Nigeria. As a matter of fact, the labor market in Nigeria is perilously close to becoming saturated.

Concerned economists and policy analysts are urging the government to create a favorable environment for the operation of small and medium-sized enterprises (SMEs) because it has the potential to generate employment opportunities for the hordes of job-seeking Nigerians who swarm the streets in search of non-existent white-collar positions. Small and medium-sized enterprises (SMEs) represent for much over half of the entire share of employment sales and value created, according to previous research by Ogujiuba, Fadila, and Stiegher (2013) and Musa and Aisha (2012). Small and medium-sized enterprises (SMEs) are the most feasible and reliable vehicle for self-sustaining industrial growth because they have the potential to cultivate an indigenous company culture more effectively than any other technique. Small and medium-sized enterprises (SMEs) are the sub-sector that should receive special attention in any significant economic restructuring program that aims to generate employment, alleviate poverty, ensure food security, accelerate industrialisation, and reverse rural-to-urban migration.

Importantly, small and medium-sized enterprises (SMEs) have been a popular word in the business world for many years. This is due to the fact that the sector serves as a catalyst for the creation of jobs, national growth, poverty reduction, and overall economic development. When compared to the larger sectors, including multinational corporations, small and medium-sized enterprises (SMEs) throughout the world can claim of being the largest employers of labor (Kadiri, 2012). Because SMEs contribute to employment growth at a higher rate than larger firms, the performance and growth of small and medium-sized enterprises (SMEs) are important drivers and indicators of the level of industrialization, modernization, and urbanization, as well as gainful and meaningful employment for all those who are able and willing to work, equitable distribution of income, welfare, income per capital, and quality of life enjoyed by the citizenry (Aremu and Adeyemi, 2011). The small and medium-sized enterprise (SME) sector, which has gained international prominence, is seen as a key driver of economic growth and job creation in both emerging and developed countries (Kpleai, 2009).

1.2       STATEMENT OF PROBLEM

Without a doubt, Nigeria's objective of ranking among the world's top twenty economies by 2020 will be impossible to attain in a socioeconomic climate marked by hunger, poverty, and unemployment among a large part of the country's population. It is worth noting, however, that the imperialist-inherited age-long formal education produced graduates with job-seeking mindsets rather than job-creation mindsets; they thus lack entrepreneurial traits like self-motivation, drive, and innovation required by the world of work and employers of labor (Towobola and Raimi, 2011; Raimi et al., 2011; Simkovic, 2012).

Furthermore, with the nation's population expanding at a geometric proportion relative to job placement developing at an arithmetic progression, it became clear that the nation's formal education is fueling unemployment, crime, and the cycle of poverty as graduates were unable to be absorbed. It then dawned on the government that there is an urgent need to address the socio-economic implications of idleness and hopelessness, with policy observers urging the government to consider entrepreneurship education as a tool for reducing unemployment in Nigeria through the establishment of SME's, because the strength of any economy in the world requires the birth of a large number of small and medium enterprises. Anyanwu (2019), on the other hand, contended that, despite the existence of SME's, joblessness still  exist in Nigeria, and so he disputes to a considerable extent whether SME's have played any significant part in the supply of employment.  It is upon this premise  that this study seeks to the role of small and medium enterprises on employment generation.

1.3       OBJECTIVES OF THE STUDY

The major objective of the study is to examine the role of small and medium enterprises on employment generation using in Ogun state. Other specific objectives include;

i.          To examine the prevalence of unemployment in Ogun  State, Nigeria

ii.        To find out factors contributing to the high rate of unemployment in Ogun State.

iii.      To  ascertain the extent at which Small and Medium Enterprise has contributed to employment generation in Ogun State

iv.      To examine the role of the SMEs sector in empowering youth with self reliance in Ogun State.

1.4       RESEARCH QUESTIONS

The undertaking of this study will consider the following research questions:

i.          What is the prevalence of unemployment in Ogun  State, Nigeria?

ii.        What are the factors contributing to the high rate of unemployment in Ogun State?

iii.      What is the extent at which Small and Medium Enterprise has contributed to employment generation in Ogun State?

iv.      What is the role of the SMEs sector in empowering youth with self reliance in Ogun State.

1.5 SIGNIFICANCE OF THE STUDY

Findings of the study will provide a framework for government to make policies that are capable of encouraging the establishing, financing and sustaining of small and medium scale business by entrepreneur. The study will enlighten youth on the need to be self-reliant and delve into businesses instead of walking the the stress looking for government  white collar job. Empirically, the study will add to the body of existing literature and serve as reference material to scholars who wishes to conduct further studies in related field.

1.6 SCOPE OF THE STUDY

The scope of this study borders on the the role of small and medium enterprises on employment generation using in Ogun state. The study will further discuss  SMEs sector in empowering youth with self reliance. The study is however delimited selected secondary schools in Abeokuta metropolis in Ogun State.

1.7 LIMITATION OF STUDY

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size covering only youth in Abeokuta metropolis in Ogun State. Thus findings of this study cannot be used for generalization for other  states within Nigeria. Additionally, the researcher will simultaneously engage in this study with other academic work will impede maximum devotion to the research. Howbeit, despite the constraint encountered during the  research, all factors were downplayed in other to give the best and make the research successful.