ABSTRACT
The study examined the effect of educational qualifications on entrepreneurs and performance of small
and medium scale enterprises
in Mainland Local Government Area of Lagos State, Nigeria. In this study,
relevant and extensive literatures were reviewed under sub-headings. The
descriptive research survey was used in the assessment of the opinions of the
selected respondents with the adoption of the questionnaire and the sampling
technique. A total of 100 (One Hundred) respondents were selected and used as
samples for this study, the respondents were made up of (50 males and 50
females). A total of four null hypotheses were generated and used in this study
using both the percentage frequency counts and the t-test statistical tools at
0.05 level of significance. At the end of the data analyses, the following
results were generated: hypothesis one found that there is a significant effect
of educational qualifications and performance of entrepreneurs in
small and medium enterprises
in Lagos State Nigeria, hypothesis two showed that there is a significant
gender difference in the management of small and medium scale enterprises due
to educational qualifications of the entrepreneurs in Lagos State while hypothesis three indicated that the
effective management of small and medium scale enterprises significantly
depend on the educational qualifications of the entrepreneurs in Lagos State, Nigeria and finally, hypothesis four revealed
that there is a significant gender difference in the successful management of
small and medium scale enterprises in Lagos State, Nigeria.
Background of the Study
In the
present day economies of the world, small and medium scale enterprises have
come to be recognized as veritable engines of growth, employment, poverty
reduction and innovative development. Government of various nations and indeed,
world economic development and financial institutions such as the Brethonwood
Institution, International Monetary Fund, the World Bank, and the United
Nations have all in recognition of the potentials of SMEs, embarked on deliberate
developmental policies aimed at creating a productive base for world economies
(Englama, 1997).
The
educational qualification of an entrepreneur who engages in the small and
medium scale enterprises is very paramount for the success of the enterprise.
This is because, if the small and medium scale enterprises are owned and
handled by the educated individuals, the resultant effect will be business boom
and success of the small and medium businesses (Anyanwu, 2004). According to
Adeosun (2006), many businesses in Nigeria, especially the small and medium
scale enterprises do not thrive because their owners are not well educated and
in some cases, are total illiterates who are not well disposed to possess the
required educational ability and skills to handle successful business
enterprises such as the small and medium scale enterprises.
As
Onyema (2007), observes that, the academic qualification or educational level
of an individual businessman is important for success in the business world.
According to Onyema, in Nigeria, where unemployment is high, individual
citizens, especially the school leavers/graduates of the Nigerian tertiary
institutions ought to engage themselves in the small and medium scale
enterprises so as to avoid hoping against hope in looking for the jobs that are
non-available. As emphasized by Harper (1995), with the large increase in world
population (especially Nigerian and many developing countries) “governments can
certainly not afford to employ many more. Also the large scale industry
has dramatically failed to absorb more than a tiny fraction of the multitudes
who need jobs. In many countries, small enterprises are possibly the hope
of employment creation, and it is hardly surprising that policy-makers in
developing nations and almost everywhere else have so eagerly strived to
promote and encourage them”. The availability of efficient infrastructural
services is a key requirement for the take-off of private investment (CBN,
2000).
Reflecting
countries experiences in the performance of small and medium scale enterprises,
SMEs employ more than 50 percent of the industrial workforce in Columbia,
India, Indonesia, Kenya, Philippines, Tanzania and Zambia. They are the real
job creators in the European Union (EU) accounting for 99.9 percent of 11.6
million enterprises (excluding enterprises in agriculture, fishing and other
sectors, 72 per cent employment of the 80.7 million persons employed by all
enterprises, and generate 69.7% percent of turn-over in EU (Deloittee, Touche
and Tohmatsu, 1995). SMEs were equally responsible for more than 50 per cent of
total employment in Canada (Government of Ontario, 1995).
Studies
have shown that, SMEs have in many countries, provided the mechanism for
stimulating indigenous entrepreneurship, enhancing greater employment
opportunities per unit of capital invested and aiding the development of local
technology (Sule, 1986; World Bank, 1995). They help to mobilize savings for
investment and promote the use of local raw materials. Through their dispersal
nation-wide, they contribute to more equitable income distribution among
individuals and regions, as well as mitigate rural-urban migration.
In view
of these advantages, greater attention has been given to the promotion of SMEs
globally as tool for poverty alleviation and economic development. Even in the
most buoyant economies, such as the United State of America, small scale
enterprises have played an important role in her transition from the industrial
age of the post industrial information technology era. Also, in other countries
like Japan and South Korea, the use of sophisticated technology has reduced to
the minimum efficient scale of production in industries known for product
innovation, such as the electronics and computer industries (Olorunshola,
2000).
In the
same vein, the Nigeria budget for 2003 was designed among other things to
reduce poverty. According to Sanusi (2003), it is “to pursue macroeconomic
policies and sector growth strategy that will achieve fiscal stability, improve
non-oil sector competitiveness, lower levels of inflation, fix stable and
competitive exchange rate in order to engender growth and reduce poverty
through increased employment”. Specifically, attention has been directed at the
development of small and medium scale enterprises with the aim of turning them
into engines of growth for the various economies.
Various
problems confront its growth and hence, the objective of its establishment and
management as engine of growth. These include among others, lack of
information; lack of management and technical skills; poor ethical values, lack
of transparency; lack of proper policy formulation and implementation; and
above all, lack of quality education on the side of the small and medium scale
entrepreneurs in Nigeria.
Many
entrepreneurs in Nigeria have failed in their businesses due to lack of proper
education which gives one the ability to manage and coordinate vital issues
that could lead to success in any undertaken by an individual businessman or
woman. Majority of the business men and women have failed in their small
business ventures due to lack of education which has made them to exhibit poor
management and expansion of their business enterprises. Above all, the small
and medium scale industries failed to achieve the desired economic growth due
to poor managerial skills of the entrepreneurs and their lack of education.
In
Nigeria, as in most countries of the world both developed and developing, small
and medium scale enterprises are faced with a number of problems which seem
insurmountable. Often the nature has been that the only problem which SMEs face
is that of inadequate acquisition of educational qualification and that all
other problems are sub-summed under it (Agundu, 2003). In as much as it is
acknowledged that the problem of inadequate acquisition of needed educational
qualification by the entrepreneur is a major impediment to the development of
small industries, most especially in the developing countries like Nigeria,
other problems such as poor transportation, inadequate and inefficient
infrastructural facilities and lack of sufficient funds, are also predominant.
Bureaucratic and inefficiency in the administration of incentives discourage
rather than promote SME growth. Multiplicity of regulatory agencies and taxes
has always resulted in high cost of doing business and poor management
practices and low entrepreneurial skill arising from inadequate educational and
technical background of many SMEs promoter. Weak demand for products, arising
from low and dwindling consumer purchasing power and lack of patronage for
locally produced goods by those in authority. All these problems should be
recognized as inhibiting the development of SMEs (Ausbeth, 2004).
The
problem of inadequate and inefficient infrastructural facilities has been a
major handicap to the meaningful development of SMEs in Nigeria. These problems
include lack of regular power supply especially in the rural areas. Lack of
access to good roads, and housing militate against efficient production and
distribution of goods and services (Agabi, 2006). The problem of inadequate
infrastructural facilities particularly in the rural areas has frustrated the
promotion of SMEs in such manner as to providing a lasting solution to the
current problem of spatial imbalance in the distribution of industries between
the rural and urban areas, and to check the perennial rural-urban drift which
increases social tension in urban cities in Nigeria.
Additionally,
there is weak demand for products and service of SMEs arising from low and
dwindling consumer purchasing power. They are faced with undue competition from
already well established firms in the industry where they belong or choose to
enter (Funtula, 2005). All strong economies in the world today have a very
dynamic small and medium scale industrial sector. This sector has been the
backbone in the transformation of young and developing economies into very
complex and advanced economies, which are characterized by very high
productivity and high per capita income. A large number of today’s big business
and even multi-nationals started as family business in the small and medium
scale industrial sector. Through growth and expansion, their businesses
developed in managerial and professional expertise to become medium or large scale
ventures, (Nwankwo, 1981).
The
benefits of SMEs are well documented in the literature and would be summarized
here to put into proper perspective the issues involved. They provide an
effective means of stimulating indigenous entrepreneurship, create greater
employment opportunities per unit of capital invested and aid the development
of local technology. Through their wide dispersal, they provide an effective
means of mitigating rural-urban migration and resources utilization. According
to Adeleke (2000), by producing intermediate products for use in large scale
enterprises, they contribute to the strengthening of industrial inter linkages.
Small enterprises are known to adapt with greater ease under difficult and
changing circumstances because their typically low capital intensity allow
products lines and inputs to be changed at relatively low cost. They also
retain a competitive advantage over large enterprises by serving dispersed
local markets and produce various goods with low scale economies for niche
markets (Ndu, 1998).
SMEs
also serve as veritable means of mobilization and utilization of domestic
savings as well as increased efficiency through cost-reduction and greater
flexibility. To ensure actualization of their benefits, programmes of assistance
in the area of education, finance, extension, advisory services, training and
provision of infrastructural facilities were designed by the government for the
development of SMEs. Too many challenges face the small and medium enterprises
in Lagos State. Among the problems are the issues of lack of education among
the entrepreneurs who manage these small and medium scale businesses in the
state. It is very disheartening to note that majority of the entrepreneurs who
run their businesses locally, do not have the requisite educational
qualification that will enable them to manage their enterprises effectively.
Little wonder the collapse of many small and medium scale business enterprises
in Nigeria, especially in Lagos State where most of the businesses are carried
out.
Lack of
education among the small and medium entrepreneurs, has caused them to suffer
the dearth of business information that are necessary for the growth and
success of their business enterprises. Not only that, due to the receipt of
half or non-education by the owners of the small and medium scale enterprises,
their required managerial skills with which to pilot effectively the daily
routine of the business venture is non-existent. Therefore, these entrepreneurs
continue to manage their businesses on trial- and- error basis, which often
times has resulted in the lost of capital, stunted growth of the businesses
which by extension, has affected the Nigerian economy adversely and the
collapse of the businesses, which equally, has resulted in the loss of manpower
and the resultant unemployment and idleness which are the causes of
restiveness, killings, kidnappings and other vices in the society these days.
The
poor management of businesses by the entrepreneurs, who are basically
uneducated, has brought unhealthiness in the Nigerian economic growth and
development. This is because, the uneducated managers of the enterprises in
Lagos State in particular, have lost focus due to their ignorance and the
ability to coordinate the business ventures effectively and efficiently for the
boosting of the economy in the state. Their failure to manage well, has led to
loss of business opportunities to other up-coming Nigerians, especially the
youths who are now skeptical and confused on the best business ventures to go
into because they have seen the failure of the previous business attempts by
others who were there before them.
1.2 Statement of the Problem
One
of the critical problems facing the economic growth in Africa Sub-Sahara and
indeed, developing countries generally is the problem of harnessing the
resources to achieve the desired goals through the acquisition of educational
qualifications by the entrepreneurs. Other factors identified as major issues
facing rapid development of the small and medium scale enterprises in Nigeria
are poor managerial skills, inadequate infrastructure, internal challenges and
some external forces. The central issue in the study is, does educational
qualifications of entrepreneurs actually affect performance in
small and medium scale enterprises?
1.3 Purpose of the Study
The
purpose of this study is to:
(2)
Examine whether the performance of small and medium scale businesses is based
on the managerial skills of the entrepreneurs.
(4)
Determine whether there is gender difference in the successful management of
small and medium scale enterprises due to educational
qualifications.
1.4 Research Questions
The
following research questions were raised in this study:
(2)
How can the managerial skills of entrepreneurs affect the success/performance
of small and medium scale enterprises in Lagos State?
(4)
Will there be gender difference in the management of small and medium scale
enterprises due to educational qualifications?
1.5 Research Hypotheses
The
following research hypotheses were formulated and tested in this study:
(4)
There will be no significant gender difference in the successful management of
small and medium scale enterprises in Lagos State.
1.6 Scope and Delimitation of the Study
Stonik
Enterprises Ltd.
Ejike
–Eme Auto Parts.
Emako
Auto Enterprises.
Lordswill
Nigeria Enterprises.
All
the above small and medium scale enterprises are located in the Mainland Local
Government Area of Lagos State, Nigeria.
1.7 Significance of the Study
The
study may be beneficial in the following dimensions:
Adult
education facilitators may benefit from the findings and recommendations of
this study, because, it may afford them the opportunity to learn deeply, the
effect of education on successful management of small and medium scale
enterprises in Nigeria in general and Lagos State in particular.
The
adult education students may be able to learn more on what connotes small and
medium scale enterprises and how the level of education of an individual
affects his handling or management of the enterprises.
The
school authorities may be in-the-know concerning the kind of education they
would give to an individual in order to equip him/her to be able to manage
effectively the small and medium enterprises he/she owns.
With
the findings and recommendations of the study, governments of the Federal,
States and Local Governments may be able to know that establishment of small
and medium scale enterprises is important to curb the issue of unemployment and
over-dependence on government for employment.
The
members of the society may be able to understand the importance of effective
management of small and medium scale enterprises in Nigeria as an engine for
effective development in the country, especially in the aspect of the economy.
1.8 Definition of Terms
Small - Scale Industry: An industry with a
labour size of 11-100 workers or a total cost of not more than N50 million,
including working capital but, excluding cost of land.
Medium Scale Industry: An industry with a labour
size of between 101-300 worker’s or a total cost of over N50million, but not
more than N200million, including working capital, but, excluding cost of land.
Educational Qualification: This means the
academic qualification of an individual, especially the entrepreneurs of the
small and medium scale enterprises.
Performance: This refers to the level
of activity put in by an individual either in his/her work or any other
activities be it in education, organization etc.
