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POVERTY, UNEMPLOYMENT AND GROWTH IN NIGERIA: THE ROLE OF ENTREPRENEURSHIP

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POVERTY, UNEMPLOYMENT AND GROWTH IN NIGERIA: THE ROLE OF ENTREPRENEURSHIP
POVERTY, UNEMPLOYMENT AND GROWTH IN NIGERIA: THE ROLE OF
ENTREPRENEURSHIP

Raheem Olasupo Akewushola
Department of Business Administration and Management Technology
Lagos State University, Lagos, Nigeria.

Olawale Ibrahim Olateju
Department of Business Administration and Management Technology
Lagos State University, Lagos, Nigeria.

Oludare Tolulope Adeyemi
Dimension Consult Limited, Lagos, Nigeria

ABSTRACT
This paper identified crucial factors influencing the growth and development of entrepreneurship activity and specific role of entrepreneurship activity at ameliorating the burden of poverty, among people in Lagos State, Nigeria. It addresses specific causal factors, indices of poverty and unemployment and proffered panacea to the identified problems.

The choice of Lagos State was purposive because of its disposition as the commercial nucleus centre of the country. A multistage sampling procedure was adopted to get a sample size of 250 respondents. Descriptive statistics (such as frequency counts, percentages and means) were used to summarise and describe the data.

The findings reveal that entrepreneurial activities absorbs unemployed labour and reduces the dependency ratio of working class. It was also evident that optimum positive derivatives of entrepreneurship was not realized because of inherent problems of non-availability of accessible credit facilities and lack of multi-functional continuum of support to entrepreneurs. Keywords: Entrepreneurship, Poverty, Development, Growth, Unemployment.

1. Introduction

unresponsive

Poverty in Africa is substantially higher

Underlying this trend is the fact that the

than in other developing regions. More

majority of people have no jobs or secure

enigmatic is that poverty in Africa is chronic

sources of income. Various reasons have

and rising. The share of the total population

been given for Africa’s lack of response of

living below the $1 a day threshold of 46 per

poverty to economic growth. First is the

cent is higher today than in the 1980s and

inadequacy of the growth rate. African

1990s-this despite significant improvements

countries need to grow by an estimated 7 per

in the growth of African GDP in recent

cent a year to reduce poverty enough to

years. The implication: poverty has been

achieve Millennium Development Goal 1, of

157

to

economic

growth.

halving the number of poor people by 2015.

(National Bureau of Statistics, 1999). By

This growth is far higher than the average of

1999 when the last administration came to

nearly 4 per cent in the last decade. Second

power, estimates had it that more than 70%

is the low labour absorption in the growth

of Nigerians lived in poverty. That was why

sectors. Growth has been concentrated in the

last government declared in November 1999

traditionally

extractive

that the N470 billion budget for year 2000

sector. Agriculture, which employs most

was “to relieve poverty.” Before the National

people

is

Assembly even passed the 2000 budget, the

characterized by low productivity growth,

government got an approval to commit N10

and thus has not provided enough real

billion to poverty alleviation programme. In

employment and income security to the

the

population, particularly in rural areas. Third

increased

is

of

alleviation programme by 150%. This idea of

opportunities created by economic growth.

poverty alleviation was received with high

Poor

in

capital-intensive

most

inequality

people

African

in

the

lack

countries,

distribution

the

capacity

2001

budget, the the

government

allocation

to

has

poverty

to

hopes especially given the speed with which

meaningfully participate in the economy,

this present administration tackled the fuel

either as producers of goods and services or

problem as soon as it came to power. Poverty

as suppliers of labour. There is a close

alleviation was seen as a means through

association

employment

which the government can revamp the

performance and poverty prevalence: poverty

battered economy and rebuild selfesteem in

rates have remained roughly constant in the

majority

same manner as the recorded unemployment

dehumanized through past military regimes.

rate since the 1980s. And the volatility of

(Ogwumike and Aromolaran, 2002)

between

of

Nigerians

who

had

been

growth has added to the vulnerability of poor people. Only a few countries in Africa have

2. Literature review

sustained growth over the years. Yet that is

There is no completely satisfactory way of

precisely

defining poverty. The Longman Dictionary of

what

is

required

to increase

employment and reduce poverty.

Contemporary English defines it as a state of being poor. Atkanson (1984) provides an

The reduction of poverty is the most difficult

official definition of poverty as used by the

challenge

the

U.S. as “absolute poverty standard”. The

developing world where on the average

definition was based on nutritionally sound

majority of the population is considered poor.

food

Evidences in Nigeria show that the number

Agriculture where the average cost of the

of those in poverty has continued to increase.

family food plan is multiplied by 3 and the

For example, the number of those in poverty

resultant total is defined as the poverty line.

increased from 27% in 1980 to 46% in 1985;

Hence any situation that falls below such

it declined slightly to 42% in 1992, and

line is described as absolute poverty. In

increased very sharply to 67% in 1996

another study, Todaro (1985) defines poverty

facing

any

country

in

158

designed

by

the

Department

of

as a situation where a population or section

subsequent to the reference period, or

of a population is able to meet only its bare

because

subsistence essentials of food, clothing and

indefinite lay-off without pay.

they

were

on

temporary

or

shelter in order to maintain minimum levels of living. While poverty can be measured in

Underemployment on the other hand, is

terms in terms of income, in developed

measured by the number of hours worked.

world, it has been argued that inadequate

Those who work for less than 40 hours a

access to basic infrastructure like water,

week for involuntary reasons in Nigeria are

health

considered underemployed, (Englama 2001).

and

education

facilities,

transportation and even information will be important in

defining

poverty

in

a

According to Smith (1997), unemployment is

developing country like Nigeria (Olanrewaju

a stock concept. This is because the number

1996), (Onibokun et al. 1996). The view of

and identities of people in the labour

poverty in the rural sector is not new as the

category are always changing and thus affect

nature of rural economy is (which is absolute

the level of those in the market.

subsistence) has over a long time been a cause of poverty in the rural population.

Unemployment has also been categorized as one of the serious impediments to social

There

is

no

of

progress. Apart from representing a colossal

unemployment. In Britain for instance, the

waste of a country 's manpower resources, it

Department

of

precise

definition

as

generates welfare loss in terms of lower

unemployed any school-leaver who is not in

output thereby leading to lower income and

paid employment but who is available for

well-being,

work and is capable of working, (Olajide,

Unemployment is a very serious issue in

S.O.1981). The Census Bureau of the United

Africa,

States of America accepts Lloyd G. Reynold’s

(Englama 2001). The need to avert the

definition

“the

negative effects of unemployment has made

difference between the amount of labour

the tackling of unemployment problems to

offered at present wage levels and working

feature very prominently in the development

conditions and the amount of labour hired at

objectives of many developing countries.

those level”. According to a United Nations

Incidentally,

definitions, the unemployed consist of all

economies are also characterized by low

persons who, during the reference period,

productivity. Thus, it seems obvious to many

were not working but who were seeking

policy makers that there must be a straight

work for pay or profit, including those who

forward connection between productivity and

never worked before. Unemployed persons

employment/unemployment.

also include those who were not seeking

researchers posit that higher productivity

work because of temporary illness, because

may

they made arrangements to start a new job

2001)

of

Employment

unemployment

accepts

as

159

and

increase

(Olajide,

S.O.1981).

particularly

most

of

in

these

Nigeria,

countries '

While

unemployment

some

(Englama

3.

The

poverty

-

unemployment

growth, basic needs and rural development

relationship

approaches.

Poor people have severely limited access to, and control over, key assets, including land

4.1 The Pre-SAP Era

and physical and human capital. Lacking

During this era, poverty reduction was never

production and labour market endowments,

the direct focus of development planning and

the

management.

poor

have

low

income

and

low

Government

only

showed

consumption. Most poor people are also

concern for poverty reduction indirectly. For

inadequately educated and may be less

example, the objectives of the first National

healthy than the rest of the population.

Development Plan in Nigeria included the

Many depend for their livelihoods on (low

development of opportunities in health,

productivity) subsistence agriculture or on

employment and education as well as

the informal sector, where returns to labour

improvement

and capital are generally low. Workers in the

opportunities. These objectives, if achieved

informal sector have low salaries, limited

could no doubt lead to poverty alleviation.

protection

of

Similarly, the Fourth National Development

unemployment. These factors, coupled with

Plan, which appeared to be more precise in

lack of access to the institutions that shape

the specification of objectives that are

policies, prevent poor people from acquiring

associated

the

The

emphasized increase in real income of the

number of people living below the poverty

average citizen as well as reduction of

line only tells half the story. In Africa, not

income

only do many people live below the poverty

things,Ogwumike, (1987 and 1998). During

line but they also stay poor for long and

this era national development plans, many

sustained periods. Many of these chronically

of the programmes which were put in place

poor people only emerge briefly from poverty

in Nigeria by the government (either wholly

because of seasonal employment, but lack

or in association with international agencies)

the impetus to contribute to technological

had positive effects on poverty reduction

change and economic growth. Unable to

although the target population for some of

directly participate in the growth process, for

the programmes were not specified explicitly

this

as poor people or communities. (Ogwumike,

and

capabilities

group,

frequent

for

albeit

decent

spells

living.

insufficient,

overall

economic growth is necessary to boost their

of

access

with

to

poverty

inequality,

these

reduction,

among

other

1995 and 1998).

incomes.
4.2. Directorate of Food, roads and
4.

Poverty-unemployment

reduction

Rural Infrastructure (DFRRI)

strategies in Nigeria

The establishment of DFRRI was not only a

In Nigeria, the poverty alleviation measures

radical

implemented so far have focused more on

programmes,

departure but from also the

previous

recognized

the

complementaries associated with basic needs

160

such as food, shelter, potable water, etc.

Programme, therefore, tried to harness the

DFRRI had tremendous impact on the rural

potentials of rural women and thereby

areas. For instance, between the time of

impacted

inception in 1986 and 1993, DFRRI had

activities and incomes. (Ogwumike, 2002)

positively

on

their

economic

completed over 278,526 km of roads. Over
5,000 rural communities benefited from its

4.5. People’s Bank of Nigeria (PBN)

rural

This was set up to encourage savings and

electrification

programme

.

This

integrated approach to rural development,

provide

no doubt, provided for the necessary basic

underprivileged in both urban and rural

infrastructures

that

can

stimulate

credit

facilities

for

the

the

areas, Also, Community Banks (CB) were

growth of agro - allied small - scale

established to provide banking facilities for

enterprises in rural areas. (Ogwumike,

rural dwellers as well as to support micro -

2002).

enterprises in urban areas, (Oladeji and
Abiola, 1998). These two banking schemes

4.3.

The

National

Directorate

of

were established in recognition of the

Employment (NDE)

indispensable role of finance in poverty

This was the main organ for employment

alleviation

creation during this period. The objectives of

Although the two banking schemes had some

NDE include: to design and implement

success, many of their goals and objectives

programmes to combat mass unemployment;

were never realized. The schemes have been

and articulate policies aimed at developing

bedevilled

work programmes with labour intensive

including

potentials. Given that poverty manifests

mismanagement. For instance, late Tai

itself in the form of unemployment and

Solarin resigned as Chairman of peoples

underemployment, the schemes/Programmes

Bank because of alleged corruption/executive

of NDE could be said to have poverty

rascality that characterized the management

alleviation focus. (Ogwumike, 2002)

of the bank.

4.4. Better Life Programme (BLP)

4.6. Family Support Programme (FSP)

This was set up to enhance the quality of life

This was set up to provide health care

of rural women, among other objectives.

delivery, child welfare, youth development,

Poverty in Nigeria is a rural phenomenon

and improved nutritional status to families

and the rural women are worst hit by the

in rural areas. Also, the Family Economic

dreadful malady of poverty; this is due to

Advancement Programme (FEAP) was

lack of basic skill and education necessary

established to provide credit facilities to

for gainful employment. The targeting of

cooperative

women in the fight against poverty will no

establishment of cottage industries in both

doubt reduce significantly aggregate level of

rural and urban areas. The programme was

poverty in the country. The Better Life

also

161

and

with

employment

many

adverse

corruption

societies

designed

to

creation.

factors

and

to

create

support

gross

the

employment

opportunities at ward levels, encourage the

also funded from contributions given to it by

design and manufacture of appropriate

state and local governments, the private

plants, machinery and equipments, and

sector and special deductions from the

provide opportunities for the training of

Consolidated

ward - based business operators. (Oladeji

Government. It also gets donations from

and Abiola, 1998).

international donor agencies such as the
World

Fund

Bank,

the

of

the

Federal

United

Nations

Other several programmes such as National

Development

Agricultural Land Development Authority

Union, and the Department for International

(NALDA), the Agricultural Development

Development, the Japanese International

Programmes

Cooperation

(ADP),

and

the

Strategic

Grains Reserves Programmes (SGRP) have

Programme,

Agency,

the

and

European

the

German

Technical Assistance.

one way or the other impacted positively on the agricultural sector and by implication

When NAPEP came on stream in January

reduced poverty. Similarly, in the health,

2001, it was given a take-off grant of N6

education and housing sectors there are

billion ($42.8m). This money was used to

several poverty reducing programmes which

establish NAPEP structures in 36 states, the

were

Federal Capital

implemented.

For

example,

the

Primary Health Care Scheme and the

Territory, Abuja and 774 local government

Guinea

councils. Part of the money was also used in

Worm

Although

the

Eradication guinea Programme.

worm

eradication

the

NAPEP

employment

generation

programme recorded a tremendous success,

intervention which translated to the training

the effectiveness of the primary health care

of

programme was grossly reduced due to

unemployed graduates in various places of

inadequate funding, lack of equipment,

work, training of over 5000 people in

essential drugs and trained manpower,

tailoring

(Egware, 1997).

establishment of rural telephone networks in

100,000

and

youths,

fashion

attaching

design,

50,000

and

the

125 local government areas. Other uses to
5. Funding of Nigeria Poverty

which the money was utilized include of the

Eradication Programme (NAPEP)

delivery of the KEKE-NAPEP a three-

The Poverty Eradication Fund (PEF) which

wheeler vehicle project involving 2000 units

is administered by the National Poverty

in all the state capitals of Nigeria, the

Eradication Council (NAPEC) directly funds

establishment of 147 youth information

the

Eradication

centres across the senatorial districts, the

Programme. However, all poverty alleviation

delivery of informal micro credit ranging

programmes originally

for by

from N10,000 ($71) to N50,000 to 10,000

participating ministries will continue to be

beneficiaries most of whom were women,

funded from those budgetary provisions

and so on. (Elumilade, Asaolu and Adereti

under the supervision of NAPEC. NAPEP is

2006)

National

Poverty

budgeted

162

5.1 NAPEP Interventions in Poverty

• A vehicle that has a low fuel consumption

Alleviation and Employment Drive

of 38km per litre. (Elumilade, Asaolu and

From January 2001, NAPEP has intervened

Adereti 2006)

in a number of projects. So far, about
140,000 youths have been trained in more

6. Research methodology

than 190 practical hand-on trades over a

The area of study includes the five (5)

period of three months. Every trainee in this

divisions

intervention project was paid N3,000 ($21)

Ikorodu, Ikeja, Island and Badagry. Lagos

per month while N3,500 ($215) was paid to

State has a total land area of 358,861

each of the trainer. The training programme

hectares or 3,577 square kilometers and is

was packaged with the understanding that

located in the Southwestern part of Nigeria

beneficiaries would subsequently set up

on the narrow coastal plain of the Bight of

their own businesses in line with the skills

Benin. The State lies approximately between

they have acquired. To actualize this, 5,000

Longitudes 20421 and 30221 East of the

beneficiaries were resettled with assorted

Greenwich Meridian (London) and between

tailoring and fashion designing equipment.

Latitudes 60221 and 60421 North of the

Also

equator.

under the

Mandatory

Attachment

of

Lagos

State

namely

Epe,

Programme for unemployment graduates,
40,000 beneficiaries were attached in 2001,

It is bounded in the North and East by Ogun

each of whom was paid a monthly stipend of

State of Nigeria, in the West by the Republic

N10,000 ($71). The installation of equipment

of Benin, and stretches over 180 kilometers

under

is

along the Guinea Coast of the Bight of Benin

the

on the Atlantic Ocean. The method of

KEKENAPEP project is currently being

analysis was based on Descriptive statistics

vigorously implemented. The project offers:

(such as frequency counts, percentages,

• A vehicle with a powerful diesel engine,

means and standard deviations) were used

and a fuel tank capacity of 10.5 litres

to summarize and describe the data.

the

currently

Rural in Telephone

progress,

Project while • A vehicle with a passenger capacity of four people 6.1. Sampling Technique and Sample

• A vehicle with a payload capacity of 320kg

Size



A purposive selection using multi-stage

A

vehicle

with

adequate

room

for

passenger luggage

sampling technique was adopted in selecting

• A vehicle whose maximum speed is up to

(10) Communities. The communities are

80 km per hour

Temu and Noforija ( Epe Division), Imota

• A vehicle that is suitable for intracity

and Oriwu (Ikorodu Division) Idale and

commuting

Irewe ( Badagry Division) Surulere/Anikanle

and

commercial

passenger

and

carriage; and

Ijedodo,

(Island).

163

Sangotedo

and

Idi-Araba

In

each

of

communities,

the two randomly producer selected

high value industrial and services sectors,

co-operative

taking

societies were identified and purposively

advantage

of

globalization

opportunities.

chosen. In all two hundred and fifty (250) respondents were investigated based on

However, it was observed that traditional

strength of the communities and population

measures of alleviating poverty may not

size. Through the use of structured and

easily work in

unstructured

schedules

researched without radical changes in the

administered at two different periods within

assets ownership structure, credit structure

a month, the validity of the instrument was

e.t.c.

interview

the

communities

being

established.
The major findings are presented under
The Independent variable, Entrepreneurship

basic socio-economic variables, supportive

was measured by the number of businesses

variables and promotional infrastructure.

ventures which a respondent had and the total number of employees who worked for

Basic Socio-economic variables

him. The dependent variables-poverty and

We observed that 78.2 percent of the

unemployment was measured by number of

respondents were male while 21.8 percent

meals per day, informal borrowing from

was female, 33 percent of the population had

frauds, sales of Assets, underemployment

tertiary education with and average fairly

e.t.c. A total mark of five (5) was awarded

size of 8 members. The average age of

based on the response from the respondent.

respondents was 44.63 years, 87.6 percent of respondents are married, 8.1 percent are

7. Data analysis

widower and 4.3 percent are divorce. The

Frequency counts, percentages, means and

average income of respondents was N12,800

standard deviations were used to describe

per month. Majority of (39%) respondents

and summarize the data collected. The

are engaged in farming, and poultry (34%)

standard deviation was used to determine

and small proportion are simultaneously

the degree of dispersion of the means.

Civil Servant, transporters and fashion designers (18%). The findings reveal that

7.1. Discussions and Findings

most respondents had affiliations with the

This research finding depicts that the level

State

of paid employment in the selected areas is

Ministry of Rural Development (68.1%) and

very minimal and that decent employment is

(23.8%) benefited from the National Poverty

the main escape route out of poverty. The

Eradication Programme (NAPEP). About

prerequisites

67.3

for

creating

decent

Ministry

percent

of

of

Agriculture

the

(62.8%),

respondents

are

employments include the transformation of

registered members of different Co-operative

local communities from low productivity

thrift and Credit Societies and bearly 18.1

traditional agriculture to labor-intensive

percent had benefited directly from their Co-

164

operative societies. The active Co-operators

However, maternity centres and traditional

secured credit facilities that could aid their

health

entrepreneurship

Garri-

facilities

Boat

observed

Processing,

activities

Fishing

in

Processing,

centres in were

the

that

the

major

communities. major health
It

constraints

was to making, palm oil Processing Coconut-Local

investment (%) drive are lack of credit

mat, weaving and Fashion designing.

facilities (72.3%), lack of stable power supply

Sex of respondents (%)

(27.6%). It was also noted that most

Marital status of respondents (%)

government projects in the communities are

Mean age of respondents (years)

tailored towards benefiting a particular

Mean income of respondents (monthly)

section of the communities who are perhaps

Occupation of respondents (%)

political power brokers in the communities.

Supportive Infrastructure

8. Summary / recommendations and

These are the variables that assist the

conclusion

functioning of Entrepreneurship. The study

Decent employment is the main escape

revealed

the

route. A major route out of poverty in

their

Nigeria is decent employment, a concept

that

respondents

57.3

percent

admitted

of

that

communities had both feeder roads that are

that

motorable.

these

employment- rooted in productive and secure

communities were mainly through wells

jobs that provide adequate income and

(53.8%) streams (27.6%) and by water

reasonable work conditions-and the quantity

corporation (18.4%). Although, electricity

of

supply by Power Holding Company Nigeria

strengthens the link between economic

Limited

growth and aggregate poverty reduction.

Water

was

supply

highly

(%)

unstable,

to

but

it

encompasses

employment.

the

Decent

quality

of

employment

accounted for about (62.3%) of power supply

Prerequisites

(%), 37.7 percent of the Entrepreneurs in

employment include the transformation of

these communities have alternative source

African economies from low productivity

of electricity as a back-up mechanism.

traditional agriculture to labour-intensive

for

creating

decent

high value agriculture and agro processing
Promotional Variables

and to the growing industrial and services

These are variables and factors which are

sectors, taking advantage of globalization’s

directly

the

opportunities. Political leadership is thus

development of entrepreneurship. Analysis

and

indirectly

influence

required in managing African economies to

revealed that 35.8% of respondents admitted

give priority to broad-based employment

that postal services were available in their

creation

communities. Most communities had no

programmes, including poverty reduction

banking facilities and police security posts.

and Employment creation strategies.

165

in

national

development

This paper focuses on four key challenges for

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