Smes and Employment Generation

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CHAPTER ONE
INTRODUCTION.
1.1BACKGROUND OF THE STUDY.
The alarming rate of unemployment in the developing countries aptly described as “a waiting time bomb” [Owualah, 1999a] has been partly attributed to the population explosion being experienced by them. However, worsening the unemployment situation is the persistent lag in the growth rate of industrial employment in the face of the economic recession. In Nigeria’s case, industrial employment declined sharply as industrial and commercial activities were seriously affected by both external and internal factors. The shortage of employment became so acute, for instance, in the mid- 1980s, that Nigeria recorded a rate of unemployment of 10% in her urban cities and a little lower in the rural areas. [Umar, 1989]

In order to stem the rising tide of unemployment, especially among the Nigerian Youths, by consciously creating job opportunities with emphasis on self reliance and entrepreneurship, the National Directorate of Employment [NDE], was established by the Federal Government in January, 1987. At the inception, the NDE articulated for practical programmes which focused on creating jobs through self-employment. These include the Small - Scale Industries and Graduate Employment, the National Youth Employment Vocational Skills, Development of the Agricultural Sector Employment and Special Public works programmes. [Owualah, 1999b].

A part from the NDE, the role of the Small and Medium Scale Enterprises [SMES] in employment generation has long begged for recognition. The SMES are a major source of employment for a large majority of people.

They have a higher capacity for generating employment as their mode of operation are more labour-intensive. A very important rationale for promoting the SMES is their job creating potentials. This stems mostly from labour-intensive and subsequently, capital- saving methods of operation. This led to the SMES in Nigeria accounting for a higher percentage of industrial employment than the large scale industries. They accounted for about 70% of employment generated in 1987, for instance, and the situation has remained largely the same. [Onwumere, 2000].

More so, it had also been observed by Venkataraman [1984], that more jobs per unit of invested capital and per unit of energy consumed are created worldwide by the SMES than large scale enterprise. It is within this context therefore, that this study sets to investigate the role of the SMES in generating employment in Nigeria, in which, conclusion would be drawn from the analysis of survey data that would be collected from a randomly selected SMES in Ilorin Metropolis. 1.2STATEMENT OF THE RESEARCH PROBLEM.

There is no doubt about the fact that the Small and Medium Scale Enterprises [SMES] are the major source of employment in Nigeria. A very important rationale for promoting the SMES is their job-creating potentials. This stems mostly form their labour-intensive and subsequently capital saving method of operation [Owualah, 1999C].

However, the role of the SMES as a major source of employment in Nigeria has been constrained by certain problems, among which are infrastructural base, low entrepreneurial skills and multiplicity of policies etc... These inhibiting problems have greatly affected the operations of the SMES in generating employment opportunities for many unemployed people in the country.

Hence, this study intends to address the following problems: What is the trend of unemployment in Nigeria? What has been the role of the SMES in employment generation? To what extent has the SMES succeeded in generating employment for a large number of unemployed youth? What are the factors hindering the effective operation of the SMES in Nigeria?

1.3AIMS AND OBJECTIVES OF THE STUDY.
Specifically, this study is aimed at examining the contributions of the SMES towards employment generation in Nigeria. However, the general objectives are as follows: 1.To examine the nature...
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