The Effect of Equity Financing on Entrepreneurship Business Development in Lagos State, Nigeria

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IJMBs Vol. 1, Issue 2, June 2011

I S S N : 2 3 3 0 - 9 5 1 9 (O n l i n e ) | I S S N : 2 2 3 1-2463 ( P r in t)

The Effect of Equity Financing on Entrepreneurship Business Development in Lagos State, Nigeria 1

Akanbi, Moses Ayokunle, 2 Akinbola Olufemi Amos, 3Ogbari Mercy Ejovwokeoghene 2,3

Dept. Of Economics And Development Studies Dept. Of Business Studies, Covenant University, Canaan Land, Ota, Ogun State, Nigeria 1

Abstract The paper investigates the effect of equity form of financing on entrepreneurship business development in Lagos State, Nigeria. A total sample size of 240 business enterprise of various categories was interviewed in three Local governments (Lagos Island, Ojo and Alimosho) in Lagos state through the administration of questionnaires. Frequency table and descriptive statistics were used to analyze the data collected. The result obtained from frequency indicated that65% of entrepreneurs indicated that government programmes such as: NERFUND, CBN, SSICS, NBCI funding of small-scale enterprise has been assisting entrepreneurship business development. Also, the greater proportion of entrepreneurs agreed that they took short term loans to finance their businesses. However, one of the findings from hypotheses testing clarified that there was positive effect of equity financing on entrepreneurship business development in Lagos state. The paper hereby recommends that Banks should cooperate more in assisting small-scale entrepreneurs to grow, and not just granting them short term loans so that the country’s (Nigeria’s) business unit can develop more. Keywords Entrepreneurship, Equity financing, Short term and Long term I. Background of the Study Business is literarily said to mean busyness or the state of being busy or any activity which keeps a man busy about. Economically, business means work, effort and acts of people, which are connected, with the production of wealth [6]. Functionally by business, we mean those human activities which are connected with the production of wealth, purchases of goods with the objective of selling them at a profit. While in the words of Urwick and Hunt [11], business is any article or service, which other members of the community needs and are able and willing to pay for. Therefore business is concerned with producing and selling for profit. Business comprises of production or acquisition of goods, sale or transfer or title, dealings in goods and services, regularity of dealings, profits as a reward for services, rendered and finally uncertainty or risk about future. Entrepreneurship is the process of identifying viable business opportunities and tapping them. Akeredolu [1], said that Entrepreneurship is the practice of starting new organization, particularly new business by forcing creative destruction across markets and industries thereby simultaneously creating new products and business models elimination orders by creative destruction. Robin and Sue [8]; buttressed that entrepreneurship also entails being largely responsible for the dynamism of industries and long-run economic growth. Also, Entrepreneurship is about taking risk, and the process of discovering, evaluating and exploiting opportunities [5]. Therefore, Entrepreneur is that kind of person that is willing to put his career and financial security on the line for an idea, spending his time and capital in an uncertain venture. He is

someone who acts without regards to the resources currently under his control in relentless pursuit of opportunities. Significant attention has been focused on Small Scale Enterprises (SSE) in developing nations because of their potentials for diversification and expansion of industrial production as well as the role they play in the attainment of the basic objective of development. However, Jose etal. [3], emphasized that small scale enterprises utilize the large labour surplus that exists. In developing economies, they yield quick returns and given their initial...
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