Entrepreneurship development in Nigeria

By Nicholas Okoye and Peter Adigwe   |   01 September 2015   |   12:20 am  

Graph-2-CopyWITH current challenges in the global economy, new and innovative strategies are emerging in the bid to stimulate and sustain growth in national economies.

Entrepreneurship is one model that is deemed critical to the formulation and implementation of these strategies. Despite this, little is known about the profile of the Nigerian entrepreneur and how they engage with the constantly evolving policy context. This study therefore aimed at better understanding their characteristics as well as how they perceived certain key policies.

A cross-sectional online survey conducted in the first quarter of 2015 yielded a 61 per cent response rate (1235/2017). Majority of the sample were between 26 – 40 years (70 per cent), and were relatively well educated as indicated by the proportion that had at least a Bachelor’s degree (73 per cent). Most of the respondents were self-employed or in business (62 per cent), but a significant proportion were government workers (20 per cent). Regarding views on government policies, 45 per cent of the sample felt the agricultural sector had potential to make the most impact on national development, while a significantly less proportion had similar opinions about the information technology (16 per cent) and the entertainment (2 per cent) sectors. Majority (46 per cent) indicated that electronic mail was their preferred means of communication with respect to entrepreneurship issues.

Demographically, Nigerian entrepreneurs are similar to their international contemporaries. This study has also confirmed that there is considerable engagement with government policies among this group, particularly those in which entrepreneurship can play a critical role. New insight has emerged regarding engagement with entrepreneurship in Nigeria, which can improve efficiency as well as facilitate the development of contextual and effective policies. For instance, enabling cost effectiveness in communication and facilitating entrepreneurship among government workers. Adopting these approaches in the various relevant policies can help drive growth in the economy and improve other facets of national development.
Background
Entrepreneurship is becoming increasingly important in the development of many countries’ economic sectors. It is also a critical factor in the formulation and implementation of growth and improvement strategies in other relevant developmental sectors, nationally and internationally. It is therefore understandable that many countries now prioritise the development of policies aimed at encouraging entrepreneurship (Drucker, 1999).

Schumpeter (1934) was one of the earliest researchers to focus on understanding entrepreneurs. Prior to this, the majority of the literature did not clearly differentiate them from other actors in the area, for example, capitalists, business owners, managers and family owned businesses. His pioneering work described entrepreneurs as individuals whose function was to carry out new combinations of means of production. His argument was that the function played by entrepreneurs within an economic setting was fundamental to that economy’s development. This was his basis for justifying the need for entrepreneurs to be studied independent of business personae.

Other researchers have since built on this definition. Vesper (1980) identified that a significant proportion of the value that the entrepreneurs contribute to a system revolves around innovation. For instance, they are involved with the introduction of products to the market, as well as developing or inventing new methods of production. Another form of entrepreneurial innovation relates to the identification or emergence of new markets or sources of resources. Organisational or process reorganisation is another area where innovative ideas by entrepreneurs can add value by reducing costs and improving efficiency (Vesper, 1980).

Internationally, contemporary research has also endeavoured to gain a better understanding of entrepreneurs’ role, albeit from various pertinent perspectives. The majority of the literature has explored this from the perspective of business, finance and economics (for instance, Webb et al., 2005; Bertocco, 2007; Galloway et al., 2005; Casson and Wadeson, 2007). Other researchers have explored entrepreneurship from the social dimension (For instance, Shapero and Sokol, 1982; Licht and Siegel, 2005; Shaw and Carter, 2007), while others have investigated the influence of geographical location and other environmental factors on entrepreneurship (Chrisman, 1999; Kuratko, 2005). Another area where significant entrepreneurship research has been undertaken is with respect to understanding milieus that nurture entrepreneurial activity, or increase the propensity for entrepreneurship intent, particularly in academic institutions, and among young people (Roberts, 1991; Ayers, 1997).

Recently, the evidence suggests that the Nigerian government has begun to understand the importance of entrepreneurship. Nigeria Youth Entrepreneurship Network (NYENET), a public-private partnership initiative with Anabel Group was established to improve organisation and coordination of the various entrepreneurship programmes within the country.

Previously, the majority of entrepreneurship and empowerment programmes aimed at creating jobs, were situated in a number of unrelated agencies (NYENET, 2015). NYENET was therefore designed to be the platform for a formulation and implementation of a national entrepreneurship strategy. This would enable better management and harmonisation as well as significantly improve efficiency and effectiveness.

A review of the literature however revealed that within the Nigerian context, there has been little focus on understanding who entrepreneurs are and how they engage with entrepreneurship development. A significant proportion of the research in this area seemed to have focused on the role of small and medium enterprises in national economic development (for instance, Abereijo and Fayomi, 2005; Ayanda and Laraba; Oyefuga et al., 2008; Apulu and Ige, 2011). In terms of policy as well, there is a similar focus. The relative national prominence of the Small and Medium Enterprise Development Agency of Nigerian (SMEDAN) (Adelaja, 2004) compared to NYENET, appears to validate this.

While this organisational approach is understandable, it appears that entrepreneurs, who arguable should be the primary focus of the debate, have been neglected. This means that a knowledge gap currently exists with respect to a comprehensive and robust understanding of individuals who engage with entrepreneurship within the Nigerian setting.
Gaining new insight into the profile of entrepreneurs together with their role in economic and national development is not only important, but also exigent, particularly within the Nigerian setting. This is due to the widespread impact of the global crises at the end of the last decade (Mishkin, 2010), as well as the more recent slump in oil prices (Ogunshina, 2015), both of which have had significant impact on the Nigerian economy.
Against this backdrop, this study therefore aimed at understanding characteristics of individuals interested in entrepreneurship, together with their perceptions of the relevant policy framework that constitute the entrepreneurship milieu in the country.
Methods

Following the launch of the national entrepreneurship strategy, the various dominant themes that emerged during the workshops and debates formed the basis for the literature review underpinning this research project. A questionnaire was then developed to better understand the characteristics of those interested in entrepreneurship, as well as explore their views and experiences.

The questionnaire contained items on demographics as well as other items relating to various aspects of entrepreneurship training and development in Nigeria. Some items required the selection of relevant options, while others required an indication with specified levels of agreement or importance attributed to relevant options. These were measured by Likert scales (Oppenheim, 1992).

To ensure quality in the data management, the data collection tool was subjected to the relevant reliability and validity tests. Cronbach’s alpha was applied to the data collection tool and related items yielded scores between 0.65 and 0.79. This indicated that the items in the questionnaire demonstrated moderately robust internal consistency (De Vaus, 2004) .

Face and content validation were also carried out using an expert panel. Following validation, piloting of the questionnaire was carried out on a convenience sample of 20 respondents. The feedback did not result in any major changes and the data collected were included in the final results.

The online survey that commenced in March 2015 involved emailing an invitation to complete the questionnaire on the Kwik survey platform. This was sent to email accounts randomly selected from a sampling frame compiled from various privately and publicly held databases of individuals associated in one way or the other with entrepreneurship and leadership training, as well as small and medium enterprises in Nigeria.

Invalid emails due to various reasons such as discontinuation of accounts and incorrect addresses were voided. The final number of respondents invited to participate in the survey was 2017. A reminder was sent after one week and a further week was allowed for the completion, before the survey was closed. Data collection which lasted for three weeks was concluded in April 2015.

Following the importation of the collected data into SPSS, univariate analysis was carried out to yield descriptive statistics. Associations between variables were also tested for using cross tabulations and results were subjected to statistical tests. It was agreed apriori that a p value of 0.05 or less would represent the threshold for statistical significance.

Results and Discussion

In this section, the results of the study are presented together with the discussion. The response rate achieved in the survey carried out was 61% (1235/2017). In relation to the demographic data collected in the study, a number of insightful findings emerged.
All the predetermined age categories were represented in the respondents’ age range (see figure 1). About half of the sample belonged to the 26 to 34 year old group (49%). This is closely followed by the 34 to 40 year old group, who make up just under a quarter of the sample (21%). Interestingly, the findings of our study are in line with other studies that suggest this group form a significant proportion of the Nigerian population, who it could be argued constituted the bulk of the national workforce (Omoju and Abraham, 2014; Odeh and Okoye, 2014).

Collectively, individuals aged 18 to 40 constituted the overwhelming majority of the sample. This is reflective of the age range of individuals that have been associated with entrepreneurship in the extant international literature (Smith and Milner, 1983; Birley et al., 1987). In this regard, some insight into the age range of individuals that engage with entrepreneurship in Nigeria can contribute to how the relevant policies are formulated as well as implemented for this group. For instance, these findings can lead to more inclusiveness in training and funding opportunities for budding entrepreneurs.

In Nigeria currently, certain relevant advertised opportunities indicate that only applicants below thirty are qualified to apply. With our findings, what this means is that more than one-fifth of potential entrepreneurs will be automatically excluded.

Figure 2 presents the details relating to the type of educational training that the respondents have had. Here, over half of the sample indicated that they possessed a Bachelor’s degree (56 per cent), while just under a fifth had a Masters degree (17 per cent).

Although some evidence suggests that current educational curricula does not sufficiently address knowledge and training needs of entrepreneurs (Paul Dana, 2001), there is some indication that higher educational qualification contributes to a more robust engagement with entrepreneurship (Burke et al., 2002; Robertson et al., 2003).
For stakeholders however, this insight into the educational background of entrepreneurs can be invaluable for policymaking. For instance, better targeting of training programmes can improve the effectiveness and efficiency of workforce development strategies.
Figure 2: Highest educational level attained with respect to the employment status, the majority of the sample indicated that they were self-employed (36 per cent), while about a quarter indicated that they were business persons (26 per cent) (See figure 3). This was expected.
An interesting finding however emerged in this area. One fifth of these individuals interested in entrepreneurship were public servants (20 per cent). That is individuals currently employed either as civil servants or as public servants by the Nigerian government (FRN, 1999).

Dr. Nicholas Okoye is the Nigerian Leadership Summit Group, Lagos, while Dr. Obi Peter Adigwe is Consultant, National Assembly, Abuja, Nigeria.



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