The International Trade Centre (ITC), the joint agency of the United Nations and the World Trade Organisation released a new research – Our SME Competitiveness Outlook – last week which makes a compelling case for small and medium firms as the missing link to inclusive growth. It aims to provide annual guidance on where best to concentrate efforts to boost countries’ SME sectors.
SMEs, formally registered or otherwise, the research points out, account for nearly 70 percent of global employment which is why jobs remain the main channel through which people share in – or are left out of – economic growth. Boosting the competitiveness of SMEs thus means working for inclusive growth. But getting to that point isn’t easy as different factors like tax policies dis-incentivise growth; access to finance dries up the moment businesses become too big for micro-lenders; epileptic power supply and disjointed internet access often render SMEs uncompetitive.
In 2011, Mr. Bolaji Abdullahi, then Minister of Youths and Social Development tried to paint a picture of the unemployment crisis in the country while making a presentation to the Senate Committee on Youths and Women Affairs. He warned that then 41.6 percent unemployment rate is too high for comfort, drawing allusion that if the Arab Spring was triggered by a 25 percent unemployment rate, 41.6 percent is way too high.
This is the singular reason why the issue of entrepreneurship and entrepreneurship education should be taken seriously especially when viewed against the backdrop of another figure from the Bureau of Statistics which puts the youth unemployment rate at over 60 million out of a population of 150 million. Which society will be at peace with itself when more than half of its total labour force idles away? It can even be argued that this figure, high as it seems considering the paucity of reliable data in Nigeria, still leave out a high number of unemployed unaccounted for.
The reason is not farfetched, unemployment statistics tend to measure the percentage of the work force that does not have a job, is actually looking for employment, or is available to work. This leaves out a large number of people including those who failed to secure full time employment and have to make do with part time jobs, and several others who have given up their search for jobs, having become despondent and discouraged.
This “despondent and discouraged” group makes up a large percentage of the Nigerian unemployment market. Graduates, many of whom left the universities some as far back as ten years, have lost touch with what currently obtains in the job market, lack the skills for today’s rapidly changing landscape or are deemed too “old” to be employed.
Shouldn’t this serve as a wakeup call? If there is one country in the world that needs as a matter of urgency to get more of its youth off the streets, positively engaged, and in very productive ventures, it is Nigeria. The reasons are quite obvious for all to see. From frustration induced sectarian violence, high rates of political thuggery, kidnappings, armed robbery and other vices, all combined in a conundrum that now threatens the very existence of the country. The danger of having a bourgeoning youth population simply wasting away on a daily basis is scary.
Like I mentioned last week, Brig-Gen Johnson Olawumi deserves commendation for his initiatives since becoming the DG of NYSC. However, I will encourage the management to increase the number of beneficiaries from 1,000 after a possible review of the scheme after one year. I received several calls from individuals who said they never heard of the scheme until they read the first part of this article last week. This is a wakeup call that more publicity has to be done to get as many corps members as possible on board.
This, and similar jobs creation mechanisms is the reason I fully embrace entrepreneurship education in our schools. It is – and should be seen as – a lifelong learning process which start as early as primary school and progress through all levels of education. Entrepreneurship is a process and a journey but definitely not a destination. All the successful entrepreneurs like Bill Gates (Microsoft), Aliko Dangote (Dangote), Warren Buffet (Hathaway), Gordon Moore (Intel) Steve Jobs (Apple), Jack Welch (GE) Jamshedji Tata (Tata) and others all went through this process. They were all started by individuals and not governments; that’s the lesson for us all to learn.
No doubt, the biggest lesson of entrepreneurship lies in the fact that it helps in identifying and developing managerial capabilities. An entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of cost and benefits implications, and finally chooses the best alternative. This exercise helps in sharpening his decision making skills. Besides, these managerial capabilities have been used elsewhere in creating new technologies and products in place of older technologies and products resulting in higher performance.
When entrepreneurs assemble and coordinate physical, human and financial resources and direct them towards achievement of objectives they gain managerial skills. By also creating productive organisations, they help in making a wide variety of goods and services available to the society which results into higher standards of living for the people.
Since entrepreneurship involves creation and use of innovative ideas, maximisation of output from given resources, development of managerial skills, etc., it then point to the fact that all these factors are essential for the economic development of a country.
It is instructive to note that the 2012 Global Entrepreneurship Monitor (GEM) which provides an annual assessment of the entrepreneurial activity, aspirations and attitudes of individuals across a wide range of countries identified Nigeria as one of the most entrepreneurial countries in the world. The report states that 35 out of every 100 Nigerians are engaged in some kind of entrepreneurial activity, out of this, 21.7 percent of Nigerians aged between 18 and 64 years were preparing to start a new business, which is the second highest rate in sub-Saharan Africa, after Zambia.
Three years later (2015), another GEM survey noted that Nigeria leads the world in the proportion of the population who believe they have the skills to run a business, with almost 90 percent of Nigerian adults believing they have the ability to become entrepreneurs. The result of the survey shows that out of every 100 Nigerian adults, 35 are involved in some sort of entrepreneurial activities. It added that Nigerians are not deterred by fear that their new enterprise will fail. Only 21 percent were concerned by this risk.
All the new entrepreneurs captured in the survey report that finding financing for their ventures is a barrier to creating and growing an enterprise, while lack of access to finance is the major reason for the discontinuance of an enterprise. There are few domestic equity sources, as well as limited sources of export finance for SMEs’ to tap into. Participation in the stock market is nonexistent due to their inability to meet the listing requirements, as well as their persistent tendency to operate as much as possible in the informal sector.
Addressing the chronic issue of unemployment lies more on the leverage of SME’s – small and medium. The unemployment crisis and inefficient income distribution among most states and communities within Nigeria can be tackled by expanding and investing in SME’s. They also contribute immensely to the output of the economy. Research findings shows that a greater percentage of Nigerian’s work for SME’s i.e. businesses less than 150 employees.
Although NYSC, through its Skills Acquisition and Entrepreneurship Development (SAED) initiative, has been promoting entrepreneurship the program has not been as effective as some would want it to. Part of this is attributed to the fact that corps members are usually engaged in other activities during the service year. It is however expected that the BoI partnership will pave the way for a new burst of energy in tackling unemployment among our graduates.
