CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Many developing countries like Nigeria are faced with the crippling challenges of inequitable income distribution, low per capita income, extreme poverty and unemployment. As the world’s fifth largest exporter of crude oil and the largest economy in Africa, with millions of acres of arable land, and a wealth of human capital by virtue of its estimated population of over 180 million people, Nigeria has the right fundamentals to create employment to meet the needs of its teeming population.
Small businesses have the tendency to drive the economy of any country. Small businesses account for over 80% of enterprises that employ 75 % of the Nigeria’s total workforce.
Small businesses have strong influence on the development of any country, especially developing countries like Nigeria due to their potential to stimulate economic growth and create employment opportunities through entrepreneurship.
Entrepreneurship is an unwritten requirement for the social and economic development of any nation. Hence, small businesses are considered by several studies to be an engine of development and a veritable vehicle towards employment creation.
Small businesses are responsible for driving innovation and competition in many economies of the world. The proliferation of small businesses is expected to be an antidote to the monumental scale of unemployment in the developing economies because of its great potential for employment generation.
Small businesses also produce goods for exports, thereby generating additional foreign exchange and hence help to strengthen the national currency and the balance of payment position. They can be beneficial in the mitigation of rural urban migration, which is a vast socio-economic problem. They are also relevant in the improvement of local technology, mobilization of local resources, output diversification, development of indigenous entrepreneurship and forward integration.
1.2 Statement of the Problem
Small businesses are saddled with the expectation of providing a sustainable road map towards achieving economic growth and alleviating the problem of unemployment.
Most people start their own small businesses out of the quest to earn income for themselves. In the process, these small businesses flourish and they are able to transition from just self-employment to creating employment for other people.
The questions are whether small businesses contribute to employment generation and its sustainability? If small businesses contribute to income creation for those individuals engaged in them in Nigeria? What are the contributions of small businesses to poverty alleviation in Nigeria? What are the contributions of small businesses to economic growth in Nigeria? The study therefore aims to identify the role of small businesses in employment creation in Nigeria with a view to making recommendations.