ENTREPRENEURS ARE THE CREATIVE FORCE IN THE ECONOMY: IS THE NIGERIAN GOVERNMENT HELPING OR HINDERING THEM? WAY FORWARD
The socio-economic question of why some nations are rich and others languishing behind in abject poverty has been a subject of debate for over two centuries, since the advent of the industrial revolution in 18th and 19th centuries in Europe and America respectively. While Keynes advocated the use of government fiscal and monetary policies to regulating the economy, it is now widely agreed upon that the entrepreneurs are the creative force towards achieving economic prosperity in this globalization era of 21st century.
The significant question now is that, has the Nigerian government been able to helping the entrepreneurs or hindering their creative ingenuity? Whatever the response may be, we should be mindful of the various efforts of the government towards entrepreneurial development and the shortcomings that have limited the creative potentials of the entrepreneurs in Nigeria as analyzed subsequently, before making suggestions on the way forward.
Who are Entrepreneurs?
Entrepreneurs have been described diversely by different experts across the world. According to Russell S. Sobel Concise Encyclopedia of Economics, the word ‘entrepreneur’ originates from a thirteenth century French verb ‘entreprendre’ meaning ‘to do something’ or ‘to undertake’. However, the word ‘entrepreneur’ was coined by a French economist named Jean-Baptiste Say in 1723 to mean a ‘planner’.
But the fact is that an Irish-French economist called Richard Cantillon (1680-1734) defined the term ‘entrepreneur’ first in his Essai sur la Nature du Commerce en General. He considered the entrepreneur to be a person who start-up business and assumes uncertain risk. Entrepreneur has also been described as any person, man or woman who establishes and manages business enterprises or artistry ventures in the cause of earning a living.
In adherence to a notable Austrian economist Joseph Schumpeter, sees the entrepreneur as an innovator who introduces entrepreneurial change within the market and converts a new idea or invention into a successful innovation through the gale of creative destruction.
In today’s world, it will be observed that the small and medium enterprises are those businesses that grow to becoming larger ones; depending on the level of their natural or nurtured creativity to introducing new business ideas and the environment they operate their businesses that determine their successes both in the short-run and long-run.
Why Entrepreneurs are the Creative Force in the Economy?
The beauty of the entrepreneurs as the creative force in the economy according to Adam Smith essay titled The Wealth of Nation (1776) posited that ‘as every individual… endeavours as much as he can both to employ his capital in the support of domestic industry…he is led by an invisible hand to promote an end [public interest] which was no part of his intention’ (Rogge, Benjamin A. 1976). The entrepreneurs are the lifeblood and backbone of economic development that determine productivity. Production factors of land, labour and capital are useless without the entrepreneur who organizes them for productive ventures.
Good Entrepreneur can create a strong, wealthy and dynamic economy. They are an important facet of industrial growth that bring to light the resources, technologies, trading opportunities, initiatives and research & development that make economic development possible in a nation. For example, the contribution of the Small and Medium Enterprises (SMEs) to the Nigeria’s Gross Domestic Product (GDP) is valued at about 37%, thereby making it the second largest contributor to the Nation’s GDP after the oil sector (SMEDAN, 2009).
On the issue of employment opportunities and poverty eradication, a study carried out by the Federal Office of Statistics in Nigeria shows that Small Scale Businesses (firms below 250 employees) constitutes 85% of all firms operating in the economy and employed the largest number of workers. Improvement in the standard of living, reduction in rural-urban drifts, development of local technology, conservation of foreign exchanges and the launching of new innovative business ideas are among the significant roles of the entrepreneurs that have made them the creative force in the economy.
Entrepreneurial Trends in Nigeria
Nigeria has numerous business potentials due to the abundant human and natural resources it possesses. Entrepreneurial activities and innovative ingenuity in Nigeria have developed enterprises in areas such as agriculture/agro-allied, solid and liquid minerals, information and communication technology, entertainment, hospitality among others. But it is unfortunate that Nigeria is still one of the poorest countries in the world and has one of the highest rates of youth unemployment in sub-Sahara Africa at 52.65%, according to the National Bureau of Statistics.
Entrepreneurial drives are strong in this country; young and old, unemployed and under-employed, and even the employed take on enterprising and risk-taking ventures in order to sustain family and self above the poverty line.
Although, more entrepreneurial policies have been formulated by the government, but the success rate of small and medium enterprises has been very low; as many businesses have been frustrated to wind-up. The erratic electricity has also made the cost of doing business high. Nonetheless, though some businesses have proven to become successful amidst the apparent national gloom, but what appears to be common among them is strive for survival.
Contemporary Entrepreneurial Initiatives of the Nigerian Government
According to research findings, the history of entrepreneurial initiatives in Nigeria can be traced to the 1970s when the Federal Government set-up several institutions and programmes to aid the development of entrepreneurship. Among the contemporary lists are:
However, apart from the proposed N60billion set aside by President Mohammadu Buhari for entrepreneurial ventures in the 2016 budget and the current Npower initiatives, it is regrettable that despite the huge human and financial resources invested in these initiatives, they have abysmally failed to produce the desired outcomes as a result of poor implementation, corruption and unfriendly business atmosphere.
Challenges Hindering Entrepreneurs in Nigeria
The liquidizing credit facilities have made potential entrepreneurs to go through many hardships when trying to access credit for their businesses. Although, there are wide ranges of financial institutions that offer business loans, they usually charge high interest rates (9% above) with severe collateral conditions that made the collection and repayment of the loan very difficult, thereby deterring aspiring entrepreneurs.
The systemic corruption that makes the procurement of licenses, permits, goods and services from government agencies difficult without paying bribes is another challenge hindering entrepreneurs. For example, the scrapping of SURE-P is an indication of the corruption that has loomed the programme, whereby money meant for entrepreneurial ventures were being diverted to another causes and other personal uses by the officials.
The poor state of Nigeria’s infrastructure can be deemed to be a nightmare to both entrepreneurs and the rest of the country's population of over 197 million according to the United Nations. The bad roads have cost the loss of lives and properties, while unstable electricity has resulted to the loss of business opportunities in the country. Many blue-chip companies had left Nigeria, while others planning to leave too to the neigbouring countries. About 272 companies were surveyed by the Manufacturers Association of Nigeria (MAN) to have closed shops or downsized between 2015 and 2016. The Federal Bureau of Statistics also confirmed that about 4.85million jobs were lost within the same period due to harsh policies and state of the economy.
One other sensitive challenge that is encountered by majority of Nigerian entrepreneurs is multiple taxation. Although, entrepreneurs in a country have a responsibility to pay taxes, but most of the taxes charged on entrepreneurs are unlawful and have the effect of increasing the cost of doing business, ploughing back profit for expansion and even surviving. Security issues, inconsistent government policies (including foreign exchange policy), ineffective patent and copy write laws, political turmoil among others are also factors hindering the entrepreneurs in Nigeria and depreciating the competitiveness and friendly business environment of the Nigerian economy.
From the aforementioned analysis above, it will be observed that Nigerian government has taken some steps to helping entrepreneurial development in the country. But it will also be discovered that more work still needed to be done to creating conducive business environment for entrepreneurs to grow and prosper, while stimulating upcoming entrepreneurs to flourishing. Nigerians are probably one of the most entrepreneurial people on earth and could be helped in the following ways:
Besides, the import substitution strategy should be maintained, whereby imported goods that could be produced here in Nigeria should be placed on embargo while encouraging local manufacturers and patronage. The entrepreneurs deserve more of government support, because without them, the economy will not prosper.
Entrepreneurship: https://en.m.wikipedia.org/wiki/Entrepreneurship (accessed 5/4/2016)
Ifeanyi Onuba and Anna Okon (24th August 2016). 272 firms shut down in one year—Manufacturers Association of Nigeria (MAN). Punch News: https://punchng.com/272-firms-shut-one=year-man/
National bureau of statistics. Latest rate of unemployment https://nigeriastat.gov.ng/elibrary?queries[search]=latest%20unemployment%20rate%20in%20Nigeria
Rogge, Benjamin A. (Ed) (1976). The Invisible Hand. In The Wisdom of Adam Smith. Indianapolis: Liberty Fund. 123-127
Schumpeter J.A (1934). The Theory of Economic Development. Cambridge MA: Harvard University Press.
Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) (2009), National Report: Lagos.
Revised article presented to the African Liberty Organisation for Development in 2016.