ENTREPRENEURSHIP DEVELOPMENT IN NIGERIA: FROM BUSINESS IDEA TO BUSINESS OWNERSHIP
Ajayi, Olumide: Entrepreneurship Development Centre, Lagos, Nigeria; Email:
[email protected], Tel: +234(0)8073891721 Ademokun, Foluke; Entrepreneurship Development Centre, Lagos, Nigeria; E-mail:
[email protected], Tel: +234(0)8052091122 Abstract Poverty reduction is key to development challenges confronting emergent nations like Nigeria, where majority of the population is considered poor based on poor showings on globally acceptable human development indices inspite of enormous natural resources. In turn, as a poverty reduction measure, the federal government of Nigeria has set up Entrepreneurship Development Centres as a social protection strategy to combat the twin-issue of poverty and unemployment, while facilitation job and wealth creation. Thus, this study seeks to investigate the impact of entrepreneurship training and availability of ancillary credit using a combination of qualitative and quantitative data. The research sample size is 647 and the data is sourced from the Entrepreneurship Development Centre (EDC), Lagos. The results showed that availability of credit and early exposure of educated young persons to entrepreneurship training holds huge potential for increased job and wealth creation through business idea generation and ownership…
Key Words: Entrepreneurship, Poverty, Ownership, idea, Training
INTRODUCTION Despite the enormous natural resources, Nigeria ranks low on the human development Index with 160 percent income distribution gap at the household level that suggests a bias against rural and uneducated households (Human Development Report 2010). This is consistent with rising poverty data, which increased from 54.4% (in 2004) to 69% in 2010 according to official government report in “the Nigeria Poverty Profile 2010”. According to the National Bureau of Statistics (NBS) more than 100 million citizens earn less than $1 per day, thereby further widening the inequality gap. Following the increasing rate of poverty, majority of citizens, mostly unskilled and poor, with low level of education and lack of asset control are therefore confined to the informal sector for survival due to necessity. The informal sector, which largely comprises trade, agricultural businesses and services related to repairs, is estimated to provide 80% of non-agricultural employment and 60% urban jobs. Unfortunately, this category of business remains at the subsistence level, constrained to the poverty corridor due to poor motivation. The importance of the informal sector in boosting employment generation and consumption activities in a developing country like Nigeria cannot be underestimated. The informal sector, which is characterized by informal activities and absence of government regulation, is inclusive of transactions not accounted for in the Gross Domestic Product (GDP) of the country. Though the informal sector, to a larger extent provides jobs to a great number of households in Nigeria, the main policy challenge according to Ajayi and Ademokun (2010) is supporting the informal sector to promote more employment opportunities, productivity, and income for the poor. Akintoye (2008), also suggested that poverty and unemployment be reduced through a well managed and supported informal sector. Having recognized the contributions of the informal sector to the economy, additional measures were taken to espouse an entrepreneurial revolution through entrepreneurial skills development. It is from this perspective, given the growing size of the sector and its undoubted contribution to the national economy that the assessment of the Federal government of Nigeria entrepreneurship development project to improving the informal sector is considered relevant (see table 1 below). The assessment of the Entrepreneurship Development Centre (EDC), Lagos, contribution to improved livelihoods for Southwest, Nigeria is considered necessary following the complexities 2
of Nigeria’s recent poverty profile. With 59% poverty rate, the southwest improved two steps on the NBS poverty ranking of Nigeria’s six zones, as the least poor. However, the 16% increase on the 2004 poverty rate of 43% remains indicative of the increasing poverty level in the country. Table 1: Entrepreneurship Development Project Comparative Outputs Outputs Jan – Dec 2011 2008 till date Number trained 1,570 15,291 Number Counseled 1,868 16,492 Number of Jobs Created 792 1,957 Start-ups businesses 35 158 Expanded businesses 147 681 Clients linked to credit 208 543 Draft Business Plan 807 2,849 Business Plan certified 280 960 Source: EDC Lagos, 2011
Paper Objective(s) Based on the recognition of entrepreneurial capital and small business formation as necessary ingredients for economic growth (Audretsch and Keilbach 2004), this paper seeks to: (i) measure the impact of entrepreneurship training on the transition from business idea generation to ownership, and the quality of entrepreneurial actions, and (ii) assess the relevance of entrepreneurship training and financial support services to business choices and ownership, on the basis that capacity building efforts are critical to increased socioeconomic impact. In specific terms the study will assess business choices on account of trainees’ exposure to entrepreneurial skills and the collaboration between EDC Lagos and the National Economic Reconstruction Fund (NERFUND), Abuja. NERFUND is a financial institution created by the Federal Government of Nigeria to provide credit for Small and Medium Enterprises (SMEs) in the production sector.
Paper Relevance The relevance of this research is implicitly based in its ability to assist policy makers to formulate policy supportive of informal sector operators especially against the background that knowledge acquired from entrepreneurship training sharpens the business ideas of the informal
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sector operators thereby leading to increased job creation. This paper is also indicative of the effect of credit on the idea generation and business ownership environment Secondly, this research demonstrates the importance of entrepreneurship training in business ideas generation by small and medium business operators in Nigeria since most business operators tend to run their businesses without requisite entrepreneurial skills. The research is also relevant in the sense that it demonstrates the significance of entrepreneurship training in bridging the gap between business creativity and actual performance.
BRIEF LITERATURE REVIEW Theoretical Review An Entrepreneur is defined as an innovative individual who has developed an ongoing business activity where none existed before by Bukola, (2011). Meredith (1983) defined it as a person or persons who possesses the ability to recognize and evaluate business opportunities, assemble the necessary resources to take advantage of them and take appropriate action to ensure success. Entrepreneurs are people who constantly discover new markets and try to figure out how to supply those markets efficiently and make a profit. S/he is a person that searches for change, responds to change, and exploits change by converting change into business opportunity. On the other hand, Commission Communication “Fostering entrepreneurial mindsets through education and learning” COM (2006) defined entrepreneurship as an individual’s ability to turn ideas into action. It includes creativity, innovation and risk taking, as well as the ability to plan and manage projects in order to achieve objectives. This supports everyone in day-to-day life at home and in society, makes employees more aware of the context of their work and better able to seize opportunities, and provides a foundation for entrepreneurs establishing a social or commercial activity. Meanwhile, Johnson (2001) states that entrepreneurship attitude and behavior entails openness to new information and people, motivation, making independent and self directed decisions, the ability to see opportunities in a rapidly changing and uncertain environment, persistence, the motivation to achieve, technical know-how, personal integrity, taking ownership and being accountable, the capacity to manage and organize as well as specific categories of cultural characteristics. 4
Business idea generation is the starting point for most entrepreneurs and beside finance it is one major challenge confronting aspiring entrepreneurs, the challenge entails generating ideas for new businesses that spark excitement, hold promise, and drive action. When aspiring entrepreneurs drown in a sea of empty ideas one of two things usually happens. They see a business opportunity and are willing to take the risks necessary to try and achieve the rewards they think they can achieve (Business Studies Report 2011).
The report argues further that entrepreneurs identify business opportunities. For example, they see that there is room in the market for a new product – something that they think would be in demand and that they could provide, that is not already being offered. Therefore, they see a business opportunity and seize the chance. The product may be a completely new item, or a new way of doing things. It may be something that exists already but that could be aimed at a new market, or at a part of a market (known as a ‘market niche’). Furthermore, in many cases, a business idea will be linked to an entrepreneur’s own experience or expertise, either at work or in their personal lives. For example, they may have been working in a particular industry and seen an opportunity for a new product, or they may have a hobby and can see how to turn it into a business. However, in some cases entrepreneurs see something offered elsewhere (perhaps in another country) and decide to imitate it. They may have been looking for a particular product themselves, and when they found it was not readily available, saw this as a market opportunity. An entrepreneur may buy the rights to sell an existing product which he refers to as a franchise.
Hisrich et al, (2005) maintained that the process of starting a new venture is embodied in the entrepreneurial process, which involves more than just problem solving in a typical management position. An entrepreneur must find, evaluate, and develop an opportunity by overcoming the forces that resist the creation of something new. According to them, the process has four distinct phases: (1) identification and evaluation of the opportunity, (2) development of the business plan, (3) determination of the required resources, and (4) management of the resulting enterprise. Although these phases proceed progressively, no one stage is dealt with in isolation or is totally completed before work on other phases occurs. They gave example that, to successfully identify
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and evaluate an opportunity (phase 1), an entrepreneur must have in mind the type of business desired.
They argue further that opportunity identification and evaluation is a very difficult task for most entrepreneurs. Most good business opportunities do not suddenly appear, but rather result from an entrepreneur’s alertness to possibilities, or in some case, the establishment of mechanisms that identify potential opportunities. They offered an example of one entrepreneur who asks at every cocktail party whether anyone is using a product that does not adequately fulfill its intended purpose with intention of looking for a need and an opportunity to create a better product. Another entrepreneur always monitors the play habits and toys of her nieces and nephews. This is her way of looking for any unique toy product niche for a new venture. Although most entrepreneurs do not have formal mechanisms of identifying business opportunities, some sources are often fruitful: consumers and business associates, members of the distribution system, and technical people. Often, consumers are the best source of ideas for a new venture. Usually, the idea for an enterprise will come first and then the people concerned have to decide whether to set up in business or not.
However, sometimes individuals know that they want to be entrepreneurs even if they are not sure what they actually want to do. In this case, they may ask friends or brainstorm to find the ‘right ‘idea. So, some ideas are genuinely new. Others adapt something that already exists: in the case of a franchise, the entrepreneur uses the approach and products of an existing business or an existing process. Some ideas will be the entrepreneur’s own. Some entrepreneur’s have a conviction that their ideas will work and are determined to go ahead. This is known as a productled approach. Other ideas come from an analysis of the market. This is a market-led approach. Someone has ownership of a particular product or a unique way of doing business and others cannot copy it, it means that they may have more customers because there won’t be any substitutes, be able to charge more because customers won’t be able to switch to something similar and be able to earn money letting others use their idea.
Hinterhuber (1992) points out a special relationship between the entrepreneurial vision and the person. According to him, entrepreneurial ideas are an expression of one’s own life and 6
professional experience. He went further to speak about the “feeling of a mission.” This sense of mission according to him must be present to set free the energies needed to market a product successfully. The researcher gave several examples of entrepreneurial ideas that have marked the society more than others, because their originators had” an idea in the Platonic sense” and were imbued with a sense of mission.
On the other hand, Shane, (2001) and Beckman, (2006) stressed that developing the initial venture idea and structuring resources for commercialization success are central challenges facing entrepreneurial firms and they have also been important topics in the entrepreneurship literature, which has frequently examined the characteristics of innovative venture ideas and of the founding teams who seek to commercialize those ideas. In this regards, the findings of Vesper (1993) shows that successful business ideas usually are a natural outgrowth of an individual's background.
Liang (2011) provides a novel explanation for why young and middle-aged workers are less likely to become entrepreneurs in a country where the cohort size is shrinking. To be successful entrepreneurs, in addition to having a great idea, one needs to have two kinds of abilities: human capital and adapt- ability. Human capital in this context includes industry knowledge, people skills, connections, etc. The level of human capital is primarily determined by the rank/position in the firm. A worker with a higher position in the firm typically has more responsibilities, more interactions with people both inside and outside of firm, and a broader and deeper understanding of the industry. Such knowledge and connections acquired on the job are essential to building a new company. In addition to human capital, a successful entrepreneur needs to be highly adaptable. Adaptability in this context refers to the ability to learn new skills, to adjust to new working environment, and to handle unexpected situations, etc.
He argues further that in general, younger people are more adaptable, and adaptability decreases with age. The key assumption is that entrepreneurial capability is a function of two kinds of abilities, first: human capital which increases with the rank in the current firm, and second: adaptability which decreases with age. This assumption is equivalent to having two hypotheses: first, with the same rank, a younger person will be a better entrepreneur; and second, at the same 7
age, a person with a higher rank will be a better entrepreneur. Both hypotheses are quite natural, and can potentially be tested empirically. An early middle-age worker (around age 30) typically has accumulated the necessary human capital and is still highly adaptable to be a successful entrepreneur. In a country with a declining cohort size, middle-aged workers have lower positions, lower human capital, and thus lower entrepreneur capability compared to a country with a balanced cohort size. Liang (2011) builds a model which formalizes the above mechanism. The model predicts that as the cohort size shrinks, overall entrepreneurship decreases. Moreover, entrepreneurship probabilities of all age groups decrease and the middleaged workers are more affected than the old workers.
Faltin (2001) presents techniques for generating entrepreneurial ideas. Its goal is to show that in the present age, which is marked by rising levels of education, growing consumer sophistication and increasing opportunities for comparing values, ideas that are developed in harmony with society's values have good and growing chances for success in the marketplace. Ultimately, a culture of innovative entrepreneurship is envisioned, which is able to incorporate economic, artistic, and social activities as parts of one coherent spectrum of human creativity.
Berglund and Wennberg (2006) conducted a study on creativity among entrepreneurship students. The study uses a personality test and open-ended interviews to explore creativity between two groups of entrepreneurship masters’ students: one at a business school and one at an engineering school. The findings indicate that both groups had high creative potential, but that engineering students channeled this into practical and incremental efforts whereas the business students were more speculative and had a clearer market focus. Eesley et al (2011) address the question of when initial venture idea assets versus founder contracting experience are more important for venture performance. One view of new venture performance emphasizes the importance of innovative ideas, while others argue that founders with knowledge of how to structure the venture’s assets is a key to performance. Using unique survey data, they advance an integrated perspective by showing that new ventures perform better when they both identify innovative ideas and also assemble human assets with expertise in structuring organizational arrangements to commercialize those ideas. An important implication
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is that organizational resources have a range of potential values, and that realizing the upper range of value capture involves the additional ability to structure organizational relationships.
Biais and Perotti (2008), studied how early stage new ideas are turned into successful businesses. They argues that promising ideas can be unprofitable if they fail on one dimension, such as technical feasibility, correspondence to market demand, legality, or patentability. To screen good ideas the entrepreneur needs to hire experts who evaluate the idea along their dimensions of expertise. Sharing the idea, however, creates the risk that the expert would steal it. Yet, the ideathief cannot contact any other expert, lest he should in turn steal the idea. Thus stealing leads to incomplete screening and is unattractive if the information of the other expert is critical and highly complementary. In such cases the entrepreneur can form a partnership with the experts, thus granting them the advantage of accessing each other’s information. Yet, very valuable ideas cannot be shared because it is too tempting to steal them. Clearly, some expertise and technical knowledge is required to progress opportunities to business entities. This paper recognizes that where properly coordinated such knowledge acquired through training can become a vital tool to a potential or existing entrepreneurs and for the overall economic direction of the nation.
Empirical Review Baldacchino (2009) explores ways in which start-up entrepreneurs are creative and innovative. Data was collected by means of a combination of in-depth interviews and telephone questionnaires with entrepreneurs who started up an enterprise in Malta between January 2002 and June 2007. Results indicate that the start-up entrepreneurs in the study display high levels of creativity and innovation and these reflected in several ways. The entrepreneurs generate, develop and implement new ideas for their start-ups, foster a climate that is conducive to creativity and innovation, provide top-down support for creativity and innovation in their organizations, and offer innovative products and services through innovative methods of production and delivery.
Keat et, al (2011) investigates the inclination towards entrepreneurship among university students in the northern region of the Peninsular Malaysia. Specifically, he examines the relationship between entrepreneurship education and inclination towards entrepreneurship. The 9
influence of demographic characteristics and family business background on university students’ inclination towards entrepreneurship was also examined. An empirical test carried out on the data gathered from questionnaires demonstrates that two entrepreneurship education variables are found to have statistically significant relationship on the inclination towards entrepreneurship. The study shows that two demographic variables and a family business background variable have an effect on university students’ inclination towards entrepreneurship.
Liang (2011) conducted a study on entrepreneurship and demographics in Japan. The study shows why young and middle-aged workers are less likely to become entrepreneurs in a country where the cohort size is shrinking. The study found that the size of the young workforce relative to the old is positively linked to entrepreneurship activity. The entrepreneurial rates or probabilities of all the age groups decrease as the relative size of the young cohorts shrinks, with the middle-aged group showing the largest decline.
METHODOLOGY The research used a combination of qualitative and quantitative data. The quantitative aspect captures the response of the respondents in term of ‘yes’ and ‘no’ basis, while the qualitative aspect captures the perception of the trainees which is not quantifiable. The sample size of this research is 647 and the data is sourced from Entrepreneurship Development Centre (EDC), Lagos. The study used 674 sample sizes because the sample covered only trainees who have completed their training and produced certified business plan from inception in 2008 to December 2011 out of a total 15,074 trained. The data was disaggregated into pre and post NERFUND1 in order to determine if the establishment of NERFUND influenced the trainee’s business choice since it was established with the purpose of supporting trainees with loan facility particular trainees with business plan written on production activities. The sampling design uses multistage approach, which first sampled the opinion of trainees on intended businesses prior to the training and latter to investigate the actual business they are into after the training. To achieve this, two sets of questionnaires were used to collect trainees’ socioeconomic and business plan baseline information. While the former captures information on variables such as
1
National Economic Reconstruction Fund
10
gender and trainees’ intended business prior to the training, the latter captures other variables, which include business status, intra and inter-business sector changes. The multi-stage stratified sampling method was used to select trainees who have who have completed their training programme, produced viable business plans, and/or have commenced business operations. The research used descriptive approach for its analysis. This approach is adopted because it is best suited for data generated.
PRESENTATION OF RESULTS This section presents the result of the analysis. To eliminate bias, the analysis was run separately on start up and existing businesses under two different scenarios. The first scenario is pre NERFUND and the second scenario is post NERFUND. The essence of this is to investigate if availability of credit complements training and also influences trainees’ choices of business. Start up businesses The result of the analysis as indicated in table 2 revealed that a total of 456 (70.5%) out of 647 of the trainees that have finalized their business plan are promoters of start up businesses. A breakdown of the startups data suggest 255 and 201 are classified under pre NERFUND and post NERFUND periods respectively. In the pre NERFUND period, 49 (19%) changed the type of business they chose at the inception of the training, while 201 (81%) did not. Similarly, during post NERFUND, 37 (18%) of the trainees changed the type of business they had chosen at the inception of the training, while 164 (82%) retained their initial business preferences. Overall, 19% of the trainees changed the type of business they had chosen at the inception of the training while 81% of the trainees held on to the initial business of interest at the startup level.
The study also interrogate trainees’ business changes within and outside of sector. The result show that 76% and 78% of the trainees who changed their businesses during the pre NERFUND and post NERFUND periods respectively migrated to a different business sector entirely, while 24% and 22% changed business within the initial business sector during pre NERFUND and post NERFUND respectively.
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The gender distribution of trainees that changed their business either to different business sector or within same business sector among the start up business in both period shows that 69% are males, while 31% are females, suggesting more males than females are likely to undertake changes in their choice of business. Table 2: Distribution of business change among trainees in start up businesses S/n Indicators Pre NERFUND Loan Post NERFUND Loan
1 2
3
4
Freq
%
Freq
%
Total start up businesses
255
54
201
46
Trainee that change business
49
19
37
18
Trainees that did not change business
206
81
164
82
Trainee that change business (male)
29
59
21
57
Trainee that change business (female)
20
41
16
43
Inter business sector change
38
76
29
78
Intra business sector change
11
24
8
22
Existing Business The result of the analysis as indicated in table 3 revealed that a total of 191 out of 647 of the trainees that have finalized their business plan are existing businesses.
A comparative analysis of this category of trainees revealed that 12% of the trainees diversified into businesses other than the business they intended to do prior to the training in the pre NERFUND era. While 10% of the trainees diversified into other businesses other than the business they intended to do prior to the training in the post NERFUND era, indicating a linkage between improved entrepreneurial skills, business diversification / expansion may result in change of business choices. This category of trainees suggest enhanced entrepreneurial skills due to exposure to training. Overall, 22% of the trainees changed the type of business they had chosen at the inception of the training while 82% of the trainees held on to initial business interests. Similarly, business intra and inter-sector changes reveal that 78% of the trainees who changed their businesses, migrated to another business sector entirely, while 22% changed business 12
within the initial business sector in the pre NERFUND era. Similarly, 71% of the trainees who changed their businesses, changed to another business sector entirely and 29% changed business within the initial business sector in the post NERFUND era. The gender distribution of trainees that changed their business either to different business sector or within same business sector in both period shows that 62% are males, while 38% are females. Table 3: Distribution of business change among trainees in existing businesses S/n Indicators Pre NERFUND Loan Post NERFUND Loan
1 2
3
4
Freq
%
Freq
%
Total Existing business
118
69
73
31
Trainee that changed business
14
12
7
10
Trainees that did not change business
104
88
66
90
Trainee that change business (male)
9
62
4
57
Trainee that change business (female)
5
38
3
43
Inter business sector change
11
78
5
71
Intra business sector change
3
22
2
29
Percentage Change Between Trainees’ Initial and Final business Choices in Pre & Post NERFUND Era Further analysis on the percentage distribution of trainees’ business categories before and after training in the pre and post NERFUND era in table 4 indicates that most trainees preferred service related businesses before and after the training in both NERFUND periods. Incidentally, percentage change between the initial and final business choices in both periods reflect both negative and positive changes depending on specific business sector. For instance while 2% change was observed in favour of business choices in the service sector at pre NERFUND, trainees’ business preference for the service sector plummeted to -14% in the post NERFUND era, suggesting that businesses in the service sector may have lost their attraction for trainees prior training based on the awareness of NERFUND’s preference for production based businesses. While the survey indicated a 19% decrease between the initial and final business choices by trainees in trade during pre NERFUND, no change was observed during post NERFUND, as trainees initial and final business choices remains the same.
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On the other hand, trainees’ preference for production based business before training jumped from 3rd place (after service and trade) during pre NERFUND to 2nd place (after service) at post NERFUND. However, preferences for production based businesses after training indicate 2nd place and 1st place ranking during pre NERFUND and post NERFUND periods respectively. The 62% and 35% preference increased for production based business after completion of training suggest a shift by businesses in Nigeria from promoting consumption activities to producing based on increased knowledge and capability Meanwhile, choices for agricultural based business suffered with 28% and 61% reduction between the initial and final business choices in both pre and post NERFUND periods respectively. Table 4: Percentage change between initial and final business chosen by trainees in Pre & Post NERFUND Era Sector
% Change
Service
Pre NERFUND Bus. chosen Bus. Chosen before training after training Freq Freq 185 188
% Change
2
Post NERFUND Bus. chosen Bus. chosen before training after training Freq Freq 105 90
Trade
91
74
-19
38
38
0
Production
59
96
62
79
107
35
Agriculture
57
41
-28
33
13
-61
-14
Overall Trend In Percentage Change Between Trainees’ Initial and Final business Choices. On aggregate, the pre and post NERFUND summary shows a reduction in preference for businesses in the service, trade and Agricultural sectors. As shown in figure 1 below, trainees’ preference for service based business dropped by 6%. Similarly trade and agriculture based businesses declined by 13% and 42% respectively. However, production sector recorded 56% increase as trainee’s first choice of business. The reason for this increment has been explained above.
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Figure 1: overall percentage change in business sector change Overall percentage change in initial and final business chosen by trainees 80 60 40 20 0 -20 -40 -60 Series1
Service
Trade
Production
Agric
-6
-13
56
-42
Reason for Change in Business Choices Investigations on the reasons trainees change from pre-training business choice revealed a variety of explanations. 40% changed their business choices due to their awareness of NERFUND funding preference for production based businesses. This is consistent with earlier finding, which shows 35% increase in production based activities particularly in the post NERFUND era where others businesses categories such as service, agriculture and trade either dwindled or remain stagnant by (-)14%, (-)61% and 0% respectively.
Likewise, 30% of the trainees migrated from initial business choices due to the entrepreneurial skills acquired from the training. Following business ideas generation sessions during the training, this category of trainees were able to identify and seize the opportunity to provide services needed in their immediate enrolment.
In addition, 20% of the trainees change their business type due to the need for business diversification into new areas discovered in the course of the entrepreneurship training. This category of trainees who incidentally are mostly in existing business sees the need to push their business beyond the status prior to training.
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Lastly, 10% of the trainees changed their business type as a result of the constraint associated with capital requirements to finance their initial business choice. This category of trainees prefers to make use of the capital available at their disposal to run their business rather than endure prolonged wait for NERFUND loan that was not readily available.
Gender Classification of Trainees According To Business Plan Submission The data indicate that out of the 647 trainees who have completed their training and have produced certified business plan, majority (65%) are male while the rest 35% are female. However, as shown in figure 2, out of the 192 trainees business owners who have produced a business plan, majority (52%) are females, while 48% are male, suggesting females possess higher capability than male to own a business if they were able to address the challenges linked with business plan writing and submission. The low rate of business plan submission by women however, suggests the need to create the enabling environment for improving the technical capability of aspiring and existing female entrepreneurs in writing business plans.
Trainees with a Business Plan and In Business Out of 647 trainees who have completed their training and produced certified business plan, majority (455) are currently not in business while 192 are currently operating varying business ventures.
Age and Business Plan Production As shown in Figure 2, out of the 192 trainees who are currently operating a business and have produced a business plan, majority (43%) are in the age bracket of 30 and 39. While 29% are in the age bracket of 20 and 29, 17% are in the age bracket of 40 and 49 and 7% in the age bracket of 50 and 59. Meanwhile, 4% are above 60 years of age. This result indicates the drive for entrepreneurship and business ownership is higher from ages 20 to 39.
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Figure 2: Age, Business operation and business plan production 43%
29% 17% 7%
20-29
30-39
40-49
50-59
4%
Above 60
Marital status, Business operation and Business Plan Production It is observed that among the 192 trainees who are currently operating a business and have produced a business plan, majority (66%) are married while 34% are singles. The need to generate sufficient income for household needs may have informed business ownership choices by married persons.
Education, Business operation and Business Plan Production As indicated in figure 3, among the 192 trainees who are currently operating a business and have produced a business plan, majority (69%) are graduates while 31% are non graduates. This finding suggests that there is a positive correlation between education and business plan production.
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Figure 3: Marital status and business plan production Graduate
Non Graduate
31%
69%
Distribution of Business Owners without a Business Plan Data from the field regarding trainees who are currently operating a business and have not produced a business plan indicate that out of 238 trainees, majority (53%) are females and the rest 47% are males. Major reasons offered by this category of trainees differ by gender. In the female category, 70% of the trainees indicate time constraint (resulting from attending to a combination of household chores, business operations with training schedule) as the major reason they have not completed their business plan, while 20% and 10% pointed to the business plan technicality and lethargy respectively, as reasons for not completing their business plans.
Similarly, among the males who are currently operating a business and have not produced a business plan, 58% indicate time constraint due to the “short” duration of the training as the major reason they have not completed their business plan, while 35% indicate their non availability and 7% pointed to the technicality of producing the business plan.
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SUMMARY OF KEY FINDINS AND RECOMMENDATIONS The result of the comparative analysis shows that: a. This paper suggests that entrepreneurship training is undertaken by trainees to enhance their business management skills and not necessarily to generate new business ideas. This submission was arrived at following the migration of only 19% of trainees to new business ideas after enrollment for training. b. Trainees who made new business choices are likely to migrate into another sector as 76% and 78% of the trainees (in startup businesses) who change their businesses during the pre NERFUND and post NERFUND intervention respectively, were observed to change to another business sector entirely, while 24% and 22% business changes were within the initial business sector during the pre NERFUND and post NERFUND respectively. c. 78% of the trainees who changed their businesses, changed to another business sector entirely, while 22% changed business within the initial business sector during pre NERFUND. This varies slightly (71%) at post NERFUND d. More males (69%) than females (31%) are likely to change/diversify their businesses (either to a different or within same business sector among the start up business category in both period). e. Targeted credit is likely to boost development of specific business sector as indicated by the increased preferences for businesses in the production sector (with 56% increase) based on trainees’ awareness of NERFUND scheme at the onset of training but not necessarily at the finalization stage. The introduction of NERFUND however, impacted negatively on other business sectors from commencement of training. For instance, the number of trainees that chose service based business dipped by 6% following the announcement of NERFUND. This trend was observed also in the agricultural and trade sectors, which recorded 42% and 13% decrease respectively. f. Majority (40%) of trainees who changed their business type in the course of training did so due to their awareness of NERFUND preference for funding production based business, 30% change their business type as a result of the exposure gotten from entrepreneurship training, 20% change their business type due to the need for business diversification purposes, and 10% changed their business type as a result of financial difficulties associated with raising adequate capital for their initial business choices. 19
g. 16. Majority (43%) of the trainees who are currently operating a business based on finalized business plans are in the age bracket of 30 and 39. While 29% are in the age bracket of 20 and 29, 17% are in the age bracket of 40 and 49 and 7% in the age bracket of 50 and 59. Meanwhile, 4% are above 60 years of age. This correlates Liang (2011) assertion that in general, younger people are more adaptable, and adaptability decreases with age. h. The low rate of business plan submission by women suggests the need to create the enabling environment for improving the technical capability of aspiring and existing female entrepreneurs in writing business plans
Recommendations To harness fully the gains of entrepreneurship development training in Nigeria, it is hereby recommended that; i.
Government should integrate credit as a key component of entrepreneurial skills development as over 50% of trainees who completed training were unable to commence business operation due largely lack of credit
ii.
Government should harness properly all programmes on poverty alleviation and economic development to develop a common platform for sharing key messages on the economy. For instance, the awareness created by the Entrepreneurship Development Centre (EDC) on NERFUND boosted trainees’ preferences for businesses in the production sector during post-NERFUND.
iii.
For the purposes of increased job and wealth creation, there is need for increased government investment in entrepreneurship development at both secondary and tertiary levels of education, following the findings that persons between ages 20 and 39 (with higher education) utilise business ownership as a form of employment more than older persons with lower education
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CONCLUSIONS This study evaluates the impact of the entrepreneurship training on business perception. In specific terms the paper compares the impact of entrepreneurial exposure to business ideas and ownership prior and post entrepreneurship training. The result shows that trainees’ choices are largely predetermined by exposure to entrepreneurial information at the commencement of training. Findings indicate that while an aggregate 19% of trainees in start up business changed the type of business they had chosen at the inception of the training, 22% of the trainees among those in existing business category migrated from their initial business choices. A breakdown of post-NERFUND findings indicate that 40% of trainees changed business type due to their awareness of NERFUND preference for funding production based business, 30% changed business type as a result of the entrepreneurship training exposure, 20% changed business type due to business diversification need and 10% changed business type as a result of inadequate funding for initial business choices.
In the light of the above findings, it is suggested that policy makers should formulate policy that support the entrepreneurial activities in Nigeria especially when it is observed that entrepreneurship activities lead to more jobs creation. Similarly, this paper demonstrates that entrepreneurs require appropriate environment for the transition of business idea to ownership. Therefore, there is need for cohesiveness of related economic programmes as revealed by the impact of NERFUND on the enrollment of trainees in the entrepreneurship training. Thus, there is need for policy to be gears towards promotion and creation of awareness on
entrepreneurship training in Nigeria. However, this must be consistent to ensure full optimization of programme goals
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