The effects of unemployment on nigeria economy small scale enterprises in nigeria:

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1.1      Background of the study

Most of the world renowned companies and organizations started as a small scale business with skills and efforts they grew up to the conglomerated and multinational companies of today.
Small scale business occupies a unique position in the economy of any nature and they are the bedrock of any economic development. They constitute of the cornerstone of any competitive economy and by far outnumber the large scale business. Also, they provide large scale business, more fertile ground for creativity and entrepreneurship. Hence, as a result of easy entry into the market, small scale business spring up all the time keeping the competition environment lively, a phenomenon that leads to productivity gains and real economic growth, apart from the fact that they generate employment opportunities, they are closer to the grass root and so on, ginger rural development. They are less capital intensive and do not require gigantic infrastructure for their operation.
Being part of the economic system, small business entities are faced with numerous problems, particularly funding and many ways these are very different from the financial problems on large concern. However, the principles underlying financial decision are similar irrespective of the size of the business, hence, the basic goal so financial management through acquisition, anticipation and allocation of funds equally apply to small scale business.It is widely known in business circles that small scale business find it difficult to secure funds from financial institutions due to the fact that they have difficulty in meeting the collateral requirement that would qualify them for the financial assistance from the back. This is not withstanding every business whether small or large needs funds. Funds constitute the life blood of any business while other things follow.
Small scale business serves as an engine room for economic development and government recognize the fact that small business is the second largest employers of labor apart from government. Government is also encouraging the establishment of small scale business by forming such bodies like Small and Medium Enterprises (SME). Government has also provided monetary incentive for small scale industries. As stated earlier, small scale industries play very important roles in the economic development of any country, state or local government. For instance, in any depressed unemployment is the increase, where the available resources are under-utilized and where raw-material supply to our big industries is inadequate, establishment of small scale business is considered as an alternative means of earning a living and providing raw-materials to our big industries.

There is no doubt that small and medium scale enterprises are the principal catalyst of entrepreneurship and it constitute the real fabric of nation’s economy. And to say that the present and future economic advancement of this out great country- Nigeria lies in the dynamics and growth of the Small and Medium Scale (SME) is not an overstatement.
At least, this is the unanimous opinion of an economic conference at the instance of the three bodies; Nigeria Institute of Social and Economic Research (NISER), the national Association of Industries (NASSI) and the Fredrick Albert Foundation in Lagos in 1989. In other words, SMEs constitute a vital force to economic growth and development (Onuoha 1994:1). Economic development is a nation wise problem which the small scale industries are capable of solving effectively these includes:

1 Development of raw materials

2         Sourcing of raw materials

3         Providing training places for workers and students on industrial attachment.

4         Problems of capital for large establishment

5         Problems of unemployment

6         Under-utilization of scare resources

7         Lack of linkage effect among several factors in the economy

8         Lack of provision of import substitution good

In the light of the above mentioned problems, the fact that small scale business are vital for economic development of any country, state or local government and numerous problems which small scale business are capable of solving motivated me to research or write on this topic.


The main objective of this study is effects of small scale business on the economic development of Nigeria.  But for the successful completion of the study; the researcher intends to achieve the following sub-objectives;

1.   To determine the roles which the small scale business have played in economic development of Lagos State

2.   To suggest the future prospect of small business in economic development of Lagos State

3.   To determine the problems small scale business are facing in Lagos State

4.   To ascertain the relationship between small scale business and the economic development in Nigeria


For the successful completion of the study, the following research hypotheses were formulated by the researcher;

 H0: small scale business plays no role in the economic development in Lagos State

H1: small scale business plays role in the economic development in Lagos State

H02: there is no significant relationship between small scale business and the economic development in Lagos State

H2:there is a significant relationship between small scale business and the economic development in Lagos State


This study is very beneficial to groups of people such as:
1. The small scale entrepreneur as it will help them to know how to solve the economic problems.

  1. Student of business studies of higher institutions of learning as this will serve as reference work and guide for further research work.

  2. The state government as this will enable them to know the roles in which the small business played in the development of the state.

  3. The state government will through this study know the problems facing the small scale business and the suggested solutions


The study covers effects of small scale business on the economic development of Nigeria.The researcher encounters some constrain which limited the scope of the study;

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


Small scale business: This is a type of business that is owned by one or few persons with direct owner influence in the decision making and having a relatively small share of the market and low capital requirement.
Entrepreneur: This is an individual who notices opportunities and take action to mobile necessary resources to produce new improved goods in the environment for a targeted market.
Capital: This is the amount of money required to carry out a particular venture and pay all the financial obligation of the business.
Development: This is the process or the ability to make something to be advance or organize for the benefit of all sundry.
Entrepreneur: According to Gilfford Pinchot 919985) entrepreneur is defined as an entrepreneur within an already established organization.
Business failure: Baumbark (1992:31) defined business failure as a situation where available capital is insufficient to pay all obligations of the business.
Innovation: According to Inegberebor (1989), innovation involves creative response to an investment opportunity by developing a new product, new technology or modification of the existing ones to meet the expectations of the consuming public.
Motivation: Stephen P. Robbins (2010), defines motivation as the willingness to exert high levels of effort toward organizational goals, conditioned by the effort and ability to satisfy some individual need.
Marketing:Kolter (1980:9) defines marketing as getting the right goods and service to the right people at the place at the right time at the price with right communication and promotion.
Management: According to Fedrick Winslow Taylor (1947) Management is knowing exactly what you want men to do and then their seeing that they do it in the best and cheapest way.
Directing: According to Joseph Massie (1994) Directing concerns the total manner in which a manager influences the action of his subordinates. It is the final action of manager in getting others to act after all preparations have been completed.
Controlling:Haiman (1985) defined controlling as the process of checking to determine whether or not, proper progress is being made towards the objective and goals and acting if necessary to correct any deviation.
Leadership: According to Mcshare (2009), leadership is the process of motivating, influencing and directly others in the organization to work productively in pursuit of organization goals.
Environment: Kazmi (2002) described the environment as the aggregate of all conditions, events and influences that surrounds and affect it.


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

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