The Effect of Unemployment on Nigeria’s Economy and Promotion of Entrepreneurship Skills
Abstract
In this quantitative survey research study, a structured questionnaire served as the primary data collection instrument to investigate the interplay between unemployment and entrepreneurship in Nigeria. The research was conducted with a sample of 120 respondents. SPSS27 was employed for data presentation and analysis, and the hypotheses were tested using the t-test statistical method. The study focused on three primary hypotheses. Firstly, it was hypothesized that unemployment in Nigeria had a significant negative impact on the economy. The t-test results confirmed this hypothesis (t(119) = 7.68, p < 0.001), revealing a strong statistical relationship between unemployment and its adverse effects on economic growth, poverty, and social stability. Secondly, the hypothesis that government-sponsored entrepreneurship promotion programs played a crucial role in job creation and economic development was explored. The t-test results substantiated this claim (t(119) = 6.22, p < 0.001), underscoring the significant positive impact of these initiatives on employment opportunities in Nigeria. Lastly, the hypothesis that the skills gap hindered the success of startups and small businesses in Nigeria was examined. The findings supported this hypothesis (t(119) = 5.09, p < 0.001), emphasizing the need for targeted entrepreneurship education to address this challenge. In conclusion, this study highlighted the complex interdependence between unemployment and entrepreneurship in Nigeria, providing empirical evidence for the intricate relationships and their implications. Based on the findings, a series of recommendations were proposed, including the necessity for expanding entrepreneurship-specific education and fostering supportive government policies. These recommendations aimed to address the skills gap and encourage entrepreneurship development to mitigate unemployment. By better understanding the multifaceted challenges and opportunities within the Nigerian context, this study offered insights for policymakers, researchers, and stakeholders who sought to enhance economic growth and social stability in the country.
CHAPTER ONE
INTRODUCTION
Background to the Study
Unemployment is a persistent and pressing issue in Nigeria, with far-reaching economic, social, and political consequences (Abosede & Onakoya, 2021). The country, often referred to as the “Giant of Africa,” boasts a substantial population and abundant natural resources (Abosede & Onakoya, 2021; Abubakar & Yahaya, 2021). However, these assets have not shielded Nigeria from high levels of unemployment and underemployment. The causes of unemployment in Nigeria are multifaceted and deeply entrenched in the country’s socioeconomic fabric (Awujoola & Ikegune, 2018). These challenges have led to a situation where millions of Nigerians are either unemployed or engaged in jobs that do not fully utilize their skills and potential (Badria, Nahidib, & Ghalami, 2018).
One of the key factors contributing to the high levels of unemployment in Nigeria is rapid population growth (Edoko, Agbasi, & Ezeanolue, 2018). The country’s population has been steadily increasing, and the workforce has grown significantly. This demographic pressure intensifies the demand for jobs, putting pressure on the already limited job opportunities available in the formal sector (Adigwe, 2022). The inability to absorb the expanding labour force exacerbates the unemployment issue, especially among the youth.
The limited job opportunities in the formal sector are another critical aspect of the unemployment problem in Nigeria (Al-Tamini & Mohammad, 2019). Many Nigerians aspire to secure stable, formal employment, but such opportunities are scarce, particularly in a country with a substantial informal economy (Edoko et al., 2018). The formal sector’s capacity to create jobs has not kept pace with the increasing workforce, leading to a situation where the labour market cannot adequately absorb job seekers (Okolie, Anidiobu, & Ugwuanyi, 2018). As a result, many individuals either remain unemployed or engage in informal, low-paying jobs that do not match their skills and qualifications.
Inadequate investment in human capital development is a systemic issue that contributes to unemployment in Nigeria (Akinmulegun, 2022). A well-educated and skilled workforce is crucial for economic growth and development (Ediagbonya, 2021). However, Nigeria faces challenges in providing quality education and vocational training that align with the needs of the labour market. The skills gap between the qualifications of job seekers and the requirements of available jobs further compounds the problem (Idogbe & Philip, 2020). This mismatch between skills and job opportunities not only fuels unemployment but also results in the underutilization of human resources.
Entrepreneurship is often presented as a potential solution to the unemployment crisis in Nigeria (Gamede & Uleanya, 2020). The promotion of entrepreneurship skills can empower individuals to create their businesses, generate income, and even provide employment opportunities for others (Ubong, 2013). Recognizing the importance of entrepreneurship, the Nigerian government and various organizations have implemented initiatives to support entrepreneurship and encourage the development of small and medium-sized enterprises (SMEs) (Okongwu & Saleh, 2021).
The relationship between entrepreneurship and unemployment is complex. Entrepreneurship has the potential to serve as a remedy for unemployment by creating job opportunities and fostering economic growth. Entrepreneurship promotion programs in Nigeria aim to provide aspiring entrepreneurs with the necessary skills, knowledge, and support to start and sustain their businesses (Ferreira et al., 2017). These programs can lead to the establishment of small businesses and SMEs, which, in turn, can contribute to job creation.
However, entrepreneurship in Nigeria faces its own set of challenges, including access to finance, regulatory hurdles, and a lack of entrepreneurship skills (Akin, 2021). To start a business, aspiring entrepreneurs often require financial resources for capital investment, operating expenses, and business growth (Okongwu, 2022). Access to finance remains a significant barrier for many Nigerians, particularly for those without collateral or a proven track record.
Regulatory hurdles also pose challenges to entrepreneurship in Nigeria (Shoenbrum, 2017). The complex bureaucratic processes, ambiguous regulations, and administrative bottlenecks can discourage individuals from venturing into entrepreneurship (Ubong, 2013). This regulatory environment can deter potential business owners and hinder the growth of existing enterprises.
A lack of entrepreneurship skills is another significant issue faced by aspiring entrepreneurs (Filion, 2021). Starting and managing a business requires a unique set of competencies, including business planning, financial management, marketing, and risk assessment (Zhang et al., 2023). Many aspiring entrepreneurs may not possess these skills, which can hinder the successful launch and growth of their businesses.
In conclusion, unemployment is a persistent and complex issue in Nigeria, with significant economic, social, and political ramifications (Akinmulegun, 2022). Factors such as rapid population growth, limited formal job opportunities, and inadequate investment in human capital development contribute to this challenge. Recognizing the importance of entrepreneurship in addressing unemployment, the Nigerian government and various organizations have implemented initiatives to promote entrepreneurship and SME development.
While entrepreneurship has the potential to create jobs and foster economic growth, it also faces challenges, including access to finance, regulatory hurdles, and a lack of entrepreneurship skills (Ubong, 2013). To effectively harness the potential of entrepreneurship in reducing unemployment, it is essential to address these barriers and provide aspiring entrepreneurs with the necessary support and resources (Onugu, 2015).
Understanding the intricate relationship between unemployment and entrepreneurship is critical for the development of effective policies and strategies aimed at reducing unemployment and fostering economic growth in Nigeria (Lucas, 2018). By addressing the root causes of unemployment and promoting entrepreneurship as a viable solution, Nigeria can move closer to unlocking the potential of its substantial population and abundant resources (USAID, 2022). This research seeks to contribute to this vital dialogue, shedding light on the impact of unemployment on the Nigerian economy and the role of entrepreneurship in addressing this longstanding challenge.
Statement of Problem
Unemployment is a persistent and pressing issue in Nigeria, with far-reaching economic, social, and political consequences. The country, with its large and youthful population, has faced significant challenges in providing gainful employment opportunities for its citizens. This issue is deeply intertwined with the broader context of economic development, poverty reduction, and social stability. As such, understanding the impact of unemployment on the Nigerian economy and the promotion of entrepreneurship skills is a critical area of research.
Nigeria is often described as the “Giant of Africa” due to its substantial population and vast natural resources. However, despite these assets, the country has struggled with high levels of unemployment and underemployment. The causes of unemployment in Nigeria are multifaceted and include factors such as rapid population growth, limited job opportunities in the formal sector, and inadequate investment in human capital development. These challenges have led to a situation where millions of Nigerians are either unemployed or engaged in jobs that do not fully utilize their skills and potential.
Entrepreneurship is often seen as a potential solution to the unemployment crisis in Nigeria. The promotion of entrepreneurship skills can empower individuals to create their businesses, generate income, and even provide employment opportunities for others. Recognizing the importance of entrepreneurship, the Nigerian government and various organizations have implemented initiatives to support entrepreneurship and encourage the development of small and medium-sized enterprises (SMEs).
This study aims to explore the complex relationship between unemployment and the promotion of entrepreneurship skills in Nigeria. It seeks to understand how unemployment affects the economy and how entrepreneurship can be a potential remedy. By investigating this issue, we hope to provide valuable insights that can inform policies and strategies aimed at reducing unemployment and fostering economic growth in Nigeria.
The problem of high and persistent unemployment in Nigeria is multifaceted. Factors such as rapid population growth, limited formal job opportunities, and insufficient investment in human capital development have contributed to the challenge. The consequences of unemployment extend to the broader economy, affecting economic growth, poverty rates, and social stability. As a result, many individuals remain unemployed or are forced to engage in low-paying, informal jobs that do not align with their qualifications.
To address the issue of unemployment and its economic, social, and political consequences, there is a growing recognition of the potential of entrepreneurship. Promotion of entrepreneurship skills can empower individuals to create their businesses, generate income, and provide employment opportunities for others. However, entrepreneurship in Nigeria faces its own set of challenges, including access to finance, regulatory hurdles, and a lack of entrepreneurship skills.
The problem, therefore, lies in the need to understand the complex relationship between unemployment and entrepreneurship in Nigeria. This research aims to provide insights into the dynamics between these two factors and to contribute to the development of evidence-based solutions to address the persistent issue of unemployment and foster economic growth.
Objectives of the Study
This study has three specific objectives:
- To examine the impact of unemployment on the Nigerian economy, including its effects on economic growth, poverty, and social stability.
- To assess the effectiveness of entrepreneurship promotion programs in Nigeria and their contribution to job creation and economic development.
- To identify the key challenges and barriers that individuals face when attempting to start and sustain their businesses in Nigeria.
Research Questions
To achieve the stated objectives, this study addressed the following research questions:
- How does unemployment affect the Nigerian economy in terms of economic growth, poverty, and social stability?
- What is the effectiveness of entrepreneurship promotion programs in Nigeria, and how do they contribute to job creation and economic development?
- What are the primary challenges and barriers that individuals encounter when starting and sustaining their businesses in Nigeria?
Research Hypotheses
Based on the research questions, the following hypotheses were tested in this study:
Null Hypotheses(H0):
- Unemployment has no significant negative impact on the Nigerian economy, leading to reduced economic growth, increased poverty, and social instability.
- Entrepreneurship promotion programs in Nigeria have no positive impact on job creation and economic development.
- The primary challenges and barriers faced by individuals in starting and sustaining businesses in Nigeria do not include access to finance, regulatory hurdles, and lack of entrepreneurship skills.
Alternative Hypotheses(H1):
- Unemployment has a significant negative impact on the Nigerian economy, leading to reduced economic growth, increased poverty, and social instability.
- Entrepreneurship promotion programs in Nigeria have a positive impact on job creation and economic development.
- The primary challenges and barriers faced by individuals in starting and sustaining businesses in Nigeria include access to finance, regulatory hurdles, and lack of entrepreneurship skills.
Significance of the Study
The significance of this study is multi-faceted and holds critical importance for various stakeholders in Nigeria. It addresses the pressing issue of unemployment in the country and the role of entrepreneurship in mitigating its adverse effects.
First and foremost, this study is of great importance to the Nigerian government and policymakers. High and persistent unemployment rates have profound implications for the nation’s economic development and social stability. By providing an in-depth analysis of the complex relationship between unemployment and entrepreneurship, this research can guide evidence-based policy decisions. It has the potential to inform the design and implementation of effective strategies to promote entrepreneurship, create job opportunities, and stimulate economic growth.
The business community in Nigeria also stands to benefit significantly from the findings of this research. Entrepreneurs and small business owners are crucial drivers of economic growth and job creation. Understanding the challenges and opportunities associated with entrepreneurship in Nigeria can help businesses make informed decisions regarding investments, market-entry, and talent acquisition. Moreover, by identifying barriers to entrepreneurship, the study can encourage businesses to collaborate with the government in advocating for a more supportive business environment.
Educational institutions and trainers can use the insights from this study to enhance their entrepreneurship programs. By identifying specific areas where entrepreneurship education and training can be improved, educators can better prepare future entrepreneurs. This, in turn, can lead to a more skilled and entrepreneurial workforce, contributing to a thriving business ecosystem.
The general population of Nigeria also benefits from this study’s findings. High unemployment rates not only lead to economic hardships but can also have social and psychological consequences. Understanding how entrepreneurship can provide an avenue for economic empowerment and employment opportunities offers hope to individuals who aspire to become entrepreneurs or gain stable employment. The study can inspire individuals to pursue entrepreneurship and equip themselves with the necessary skills for success.
On a broader scale, this study’s significance extends beyond Nigeria and contributes to the global discourse on unemployment and entrepreneurship. It offers valuable lessons that can be applied to other developing economies facing similar challenges. The study’s findings can serve as a reference point for researchers and policymakers worldwide, helping them understand the intricate relationship between unemployment and entrepreneurship and the strategies that can be employed to combat unemployment and promote economic growth.
Scope of the Study
The scope of this study focuses on the impact of unemployment on the Nigerian economy and the promotion of entrepreneurship skills. Specifically, the study will examine the economic consequences of unemployment, the effectiveness of entrepreneurship promotion programs, and the challenges faced by aspiring entrepreneurs in Nigeria. The research will primarily cover the period up to 2022, considering available data and information up to that year.
While Nigeria is a diverse and complex country with varying regional disparities, this study will provide a general overview of the nationwide situation. It may not comprehensively capture the unique challenges and opportunities in each of Nigeria’s states and regions. However, the findings can serve as a foundation for more localized and specific research in the future.
Operational Definition of Terms
To ensure clarity and consistency in the use of key terms in this study, the following terms are operationally defined:
Unemployment: For this study, unemployment refers to the condition in which an individual who is actively seeking employment is unable to find a suitable job.
Economy: The economy encompasses all economic activities within Nigeria, including production, consumption, and distribution of goods and services. It also includes factors such as GDP, economic growth, and poverty rates.
Entrepreneurship: Entrepreneurship refers to the process of creating, developing, and managing a business venture to generate profit and contribute to economic growth.
Entrepreneurship Skills: These are the knowledge, competencies, and abilities required to identify business opportunities, plan and establish a business, and successfully manage its operations.
Economic Growth: Economic growth is the increase in the production and consumption of goods and services in an economy over time, typically measured by the Gross Domestic Product (GDP).
Poverty: Poverty refers to a state of deprivation in which individuals or households lack access to basic needs, including food, shelter, and education.
Social Stability: Social stability encompasses the peaceful and harmonious coexistence of individuals within a society, often characterized by low crime rates and a sense of security.
Entrepreneurship Promotion Programs: These programs include government initiatives, policies, and interventions designed to encourage and support the development and growth of entrepreneurial activities in Nigeria.
References
- Okongwu, A. (2022). Marketing and promotion of library services in Nigeria. Nigerian Library Link Journal of Library and Information Science, 9(1&2), 9-14.
- Okongwu, D., & Saleh, A. U. (2021). Fundamental Issues in Entrepreneurship. Lagos: Apex Books LTD.
- Olubukola S. A. (2021). Unemployment & Security challenges in Nigeria. International Journal of Humanities and Social Science, 3(7), 41-65.
- Onifade, A. (2022). Small Business and Entrepreneurship. Abeokuta, KAPPCO, Nigeria LTD.
- Onugu, B. A. N. (2015). Small and Medium Enterprises (SMEs) in Nigeria: Problems and Prospects. A Dissertation Submitted to the St. Clements University in Partial Fulfilment of the Requirements for the Award of the Degree of Doctor of Philosophy in Management.
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