Smes and Employment Generation
CHAPTER ONE
INTRODUCTION.
1.1 BACKGROUND OF THE STUDY. The alarming rate of unemployment in the developing countries aptly described as “a waiting time bomb” [Owualah, 1999a] has been partly attributed to the population explosion being experienced by them. However, worsening the unemployment situation is the persistent lag in the growth rate of industrial employment in the face of the economic recession. In Nigeria’s case, industrial employment declined sharply as industrial and commercial activities were seriously affected by both external and internal factors. The shortage of employment became so acute, for instance, in the mid- 1980s, that Nigeria recorded a rate of unemployment of 10% in her urban cities and a little lower in the rural areas. [Umar, 1989] In order to stem the rising tide of unemployment, especially among the Nigerian Youths, by consciously creating job opportunities with emphasis on self reliance and entrepreneurship, the National Directorate of Employment [NDE], was established by the Federal Government in January, 1987. At the inception, the NDE articulated for practical programmes which focused on creating jobs through self-employment. These include the Small - Scale Industries and Graduate Employment, the National Youth Employment Vocational Skills, Development of the Agricultural Sector Employment and Special Public works programmes. [Owualah, 1999b]. A part from the NDE, the role of the Small and Medium Scale Enterprises [SMES] in employment generation has long begged for recognition. The SMES are a major source of employment for a large majority of people. They have a higher capacity for generating employment as their mode of operation are more labour-intensive. A very important rationale for promoting the SMES is their job creating potentials. This stems mostly from labour-intensive and subsequently, capital- saving methods of operation. This led to the SMES in Nigeria accounting for a higher percentage of industrial
INTRODUCTION.
1.1 BACKGROUND OF THE STUDY. The alarming rate of unemployment in the developing countries aptly described as “a waiting time bomb” [Owualah, 1999a] has been partly attributed to the population explosion being experienced by them. However, worsening the unemployment situation is the persistent lag in the growth rate of industrial employment in the face of the economic recession. In Nigeria’s case, industrial employment declined sharply as industrial and commercial activities were seriously affected by both external and internal factors. The shortage of employment became so acute, for instance, in the mid- 1980s, that Nigeria recorded a rate of unemployment of 10% in her urban cities and a little lower in the rural areas. [Umar, 1989] In order to stem the rising tide of unemployment, especially among the Nigerian Youths, by consciously creating job opportunities with emphasis on self reliance and entrepreneurship, the National Directorate of Employment [NDE], was established by the Federal Government in January, 1987. At the inception, the NDE articulated for practical programmes which focused on creating jobs through self-employment. These include the Small - Scale Industries and Graduate Employment, the National Youth Employment Vocational Skills, Development of the Agricultural Sector Employment and Special Public works programmes. [Owualah, 1999b]. A part from the NDE, the role of the Small and Medium Scale Enterprises [SMES] in employment generation has long begged for recognition. The SMES are a major source of employment for a large majority of people. They have a higher capacity for generating employment as their mode of operation are more labour-intensive. A very important rationale for promoting the SMES is their job creating potentials. This stems mostly from labour-intensive and subsequently, capital- saving methods of operation. This led to the SMES in Nigeria accounting for a higher percentage of industrial