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Entrepreneurial Challenges and Opportunities for Small, Micro and Medium Enterprise: A Case
study of Nigeria.
Abstract
Nigeria is a developing country and there are several socio economic factors that threaten the
growth of economic development despite the strategies and intervention. This study examines the
challenges and opportunities faced by an entrepreneur using the Small, Micro and Medium
Enterprises in Lagos Nigeria as a case study. This study will be conducted to investigates if
Small, micro and Medium enterprise can be totally developed it help in removing poverty
employment and wealth creation and the government also will benefit too because of the power
it has to enhance the country’s growth. This research adopted a descriptive, explanatory and
exploratory research design using 200 randomly selected small business operators in Lagos.
Survey was the main procedure for data collection making use of a self-completion questionnaire
with closed questions. Theories like Cantillion theory, Kirzner theory, were used to support the
findings. This study recommends that Government (policy makers) should really recognize the
main purpose of entrepreneurship as it contributes to developing the economy by creating an
atmosphere for private sector opportunities and also help to provide the right infrastructure like
water, electricity, roads and network communications.
Introduction
Nigeria is a country endowed with resources from human to natural and if properly devoted to
will have turned them into a developed nation. The nation ability to produce a proper flow of
business connection only happens when its citizens rise up and start business activities and good
entrepreneur helps to create a solid economy (Ihugba et al. 2013, p25). (Harper, 2003) states that
the main drive that develops wealth is entrepreneurship, discussions of economic growth and
development often fails to notice or acknowledge the entrepreneurs change and adaptation that
underlie economic performance.
Entrepreneurship as a subject matter (and is still generating) increased interest in Nigeria. This
increased interest in entrepreneurship is partly due to the belief that it will help to reduce
unemployment, poverty and under-development and partly due to the belief that entrepreneurship
will also grow the economic development Clausen (2006). Nigeria has a lot of ventures and
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investment prospective from the large, rich, full and dynamic resources it has. The behavior and
actions of business owners in the country as a tool for measuring economic growth and
development has been under watch. This watch has been against the backdrop of the reduced
behavior and actions that form small scale ventures characterized in looking at the part it plays in
the development of the economy. Investing into the nations resources need useful fields.
Activities and radical innovations in entrepreneurship in Nigeria have brought about businesses
in agriculture/agro-allied, solid minerals, transportation, information and telecom, hospitality and
tourism business, building and construction etc. (Anyadike et al. 2012) states that despites these
resources, Nigeria is still one of the poorest nation in the world and has a high volume of
unemployment in Africa.
The main purpose of this work is to discover the challenges and proffer solutions to these
challenges that will cause a positive impact on the economy.
Keywords: Entrepreneurship, opportunities, challenges, Smme’s, Economic development.
Statement of Problem
The small, micro and medium scale business in Nigeria has a low performance and hasn’t
contributed to the growth of the economy. Most SMME’s record low performance during their
first years of startup, some of them don’t even make it between their sixth year only about five
percent struggle and make it to the maturity stage in business (Agwu and Emeti 2014, p2). The
following factors have been identified contributing to the issues of Smme’s they include:
1) Insufficient Capital: (Ufot et. al. 2014, p658) argued that money is a key issue and it’s a
challenge to sponsor Smme’s in Nigeria. Small scale ventures are funded from an
individual personal savings, getting loans from friends and families also from credit
associations. Institutions like commercial banks hardly give credits to SMMEs loans
without proper collateral, while micro finance schemes are not properly develop and
there is little they can do to help SMME’s in finance.
2) Poor Infrastructure: Idam (2014) emphasized the devastating state of infrastructure such
as lack of power supply, bad road network and lack of water supply on upcoming
businesses causes low business performance.
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3) Lack of Managerial skills: entrepreneurs these days lack managerial skills therefore they
do not know how to plan ahead of the future, low standard of education and proper
training contribute to poor managerial skills.
4) Government inconsistency to make favorable policies: since entrepreneurs have no say in
government policies or control over it, they don’t benefit from it except they have the
financial muscles to do it.
5) Poor product and services offered to customers and understanding the needs of their
customers therefore providing them with bad products and poor services cause low
business performance.
Nigeria is very rich in so many other unexploited resources in different divisions of the economy,
they include agriculture, mining, semiprecious stones and other resources have not been properly
developed because of the petroleum industry (Ihugba et al. 2013, p30). The following present
opportunities for investors and entrepreneurs they include:
1. Agriculture: Nigeria is a country filled with vast array of lands which is yet to be
exploited by the government and individuals for purposes like farming, rearing of
animals, forestry and these present opportunities for both the government and individuals.
2. Mining: In June 2103 the federal government developed a new plan to bring up the
mining sector of the economy by declaring duty free the importation of mining
equipment’s (Top Business Idea, 2016).
3. Security: Setting up Security Company serves as a good investment opportunity for
entrepreneurs in Nigeria with a huge demand for security services in Nigeria these days
(Ihugba et al. 2013 p32)
4. Training Centers: : Different people write exams and test on a daily basis and most
people need help which is done by tutoring, trainings, specialized training or conducting
tutorials, examples of these training centers include specialized learning centers
Research Objectives
The following objectives were developed in this work:
1) To determine if lack of finance constitute a major problem in the performance of
SMME’s
2) To understand how good infrastructure can affect business performance.
3) To determine if poor management skills can lead to poor business performance
4) To understand if government policies influence the performance of SMMES
5) To help entrepreneurs understand the needs of their customers
Research Questions
The following research questions were asked:
1. Does lack of finance leads to problems in performance of Small, Micro and medium scale
enterprise?
2. Do poor infrastructural facilities constitute a major setback to the performance of
SMME’s?
3. Does lack of managerial skills affect the poor performance of small, micro and medium
scale enterprise?
4. To what extent do Government policies and interventions programmes improve the
activities of small, micro and medium scale enterprise in Nigeria?
5. To what extent do entrepreneurs understand the needs of their customers?
Literature Review
SMMEs in Nigeria are usually known as the support system of the economy, they have been the
head to major growth in the economy (Agwu and Emeti 2014, p4). In a research done by the
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