Development Studies Round Table (A Journal of Development), Vol. 7 No.

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EFFECT OF SMALL AND MEDIUM SCALE ENTERPRISES ON YOUTH EMPOWERMENT

DEVELOPMENT IN ABEOKUTA METROPOLIS, OGUN STATE, NIGERIA
F. A. AJAGBE
Department of Entrepreneurial Studies
Federal University of Agriculture
Abeokuta, P.M.B 2240, Abeokuta
Ogun State, Nigeria.
Abstract
In a developing economy like Nigeria, Micro, Small, and Medium Enterprises
play tremendous role in reengineering socio-economic landscape of the
country. These enterprises largely represent a stage in industrial transition
from traditional to modern technology. The study examines impact of SMEs
development on youth empowerment in Abeokuta metropolis. In attaining
the highlighted objectives, structured questionnaire was administered for
data collection and stratified random sampling technique was used for
selection of respondents. Total of 120 respondents were selected and STATA
11.0 was employed for the analysis. These Results revealed that variables
with positive signs indicate that the chances of the SMEs in influencing youth
empowerment increase with education (4.04), government policy (2.48),
technology (4.61) and training (3.64). Hence, this recommendation was made
that educational policy should be put in place to encourage young Nigerians
on how to start a business, maintain, control to achieve the aims and
objectives of an organization.
Key Words: Small and Medium Scale Enterprises, Youth Empowerment
Development, Abeokuta metropolis, Nigeria

Introduction
In a developing economy like Nigeria, Micro, Small, and Medium Enterprises play
tremendous significant in developing the socio-economic landscape of the country. These
enterprises largely represent a stage in industrial transition from traditional to modern
technology. The differences in transitional nature of this process are revealed in the diversity
of these enterprises. For instance, many of the small enterprises are found in the use of simple
skills, machinery, local raw materials and technology. There is no doubt that small and medium
scale enterprises constitute the real fabric of a nation‘s economy. This is because the sector
serves as a catalyst for employment generation, national growth, poverty reduction and
economic development, Owualah (1998).
Entrepreneurship is fast given recognition of becoming a household name in Nigeria.
This emanate from the fact that the so-called white collar jobs that people clamour for are no
longer visible. Even sectors such as banks and manufacturing companies known to be the
largest employers of labour are on the down turn due to consolidation exercises and
fraudulent perpetrated by high and mighty in the banking sector. Many companies of course
are folding up due to erratic power supply, insecurity and persistent increase in interest rate
which has led to high cost of production and undermines their profit merging. This eventually
led to massive unemployment which is detrimental to the economic development of the
country (Kemi, 2014).
Since independence in 1960, unemployment has been a rising phenomenon as many
Nigerians are jobless. Many of the jobless persons have taken to crimes like armed robbery,
drug trafficking and prostitution among others. In view of realisation of the dangers of
unemployment, federal government has put in place policies and programmes such as the
establishment of the National Directorate of Employment (NDE) in 1986 to work out
 F. A. Ajagbe 114

modalities for eradication of mass unemployment in the country especially among the youth.
The essence of these efforts is to equip unemployed persons to be self-reliant and self-
employed through acquisition of relevant skills in any trade of their choice as a means of
earning a living. A person who has acquired a skill becomes an employer of labour instead of
searching for a white collar job that is hardly available. Hence, Nigeria is faced with the
challenge of curbing increase in crime rate, unprecedented increase in prostitution, high
mortality rate, political, thuggery among others which are traceable to youth unemployment.
Arising from this, it is therefore pertinent to examine impact of small and medium scale
enterprises on youth empowerment development in Abeokuta metropolis.
Barnabas (2017) made remark in the study of impact of SMEs on employment
generation in Plateau state, that one of the major problems facing Nigeria today is
unemployment. The study adopted survey research method with a sample of 133, Chi – square
techniques was adopted for the analysis and the result revealed that SMEs have significant
impact on employment generation in Plateau state through increased expansion of markets
for local goods and services. He recommended for power sector reforms, control of religious,
ethnic and political crisis and development of infrastructure.
Opafunto and Adepoju (2014) in their study of impact of SMEs on economic
development of Ekiti state, Nigeria reported that SMEs has proved to be a major intervention
in resolving the problem of poverty and unemployment in most developing countries. Survey
research design was adopted to obtain data from 150 respondents with the use of multi stage
sampling method across 16 local government areas of Ekiti state. The collected data was
analysed using statistical package for social science (SPSS) and chi – square. The result revealed
that there is a positive and significant relationship between SMEs and poverty reduction,
employment generation and improvement in standard of living of people in Ekiti state. It was
recommended that interest rate should be reduced for direct accessibility for fund by SMEs.
Safiriyu and Njogo (2012) examined impact of SMEs in the generation of employment in Lagos
state. The study was carried out with the use of questionnaire and interview schedule for the
selection of the respondents and for the analysis percentage and chi – square were employed.
The results showed that SMEs and sustainable development of Nigerian economy are related.
It was concluded that adequate attention must be given to wide spread of economic activities
through entrepreneurship and SMEs generation.
Okoli, (2014) remarked in his study of youth empowerment through entrepreneurial
development in Nigeria that entrepreneurial development is a field that saddles its recipients
with skills on how to be employable and useful to themselves and society at large. The study
made emphasis on youth empowerment which is orchestrated by the prevailing
unemployment of our youths after higher education, yet each year all the higher institutions in
the country keep on churning out graduates in thousands into the labour market for jobs that
are non-existent. Hence the needs for entrepreneurial development as a way of equipping
them with the necessary skills that will enable them start up something on their own. The
study amongst others looked at the objectives of entrepreneurship development, support
organizations for entrepreneurship in Nigeria, tips for entrepreneurship development,
implications for entrepreneurship development on youth empowerment.
Oloruntuyi and Ogunyemi (2016) in their study of impact of small and medium scale
enterprises in the creation of jobs in Ondo state, opined that small and medium enterprises
have been considered as the engine of economic growth and for promoting equitable
development. In their research a total of two hundred respondents were used. Both
questionnaires and interview were used and for the analysis, two different statistical methods
 Development Studies Round Table (A Journal of Development), Vol. 7 No. 1 115

were employed (i) simple percentage and (ii) chi-square (X ). The results show that small and
medium scale enterprises and sustainable development of the Nigerian economy are related.
Hence, it was recommended that government should make policies that will target
macroeconomic stability.
This paper by Ejima (2017) was meant to examine how youth empowerment in Kogi
State, Nigeria could be achieved through participation in Small and Medium Scale Enterprises
(SMEs). In this study, the key factors responsible for the failure of the previous youth
empowerment programmes in Nigeria such as inability of government/private sector to create
jobs, inadequate technical know-how, collapse of the manufacturing/industrial sector, etc,
were discussed. The study also identified employment generation, poverty reduction, and
structural transformation of the rural areas among others, as the major benefits of sound
participation of youths in SMEs. Hence, this recommendation was made to create jobs through
investment and reinvestment in SMEs and create more vocational skills acquisition centers for
the teaming youths.
Methodology
This study was carried out in Abeokuta metropolis, Ogun state, Nigeria. A well-
structured questionnaire was designed to obtain relevant information from 120 respondents
chosen through stratified sampling techniques. The primary data were analyzed using such as
descriptive statistics analysis percentage, and frequency distributions. In other to examine the
association between small and medium scale enterprises on youth empowerment
development, Logit regression was employed because of the quantitative nature of most of
the variables. Logit model is presented thus:
The model is in explicit form:
Y = f (X1 X2 X3 - - - - -Xn) + e ………………………………… (10)
Where Y = Income
X1 = Age (years of existence)
X2 = Level of Education (formal (1) informal (0))
X3 = Gender (Dummy variable, male (1) female (0))
X4 = Technology (Dummy Yes (1) No (0)
X5 = Training (Dummy Yes (1) No (0)
X6 = Government policy (Dummy Yes (1) No (0)
Ui = error terms
Results and Discussion
Demographic Characteristics of Respondents
The variables that are expected to have important implications for influence of small and
medium scale enterprises on youth empowerment is presented in Table 1. About 75% of the
respondents were male while 25% were female. In other words more male are inv olve in
transactions that could be affected by youth empowerment in SMEs. The Table 1, also shows that
25% of the respondents were within 20 – 29 age group, while 58.3% where between 30 – 39 years
age cohort, 16.7% were more than 40 years old. This reveale d that the population sampled was
predominantly middle aged. This age – groups are known to be energetic and therefore expected
to be entrepreneurial and economically active in exploring avenue for business opportunities.
The result of the educational status of the respondents is in Table 1 revealed that 41.7%
had post primary education, 41.7% had vocational/Technical education while the remaining 16.7%
had attended either polytechnics or Universities. The distribution clearly reveals that, all the
 F. A. Ajagbe 116

respondents (100%) had acquired one level of education or the other. The result of the cadre
status of the respondents is in Table 1. 75% were junior staff, 52% were senior staff. The
distribution clearly reveals that, junior staff were more than the senior in te rms of workforce.

Regression for influence of SMEs on Youth empowerment

Table 2. Shows regression for influence of SMEs on Youth empowerment. The result of
regression model shows that Table 2 has coefficient of variables that were statistically signifi cant
at 1%, and 5% probability levels. The variables are education, technology, and government policy
and training. Education (4.04) positively affects the level of youth empowerment. This shows that
an increase in the level of education of the people posi tively increases the level of youth
empowerment in an organization. Also, education will pave way for an individual to gain direct
access to all forms credit required to empower them. With increase in income of an individual the
greater the financial empowerment of an individual.
Government policy is positively correlated with the level of youth empowerment and
significant at 5% level. This shows that positive influence of government policy on youth empowerment
will enhance the efficiency and effectiveness of the young Nigerians. It also enhances self-confidence
and commitment of youth and reduces job stress and improves the ethical behaviour of the youth as
well as their quality of life.
Technology (4.61) is positive. This shows that a fall in the level of technological development of
an organization the lesser the growth and development of young Nigerians also the level of
performance of an individual in an organization. In other words, the better the technological
advancement the greater the performance of an individual in an organization and the income to be
generated and this will invariably act as financial empowerment to boost the business.
Training, (3.64) is positive. This shows that an increase in the level of training in an organization
for the youth the greater the level of growth and development of the youth. Also, training programme
will provide aspiring youth with a platform to show case their business acumen, skills and aspirations to
business leaders, investors and mentors in Nigeria. Hence, the required vocational, entrepreneurial and
managerial skills will be provided.
Conclusion and Recommendations
This study concluded that education, government policy, technology and training positively
affect the level of youth empowerment. It is against this background that these recommendations were
made that, (i) educational policy should be put in place to encourage young Nigerians on how t o start a
business, maintain, control to achieve the aims and objectives of an organization and (ii) there is need
for government to provide a policy environment that affords the necessary incentives for youth
empowerment to grow and developed.
References
Barnabas, G., (2017). Impact of Small and Medium Scale Enterprises on Employment Generation in
Plateau State, Nigeria. IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-
487X, p-ISSN: 2319-7668. Volume 19, Issue 6. Ver. I (June 2017), PP 47-54
www.iosrjournals.org.
Ejima A. O. (2017). Achieving Youth Empowerment through Small and Medium Scale Enterprises in Kogi
state, Nigeria. Research Guru. Online Journal Multidissciplinary Subjects (ISSN: 2349 - 266X)
UGC Approved Journal No. 63726. Vol.11, Issue 3, December, 2017. www.researchguru.net.
Kemi, .O. O. (2014). The Role of Small and Medium Enterprises in Economic Development: The
Nigerian Experience. International Conference on Arts, Economics and Management (ICAEM'14)
March 22-23, 2014 Dubai (UAE).
Okoli, D. I., & Okoli, E. I., (2013). Youth Empowerment through Entrepreneurial Development in
Nigeria. Journal of Educational and Social Research MCSER Publishing, Rome-Italy. Vol. 3 No. 9
November 2013. ISSN 2240-0524.
 Development Studies Round Table (A Journal of Development), Vol. 7 No. 1 117

Oloruntuyi, A. O., & Ogunyemi, F. F.,(2016). Impact of Small and Medium Scale Enterprises in the
Creation of Jobs in Ondo state. JORIND 14(1) June, 2016. ISSN 1596-8303.
www.transcampus.org/journal; www.ajol.info/journals/jorind 1.
Owualah, S.I., (1998): Entrepreneurship in Small Business frim G- MAG Investment Ltd. Ikeja, Lagos . P. 6
7.
Safiriyu, A. M., & Njogo, B. O., (2012). Impact of Small and Medium Scale Enterprises in the Generation
of Employment in Lagos state. Kuwait Chapter of Arabian Journal of Business and Management
Review Vol. 1, No.11; July 2012.

Table 1: Frequency and Percentage Distribution of Respondents by their socio-

economic characteristics N = 120
Socio-Economic characteristics Frequency Percentage Cumulative
%
Gender
Ma l e 90 75.0 95.0
Fema l e 20 25.0 100.0
120 100.0
Age
20 – 29 30 25.0 25.0
30 – 39 70 58.3 83.3
40 a bove 20 16.7 100.0
120 100.0
Educational Status
Pos t pri ma ry 50 41.7 41.7
Voca ti ona l /Techni ca l 50 41.7 83.4
Terti a ry 20 16.6 100.0
120 100.0
Cadre Status
Juni or s ta ff 90 75.0 75.0
Seni or s ta ff 30 25.0 100.0
120 100.0

Source: Field Survey, 2018

Table 2: Regression for influence of SMEs on Youth empowerment

Dependable variable: Income
Explanatory Coefficient Std. Err. Z p>/z/ (95% conf.) Interval
variable
Ln(education) .5442029 .1346376 4.04*** 0.000 .2773279 .8110779
Technology .6540748 .1419507 4.61*** 0.000 -3727039 .9354458
Government
policy .2633641 ..1062137 2.48** 0.015 .0528301 .473898
Training .433696 .1192091 3.64*** 0.000 1974029 .6699892
Constant .0930774 .1208485 0.77 0.443 .1464654 .3326202
Number of Obs. 120
F (11, 108) 174.65
Prob. > F 0.0000
Pseudo R2 0.9468
Source: Field Survey, 2018

** Significant at 5%
*** Significant at 1%