INTRODUCTION

1.1 Background to the Study

Many developing countries like Nigeria are faced with the crippling challenges of inequitable income distribution, low per capita income, extreme poverty and unemployment.

As the world’s fifth largest exporter of crude oil and the largest economy in Africa, with millions of acres of arable land, and a wealth of human capital by virtue of its estimated population of over 180 million people, Nigeria has the right fundamentals to create employment to meet the needs of its teeming population.

Small businesses have the tendency to drive the economy of any country. Small businesses account for over 80% of enterprises that employ 75 % of the Nigeria’s total workforce.

Small businesses have strong influence on the development of any country, especially developing countries like Nigeria due to their potential to stimulate economic growth and create employment opportunities through entrepreneurship. 

Entrepreneurship is an unwritten requirement for the social and economic development of any nation. Hence, small businesses are considered by several studies to be an engine of development and a veritable vehicle towards employment creation.

Small businesses are responsible for driving innovation and competition in many economies of the world. The proliferation of small businesses is expected to be an antidote to the monumental scale of unemployment in the developing economies because of its great potential for employment generation. 

Small businesses also produce goods for exports, thereby generating additional foreign exchange and hence help to strengthen the national currency and the balance of payment position. They can be beneficial in the mitigation of rural urban migration, which is a vast socio-economic problem. They are also relevant in the improvement of local technology, mobilization of local resources, output diversification, development of indigenous entrepreneurship and forward integration. 

1.2 Statement of the Problem

Small businesses are saddled with the expectation of providing a sustainable road map towards achieving economic growth and alleviating the problem of unemployment.

Most people start their own small businesses out of the quest to earn income for themselves. In the process, these small businesses flourish and they are able to transition from just self-employment to creating employment for other people.

The questions are whether small businesses contribute to employment generation and its sustainability? If small businesses contribute to income creation for those individuals engaged in them in Nigeria? What are the contributions of small businesses to poverty alleviation in Nigeria? What are the contributions of small businesses to economic growth in Nigeria? The study therefore aims to identify the role of small businesses in employment creation in Nigeria with a view to making recommendations. 

1.3 Research Questions

Small businesses play vital role in the policy framework of the government, particularly in creating employment. To achieve clarity, this research will attempt to answer the following questions:

I. Do small businesses play a role on employment creation in Nigeria?

II. Do small businesses reduce unemployment rate in Nigeria?

1.4 Objective of the Study

The main objective of the study is to find out the role of small businesses on employment creation in Nigeria. 

Other objectives of the study are to:

I. Examine the role small businesses play in employment creation in Nigeria

II. Whether small businesses reduce unemployment rate in Nigeria

1.5 Statement of Hypothesis

To guide this research, the following Null hypothesis (Ho) and Alternative Hypothesis (Ha) have been formulated for testing in this study:

Ho1: Small businesses do not play significant role on employment creation in Nigeria

Ha1: Small businesses play significant role on employment creation in Nigeria

1.6 Significance of the Study:

The rationale for the study is to shed some light on the role of small businesses in employment creation in Nigeria. As much as this undertaking is primarily for academic purposes, its findings will serve as a guiding principle to help the relevant government authorities in policy formulation to improve the development of small-scale businesses in order to contribute to economic growth. 

The paper is also of great importance, as its findings will help existing and prospective small-scale businesses.

The submissions in terms of recommendations will be vital for both practical use and future references to students, researchers and the general public. 

1.7 Scope of the Study

The study investigates the role of small scale businesses in employment creation in Nigeria but it focuses on Abuja, the federal capital territory of Nigeria as a case study. 

1.8 Limitations of the Study

The constraint of this study includes the following:   

i. The researcher had limited finance to face the various travelling, printing and logistical challenges of this work

ii. The study has been acutely limited by lack of any research grant window

1.9 Definitions of Terms

The following terms are defined in order to lend clarity and remove any ambiguity as well as enhance understanding of the context:

a. Small Business:

This is any business that is independently owned and operated, that is limited in size and in revenue depending on the industry. A local bakery that employs 10 people is an example of a small business.

b. Employment:

This is the condition of having paid work.

c. Balance of Payment:

This is the difference in total value between payments into and out of a country over a period.

d. Economic Growth:

This an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation.

e.   Forward Integration: 

This is a business model whereby a company takes direct control of how its products are distributed to achieve greater economies of scale or higher market share.

f. Entrepreneurship:

The capacity and willingness to develop, and manage a business venture, usually with considerable initiatives and risks

g. Nigeria:

This is a West African country on the Gulf of Guinea (an arm of the Atlantic Ocean): Exploited by Portuguese, British, French, and Dutch traders in the 1600s and 1700s: Nigeria was eventually claimed by the British, who consolidated the area into one colony in 1914. It became independent in 1960, a republic since 1963: member of the Commonwealth: 356,669 square miles (923,768 square kilometers). In 1991, the seat of government was moved from Lagos to the new capital, Abuja.