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ENTREPRENUERSHIP INNOVATION AND ECONOMIC GROWTH IN NIGERIA Presented by: OLOGUNDUDU, MOJEED M.(Ph.D) Mountain Top University Economics Department Prayer City, Ogun State AND OJO J. OLANIPEKUN (Ph.D) McPherson University, Seriki Sotayo, Business Administration Department Ogun State 1 st Covenant University International Conference On Entrepreneurship (CU-ICE) June, 2017.
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ENTREPRENUERSHIP INNOVATION AND ECONOMIC GROWTH IN NIGERIA

Presented by:

OLOGUNDUDU, MOJEED M.(Ph.D)Mountain Top University Economics DepartmentPrayer City, Ogun State

ANDOJO J. OLANIPEKUN (Ph.D)

McPherson University, Seriki Sotayo,Business Administration Department

Ogun State

1st Covenant University International Conference On Entrepreneurship(CU-ICE)

June, 2017.

1. INTRODUCTION•The Social-economic impact ofEntrepreneurship Innovation on the sustainableeconomic growth in Nigeria economy is difficultto accurately measure or estimate but it isbelieved to be highly dynamic and significant(Chu, Kara, Benzing (2010)).

•Another study suggests that entrepreneurshipinnovation has been beneficial because theNigerian private sector comprising of small andmedium enterprises provides diverseemployment opportunities for 50% of thecountry’s population and 50% of the industrialoutput.

2. LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK2.1 The Concept of Entrepreneurship

• There is no specific definition on entrepreneurship

• Robert Hisrich, (2002) viewed entrepreneurship as theprocess of creating something new with value of devotingthe necessary time and effort, assuming the accompanyingfinancial, psychic, Social risks, receiving the resultingrewards of monetary and personal satisfaction andindependence.

• In almost all the definations of entrepreneurship, there isagreement that we are talking about a kind of behaviourthat includes:

(i) Initiative taking; (ii) Organizing of economic resources

(iii) The acceptance of risk or failure.

• In conceptualizing entrepreneurship, we could differentiate the following related concepts according to Ronstadt (1984):(i) Entrepreneur = Individual actor in the market

(ii) Entrepreneurial = Behaviours in the market

(iii) Entrepreneurship = Combinations of actors (entrepreneurs) and the behaviour in the market.

(iv) Entrepreneurial process = Combination of time dimension and behaviour in the market.

2.2 The Concept of Innovation

• One of the major characteristics or attributes of anentrepreneurs is the INNOVATION TENDENCIES.

• According to the New Oxford Dictionary of English (1998), theterm innovation is seeing as making changes to somethingestablished by introducing something new.

• To express this development of good ideas innovation Bogby(1988), Monetary (2010) added an addendum to our defination:(Adding value to customer needs).

• It should be noted, however, that the term innovation is oftenpoorly understood and can often be confused with relatedterms such as Growth, Invention, creativity and design.

• For example, Innovation leads to growth and invention. According to Drucker (1988). Bottom line growth and invention can also occur in a number of ways such as better service quality, cost reduction, cost avoidance and increased turn over.

2.3 Global View of Entrepreneurship• Economics experts and various studies conducted across the globeconfirmed that the two Asian giants; India and China are ruling theworld in the 21st Century on account of entrepreneurship and smallbusiness promotion feats (Economy watch. 2014)

• Market liberalization in the Chinese economy has brought about itshuge economic prosperity.

• In the last 30 years, it has recorded an average GDP growth rate of15% per annum.

• The economy has grown more than 10times during that period with Chinese GDP reaching 3.42 trillion dollars by 2007.

• In terms of Purchasing power parity GDP, China already has the biggest economy after United State of America.

• But now, China has become the largest economy in the world in this century using all measure of GDP (Economy watch 2014)

• Similarly India, an emerging economy has witnessed unprecedented level of economy expansion, along with countries like China, Russia, Mexico and Brazil.

•Indian economy has been predicted to grow at a level of GDP growth of 6.9% per annum in 1994 such that in the last 20 years the GDP growth rate has been steady and Sporadic (Economy watch 2014)

2.3 ENTREPRENEURSHIP AND ECONOMIC GROWTH IN NIGERIA

•The Nigeria economy is one of the most developed economies inAfrica.

• According to UN Classification, Nigeria is a middle-income nationwith developed financial, communication and transport sectors

• The oil sector is central to the Nigeria economic profile.

• It is the 12th largest producers of Petroleum products in the world.

•The oil sector accounts for almost 80% of the GDP share and above90% of the total export.

•Outside the petroleum sector, Nigeria economy is highly amorphousand lacks basic infrastructure. (Economy Watch, 2014)

•Lack of basic infrastructural facilities is a major threat toentrepreneurship innovation in Nigeria.

• Nigeria economy has great potential for economic growth and development given her vast natural resources in agricultural lands and minerals as well as abundant manpower.

• In the last two decades, economic growth rate has been very low and in many years less than the population growth rate.

• One of the reasons for the abysmal poor economic growth rate in Nigeria is lack of conducive economic climate to encourage entrepreneurship innovation.

• The attendance effect was that the general macroeconomic outcome has been poor, resulting in high poverty level (wikipedia, 2014)

• The following tables are the most recent data on the growth rate of major sectors in Nigeria for period of 2005 -2015:

Sector 2005 (%) 2015(%)

Agriculture 6.5 6.2

Mining and Quarrying 6.2 1.5

Manufacturing 9.4 9.2

Electricity, Gas & Water 4.9 4.2

Construction 14.4 13.2

Wholesale & Retail Trade, Restaurants, Hotels

15.2 12.3

Finance, Insurance, Real Estate etc. 7.5 6.7

Table 1: Growth Rates of Major Sectors in Nigeria, 2015

Source: African Statistical Yearbook 2015 by African Development Bank

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2015

Real GDP (%)

3.8 3.5 3.5 3. 7.1 6.2 6.9 5.3 6.4 5.3 6.8 8.5

Pop. (%)

2.67 2.61 2.54 2.53 2.45 2.37 2.38 2.38 2.03 1.99 2.0 2.5

U.R (%)

3.6 28.0 28.0 28.0 28.0 4.9 2.90 5.80 4.9 4.9 4.9 5.6

Mcu 36.1 42.7 54.9 56.1 55.7 55.9 53.3 54.6 NA NA NA 50.0

I.R (%)

6.9 16.6 12.9 14.2 13.8 16.5 13.5 10.5 5.40 11.6 11.5 12.6

Table 2: Nigeria: Performance of the Economy, 2000-2015

Source: The Central Bank of Nigeria, 2015

3. METHODOLOGY

• The methodology of this paper is narrative-textual case studies (NTCS) method.

• The choice of this method are predicated on the following facts:

(i) Absence of sequential data related to entrepreneurship and economic growth in Nigeria.

(ii) It allow the use of both quantitative and quantitative observation and available official statistics in different proportions for problem solving

• The Paper shall review the case studies of some selected successful entrepreneurial innovation food processing industries in Nigeria.

3.1 The Garri Processing Machine• Garri is a local staple food obtained from Cassava which is a

root crop grown widely in Nigeria.

• Cassava normally rots quickly and is difficult to preserve whole or as a fresh tuber.

• Traditionally processing Garri from Cassava is a long, tedious process.

• The harvested cassava has to be peeled, washed, grated, pressed, granulated and dry roasted before becomes edible Garri.

• Nearly all Garri is produced by women in rural areas and they spend their great time producing it with tradtional, inefficient and manual methods.

• Several researchers and entrepreneurs have recognised the need to mechanized all or part of garri processing.

• Federal Institute of Industrial Research, Oshodi has developed a garri processing plant that integrates all the processing stages.

3.2 The Yam Pounding Machine

• Yam is another staple that is cultivated and consumed across Nigeria.

• It is seasonal and very difficult to preserve.

• The commonest way to prepare yam is to pound it into a sticky mash after which it can be eaten in soup or a sauce.

• But pounding yam is laborious as it generates a large volume of sweat.

• The yam pounding machine is a post harvest innovation in Nigeria.

• The machine is a mechanized mortar and pestle.

• The prototype was produced in 2006 and after 2 years of continuous demonstration of its functionality and marketability, the innovator produced three of the machines and sell due to access to a modern workshop and trained technicians.

3.3 The maize Sheller

• The entrepreneur innovator was an agricultural engineer and he developed the maize sheller machine in response to the public heed.

• Ever since, the idea has been replicated by other researchers and the Sheller is now in general use.

• The maize sheller machine is classified as one of the

demand – pull innovation in Nigeria.

4. ANALYSIS AND DISCUSSIONS

• In spite of this entrepreneurial innovation from the selected food processing machines as established in the case studies, their achievements and continuous existence could not be sustained due to environmental and financial constraints.

• As a result, those other entrepreneurs who had passion for innovation were not motivated to implement their ideas.

• Other factors that hinders this entrepreneurs innovation in Nigeria is paucity of infrastructure such as bad roads, water shortage, erratic supply of electricity, and poor telecommunication. ( Manbula, 2002. Chu, Kara, 2008, Benzing, 2015)

• Business Environment and Enterprises performance surveys (2007) repeated in (2014) identified 15 critical challenges facing entrepreneurial innovation in Nigeria as listed in Table 3

Challenges of SMES in Nigeria

Small(%)

Medium(%)

Large(%)

Access to Finance 17.01 11.52 3.90

Access to Land 2.70 3.38 2.85

Licenses & Permits 0.58 0.60 0.00

Corruption 2.13 1.12 0.00

Courts 0.00 0.00 0.00

Crime, Theft & Disorder 1.64 3.40 4.33

Customs & trade Registration 1.09 2.23 0.00

Electricity 62.66 65.50 78.78

Inadequately educated workforce

0.32 0.32 0.00

Labour regulations 0.07 0.20 0.00

Political instability 0.79 0.45 0.00

Practices Informal Sector 0.92 1.66 0.00

Table 3: Critical Challenges Facing Businesses in Nigeria

Source: Business Environment and Enterprise Performance Surveys (BEEPS)/World Bank, 2014

5. CONCLUSION AND RECOMMENDATIONS.

• Economic growth is the key to higher living standards.

• Entrepreneurial innovation is one of the major ways of sustaining economic growth through Job creation and product added value for people of Nigeria.

• According to Okpara (2007) the place of innovation in commercial success can not be under estimated.

• Innovation is vitally concerned with novel approaches, new ideas, and originality and it is the means by which ideas are exploited for competitive advantage.

• Rather than innovation, most entrepreneurs in Nigeria prefer to imports their tools abroad because of high cost of local production.

• In order to reverse this trend, it is therefore recommended that the following policies should be adopted in other to enhance sustainable economic and entrepreneurial innovation in Nigeria.

(i) There is the need to investigate our latent natural resources for the possibility of transmitting them into goods and services. This would require a scientific analysis of the various resources available in the country, the identification of their properties, and a determination of the extent to which those properties can be harnessed.

(ii) There is the need to develop new technology which can be used to process the raw materials which may result from the investigation of natural resources suggested above and with a view to producing goods and services from them.

(iii) There is the need to adapt existing technology so as make them accept local materials are substitutes. A complete change from an almost total dependence on foreign research and technology is source of products is called for.

(iv) There is the need for government gives priority to capacity buildingfor technological innovation, good infrastructure and provideenvironment conducive for business that will lead to sustainableeconomic growth.

(v) There is the need for legislators and other leaders who develop economic policies should strive to encourage the innovation and risk taking of entrepreneurs. Enforcing property rights through contract, patent and copyright laws; encouraging competition through free trade, deregulation and antitrust legislation and promoting a healthy economic climate.

(vi) There is the need for Nigerian government to shift from over-dependence on oil and place more attention on the development of small & medium sized enterprises. for Economic prosperity in Nigeria, as in the rest of the world, depends on strong and empowered private sector to lead MSEs to a higher level of growth which would significantly contribute to the country's economic well-being.

THANK YOU FOR

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