COVENANT UNIVERSITY

Entrepreneurship Development Studies III

EDS221
Week 8

Relevance of Entrepreneurship and

SME’s to the Nation, Society and
Individuals
 OVERVIEW
OIntroduction
ODefinition of Small and medium Scale industries
ORelevance of SMEs
ORelevance to Nigerian Economy
ORelevance to the Entrepreneur
OConclusion
 Introduction
O Entrepreneurship primarily means innovation, to
others it means risk-taking; starting, owning and
managing a small business.

O Accordingly, the entrepreneur is then viewed as a

person who either creates new combinations of
production factors such as new methods of
production, new products, new markets, finds
new sources of supply and new organizational
forms; or as a person who is willing to take risks;
or as one who owns and operates a business
 Definitions of SMEs

O The definitions are by number of employees

and by total assets and sometimes by
working capital. The definitions are:

O SME is an enterprise that has asset base

(excluding land) of between N5million
and N5oo million and labor force of
between 11 and 300 persons
 Definitions of SMEs

O Thus we a have broad continuum by which

the definitions are applicable to these
companies. In the process we have different
types of these enterprises as:
O Micro/Cottage enterprise
O Small Scale enterprise
O Medium Scale enterprises
O Large Scale enterprise
 Micro/Cottage Enterprise

O An enterprise with a labor size of not

more than 10 workers;
O Total assets of not more than N1.5
million, including working capital
but excluding cost of land
 Small Scale Enterprise

O An enterprise with a labor size of not

more than 11-100 workers;
O Total assets of not more than N50
million, including working capital
but excluding cost of land
 Medium Scale enterprises

O An enterprise with a labor size of not

more than 101-300 workers;

O Total assets of over N50 million but

not more than N200 million,
including working capital but
excluding cost of land
 Large Scale Enterprise

O An enterprise with a labor size of more than

300 workers;

O Total assets of over N200 million, including

working capital but excluding cost of land
 Importance of SMEs

Small and Medium Scale enterprises are

firms that have been recognized as ones that
can be of serious importance to the
development process of the country as they
have a lot of advantages that can be gained
from their existence and sustenance.
 Relevance of SMEs
O Apart form the fact that they contribute to

growth of the economy in their own way, they

employ a sizeable number of people.
O The mega size companies today grew from the

small or medium size enterprises.

O Therefore every country including Nigeria

must not only encourage this set of

industries but must also sustain them.
 NIGERIAN SMEs
The development of Small and Medium
Scale Enterprises(SMEs) during the SAP
(Structural Adjustment Program) era is
another dimension to industrialization in
view of the failure of the heavy and large
import substitution industries.
 Relevance to Nigerian Economy

Apart from stimulating entrepreneurship,

the SME has the potential of:
O establishing linkages with agriculture,

O reducing poverty, and

O accelerating the development of rural

areas, hence mitigating rural-urban drift..

 Relevance to Nigerian Economy
O SMEs constitute about 70% of industrial

establishments, accounting for 70% of

industrial employment and 10-15% of
manufacturing output.
O Unlike the large-scale enterprises, the SMEs

have experienced expansion in post SAP

period.
 Relevance to Nigerian Economy
OThe consumer goods industries account for about
70% and 75% of value-added and employment in
the manufacturing subsector.
OIn terms of relative sizes, about 65.2% are small
scale and micro enterprises while the medium and
large scale enterprises represent 31.3% and 3.5%
of total manufacturing units, respectively.
Relevance to The Entrepreneur
O An entrepreneur is an individual who accepts
some sort of risk in the pursuit of new ventures.
O The word ‘Entrepreneur’ can apply to any
person organizing a new project or opportunity,
though it is most often used in a business
context.
O A person in this role is often characterized as
innovative, independent, optimistic, creative,
and hard-working.
Relevance to The Entrepreneur

O Entrepreneurship is one of the most cutting-

edge careers a person can get into. Due to that,
the industry is also one of the most welcoming
when it comes to making a major difference.
 Salary

O Often people do not feel fully compensated for

the work they do. Becoming an entrepreneur
means you can reap the benefits of all your
hard work.
O Many of the Nigeria’s richest people are
successful entrepreneurs.
 Flexibility

O Having control over your work schedule

means that you can choose when to take time
off and work the schedule that suits you best.
 Independence

O Entrepreneurs are able to make all of the

decisions relating to their company
themselves; they have complete control. This
allows for a huge degree of independence and
a chance to shape one’s own career.
 Excitement

O Becoming an entrepreneur is a very exciting

time, from the idea and start-up to the
development and realization of the product or
service. The entrepreneur is able to turn
passion to profit.
 Fulfillment
O Entrepreneurship can offer levels of
fulfillment and achievement that are hard
matched by any other type of employment.

O A great idea teamed with passion and

commitment will certainly help a new
entrepreneur overcome many of the challenges
posed by starting their own business
 Importance of SMEs; Korean example
O Korea is a typical example of a successful East Asian

country, where for over three decades, the trade and

industrial policies have evolved in response to changing
internal and external economic conditions.
O The Korean economy rebounded from the recession of 1982-

1984 to economic prosperity and moved for debtor to

creditor status in 1989.
O By 1989, Korea has moved from a poverty ridden

underdeveloped economy, to the status of a highly

industrialized economy.
 Importance of SMEs; Korean example

OThe decade of the 70s saw the emergence of large-

scale industrial conglomerates, the attainment of
economies of scale and technological progress that
has propelled it to a new level of international
competitiveness.
OHowever, one of the costs of rapid industrial
growth in Korea was the neglect of small and
medium scale enterprises that later resulted in
structural imbalances in the economy.
THANK YOU