Problems of the Development of Entrepreneurship in Nigeria


Historically, owners of business enterprises have been in existence all over the world, ever since trade by barter began. They have been accommodating themselves to the circumstance of items and places, carrying over the broad thread of their business affairs from century to century   with chains of transformation.   It was essentially the craftsmen who gave pedigree to today’s manufacturers.  The continuing changes since then, in the modern production process by which innovation or invention renders the existing one obsolete and creates areas of consumer satisfaction.   Schumpter J. A (1961) apathy described it as the process of creative self-destruction this rightly describes entrepreneurship and points its role in an economy.

Entrepreneurship as a process, represents the greatest single historical force known to have induced industrial revolutions to in those societies where the people and their government is a true spirit of national self-reliance have recognized and fully imbibed its lesson as a way of life.  According to Thomas Wolfe, he said, if a man has a talent and uses only half of it he has partly failed.   It he has a talent and learns somehow to use the whole of its, he has gloriously succeeded and won a satisfaction.   However, an overview of the development of the theory of entrepreneurship will better comprehend in the development of the train itself.

The meaning of entrepreneurship evolved over the years as world economic structure have changed and become more complex.   The origin of the term come from the French language and literally translated to mean between taken or go between”.   In the middle ages, the word referred to specific occupancy.   The term entrepreneurship” is used to refer to people or clerics and actors who are engaged in large-scale production.   Have the resources used by these groups were provided for them, though no risk was involved in that they do not tribute anything physically except their skills.

In the 17th century, the concept of risk in the notion of entrepreneurship developed, with an entrepreneur being viewed as a person bearing risk of profit (Loss) in a fixed price contract with the government.   Richard Cantillon a noted economist and author, viewed the entrepreneur as a risk taken who buys at certain price and sells at an in certain price, thereby operating at a risks.

During the 18th century an American economist Francis Wauker A. underscore the distinction between the capitalist who merely supplies funds and takes his profit in interest and the entrepreneur whose profit is his compensation of his efficient management of his business enterprise.

One reason causing this differentiation was industrialization occurring throughout the world.  Many innovators, thus they became the user of capital.   In riveting attention to entrepreneur no theoretician was more influential then.   Schumpter J. A. saw the entrepreneur as primarily an innovator whose dynamic creative response to the economic environment makes him central to the promotion of material growth.

Among the conditions that nurtured private enterprise were the dormant philosophy of economic individualism and lassies-fair, the gospel of work, a legacy of the puritan ethic universal acceptance of the self-made man, the glorification of material success, government policies that facilitate the private exploration of continental resources the largest internal free market in the world, a high level of social receptivity to invention and technology and a cheap supply of labour.  In 19th and 20th centuries entrepreneurs were frequently not distinguished from managers but rather were view from economic perspective.

By way of definition, there is no generally accepted definition of the word entrepreneurship” the definitions vary from country to country state to state form institution to institution and is usually based on the level of economic development of the particular economy and the purpose for which the definition is preferred.   According to John Udeh. O, entrepreneur is a person who risks his or her time, effort and money to start and operate a business.  Entrepreneurship implies a willingness to take calculated risk – both personal and financial and doing everything possible to influence the odds.

In the Schumpeterian view innovation was the criterion of entrepreneurship the defining character is simply the doing of a new thing or the doing of the things that are already being done in a new way.

Artur H. C has similar opinion, he views entrepreneurship as the purposeful activity of an individual or group of associated individuals induction or initiate and maintain a profit oriented business units for production or distribution of some economic goods and services.  The concept of entrepreneurship refers to a business situation where a person undertakes the jobs of brining together resources, both human and materials and managing them to achieve anticipated activities.

According to Hisrich and Peter:  entrepreneurship is the process of creating something different with value by devoting the necessary time and efforts assuming the financial, psychic and social risks and receiving the resulting rewards, monetary and personnel gratification.    Thus far entrepreneurship is a human creative act that involves finding personal energy by initiating and building an enterprise or organization rather than just watching analysis and describing one.

Entrepreneurship could also be defined in terms of exchange, that involves the definition, creation distribution of value and benefits to individuals, groups’ organization and the society at large.

Infact, entrepreneurs are resilient men and women who regards difficulty as a challenge and lean from their mistakes.  According to Adoum Osbome “you have got to fail some of the times or you are not trying hard enough.   It therefore requires special characteristics and decision-making modes to be this person called entrepreneur.

The fact is that, not all of us posses the characteristics of an entrepreneur, but the good news that it could be developed because, the skills are present but not developed in many people.   Common characteristics of entrepreneurs are a flair for identifying profitable business opportunities and the willingness to utilize the perceived opportunities optionally, willingness to take calculated risks, vision drive and initiate the desire to acquire organizing skills, for project execution and the ability to develop and devote the energies completely to attain ends.


The role of entrepreneurship in the process of economic development has long been recognized as an important question.

In the area of technology, much have been achieved.   Before the advent of the colonial masters there were in existence, some sort of technological break through in the field of black smiting.

Remarkable progress has been recorded at the University of Nigeria Nsukka and University of Sokoto as regards the development of solar energy.

Educationally, entrepreneurs have contributed immensely to the growth in educational institutions in the country and in the sense, supporting government in its bid to eliminate illiteracy by the year 2010.

Management development and training is another area where the contribution of entrepreneurs cannot be left mentioned.

The benefits coming from this manpower planning and training are many.


          Whenever a man sets up a business it is because he feels he can produce some useful commodities or services which will be needed by his fellow men.   In return, he expects to be able to earn a profit which will be reward for his efforts.   The analysis of business enterprises.   Here is to serve as a pedagogical too for assisting and exposing an intending entrepreneur in the art of managing and operating his business efficiently and effectively.

The task of any person wishing to start a business is to accumulate capital and generally, the only method of obtaining it is to save it up by self-denial the postponement of present consumption to a future date.   Other ways may be by loans from some one or financial institutions.

The difference between the various forms reflects.

  • The ownership of the capital concerned
  • The control of the conduct of the enterprise
  • The accountability of the controllers to the investors, in so far as they are definition people and
  • The definition of profits

The different forms of business enterprises can be classified under two basic forms namely:  un-incorporated business organizations and incorporated business organization.


This is the type of business that does not require any legal procedures to be fulfilled before the business is set up.


In Nigeria sole proprietorship or one man business ownership as is often called is the dominant form of business organizations the cheer guest for status, independence and lack of honest and trust are responsible for the negative attitude towards combining with other person.

Sole proprietorship constitutes the vital propelling engine for the Nigerian economy.   Also the workshop within the group helps in training of manpower though apprenticeship system.


Partnership is the type of business organization which two or more individuals (not exceeding twenty) make a legal agreement to own and operate a business unit with a view to make a profit.

The deed of partnership is a written accord embodying the nature of business the method and criteria of admission of a new partners, the amount of capital to be contributed by each partners, the sharing of business responsibility gains and losses and others.

The possibility of attracting entrepreneur and polling their resources skills and talents together for the success of the business in a big advantage.

Furthermore, the life of a partnership business is limited and should one of the partners die or withdraws; the business usually comes to an end.


Unlike the un-incorporated in accordance with prevailing acts of the National Assembly.   This form of business enterprise will enable the Entrepreneurs pool their resources, in order to generate the much-needed capital for purchasing an existing business or establishing a new one.

By legal personality, it is meant that the company will have the right to own property, to keep its own accounts, to use and to be sued in a law court.   Unlike un-incorporated business capital is raised through the issuance of shares.


In the words of J. B. says the function of the entrepreneur is to direct the application of acquired knowledge to the production of a product human consumption.

Read More: Entrepreneurship Development in Nigeria – Its Problems and Prospects


          In Nigeria, business success still depends largely on personal contacts and much gratification bribe kickbacks and lately up fronts a business can offer.   These tendencies not only increase cost of operations and limit profitability but also discourage men of high integrity and transparent honesty with entrepreneurial skills from venturing.


Finance undoubtedly is the life-wire of any business organization.   Finance in other words capital is important to organization, be it an profit making or non-profit making organization as water is important to a fish.

For example, in 1957 Keneh Olsen wanted to develop a machine to simplify engineering computations and required $70,000 (N560,000) to continue his project.

This difficulty in obtaining capital is compounded by banks which regard these people’s high risk borrowers.

Available literature have shown that money is the bull-ward of entrepreneurship development and lack of its shows slim probability for success.


Apart from capital shortage, the provision of some infrastructural facilities like electricity, water supply and accessible roads leads itself for evaluation.

Entrepreneurs need a well-developed infrastructure because they do not have enough resources to go into developing these facilities.


Political stability is as important as physical infrastructure for entrepreneurial development.

The environment necessary to initiate and sustain new activity and the implementation of new capital investment requires political stability good public administration and law and order within the community.   Political instability as one of the problems of entrepreneurship development is better experienced than explained in a research work of this nature.


Culture and orientation are twin factors which help fashion out the spirit entrepreneurship among individuals.

Orientation on the other hand can have positive as well as negative bearing on people’s entrepreneurial culture.

The banking industry, for example has attached much criticisms form most commentators on national issues because of high profits which they have been making since the advent of structural adjustment programme (SAP) in a society where reward is a function of effort or input people will always go for those thing, that will perpetuate their names like establishing of industries, but if otherwise, people will always go for easy means such as obtaining by Tricas (AKA 419).



While it is recognized that men without technical skills could run enterprises.   Successfully the inability of the typical Nigerian entrepreneur to entrust the management of his business to others seriously hampered the development of indigenous entrepreneurship.

Since management is the key factor in economic growth and development, all resources of a country, labour land equipment and other are under the day-to-day control of managers.

Majority of managers of small enterprises have no formal training are specialized in one or at most, a few aspects of their works.



Entrepreneurship development in Nigeria is faced with high level of uncertainty associated with enterprises ownership.

Nothing is as certain in Nigeria as uncertainty.   One has to expect changes in monetary and credit policy fiscal policy etc.



Business success requires the intangible quality of entrepreneurship as well as conditions necessary for the evolution and growth of entrepreneurship.   No business are subject to the pressures and the requirements of our society’s physical social economic legal and political government systems.



The physical environment relates to the land area, topography, drainage system, climate vegetation and soil types as they affect the sources of inputs, the conversion of inputs to out-put at the local of business and the consumer location.

As a result of the favourable physical environment in the country the following principle development of entrepreneurship.

Petro Chemical: crude oil natural gas chemical derivatives electrodes metals.

Building and road construction:        bitumen timber and wood, sands way materials and iron.

Industrial chemical and minerals:      caustic soda ammonia gypsum sulphiric acid and refrigerants.



          Though entrepreneurs play a crucial role in economic development they are also products of economic development.   Entrepreneurship requires large market for goods of enterprise, ready labour supply and capital for efficient and effective operation.

The establishment of Nigeria industrial development Bank of commerce and industries, the grating of tax holidays to infant industries and the enactment of protective laws are some positive measures taken by the government to encourage and to ensure the survival of indigenous enterprises.


The entrepreneurs provide a direct point through which society influence economic activities.

The social structure must not seem to impeded social mobility and enterprises should be accorded higher social prestige relative to other human endeavours.


The legal environment under which business operates influences the development of entrepreneurship.   The government being an ultimate controller of all social systems can encourage or discourage the development of entrepreneurship through rules and regulation.

Import Duty Relief on machinery and

Liberalization of locational approvals for entrepreneurship.

Pioneer status” or tax holiday to pioneers enterprises for a period of 3 – 5 years.

Furthermore the Nigeria Enterprises promotion Act 1977 and Alteration of list schedule enterprises order to 1982 specify the conditions for doing venture in Nigeria.    To ensure the operation of legal business the Entrepreneur is obliged by law to register his or her business prior to the commencement of serious business activity.


Various government policies have tended to encourage private investment, the providing opportunities for acquiring entrepreneurial experiences.

Apart from the commitment of substantial proportion of revenue to the general development of infrastructure, the government also attempts to influence development of entrepreneurship through number of incentive and assistance schemes.

A comprehensive National policy was introduced to encourage investment in manufacturing as well as local raw materials development. Such agencies as the industrial.

Training fund (ITF) National Directorate of Employment (NDE) and Directorate for food, Road and Rural Infrastructure (DFRRI) are established to encourage development of indigenous entrepreneurship.


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