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CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Perception of African entrepreneurship among scholars and researchers seem to differ considerably. At one extreme is the view that, for one reason or the other, technical entrepreneurial talent that involves the establishment and management of manufacturing industries for productive activities in the real sector of the economy, is lacking in Africa. According to a World Bank study carried out by Nil-,-Henrik March in 1995, the poor growth performance of most sub-Saharan countries and, in particular, the slow rate of industrialization could be taken to support such a dismal perception. Supporters of this view May point to the fact that the kind of economic policies that have been followed In many African countries in the two to three decades after political Independence have not always been conducive to private enterprise. This position is consistent with a third. view by Adjebeng-Asem (1989) that the African entrepreneur is alive and well, brat that he or she, rather than undertaking manufacturing businesses, has been diverted to non-productive, rent-seeking activities which researchers have referred to as commercial entrepreneurship.

In spite of this critical gap in Africa's development process, researchers scholars around the world have long identified the role of entrepreneurs and entrepreneurship in the economic development of nations. For instance, Dozie (2005) argues that this vital factor of production formed the bedrock of the classical thesis of Joseph Schumpeter (1934) who established that no nation would break the barriers of development without a critical mass of entrepreneurs. This assertion, which formed the basis of Schumpeterian model economic growth, has helped many developed and even developing nations accelerate their pace of development by focusing on appropriate incentives support entrepreneurial activity (Dozie, 2005). It is the entrepreneurs who generate the critical momentum an economy requires for economic growth by breaking new grounds In human endeavour as a result of the vital characteristics or attributes they posses. Unfortunately, after more than four decades of import substitution strategy, structural adjustment programme commercialization and privatization of ailing state ­owned enterprises general economic decline, the manufacturing sector's contribution to the Gross Domestic Product (GDP) in Nigeria is still very small. It is plagued by productivity and low­ quality output. This is compounded by the consequent increase in competition from imports, which has resulted in downsizing or outright closure of many manufacturing industries.

Therefore, the extent to which the restructuring of the private sector as engine of growth of the economy will succeed is dependent on the fostering and development of technical entrepreneurship among the indigenous population. In addition, theoretical and empirical investigations have emphasized the crucial role that technological innovation and technical entrepreneurship play in fostering economic development. These investigations are now seen as crucial and are also recognized as important components of technological policy and economic planning.

1.2    STATEMENT OF THE PROBLEM

The present emphasis by government and stakeholders on indigenous technical innovation and entrepreneurship stems from the failure of past attempts through the import substitution strategy to stimulate development by borrowing or transferring advanced and sometimes inappropriate and sustainable technologies from developed countries. This position was further reinforced by Adjebeng-Asem (1989) where it was argued that governments in most developing economies such as Nigeria were criticized for paying inadequate attention to the need for accelerated economic growth and for not harnessing the abilities of their own citizens for technological innovations and entrepreneurship.

Critics also conclude that these developing countries depend on exogenous technologies that are inappropriate for their environment (ibid, 1989). This has been responsible for Nigeria's exports which have largely been based on raw materials and semi-manufactured goods with the petroleum sector as the most important. Less than 5% of these exports are on the average attached to knowledge intensive goods and services Adjebeng-Asem (1989) Akeredolu-Ale (1975). The problems became acute in the 1980's and early 1990's, when Nigeria experienced stagnating industrial output and decreasing crude oil prices while industrialization through the production of indigenous technological development became central topics in the industrial policy debates.

As a result of this, United Nations Development Programme UNDP, (1992) and United Nations Industrial Development Organization UNIDO, (1994) argued that if Nigeria is to join the league of industrialized economies, industrial activities have to converge and focus more on knowledge-based production particularly in the small scale manufacturing and processing industries. This view was partially enunciated in the various development national budgets, rolling plans and in the current reform programmes elaborated in the National Economic Empowerment and Development (NEEDS) Federal Government of Nigeria, (2004). The central theme of the policy has been that small-scale industries should spearhead the nation's drive towards economic recovery. Studies have shown that small industries in many countries provide the mechanism for promoting indigenous entrepreneurship, enhancing greater opportunities per unit of capital invested, and aiding the development of local technology Sule (1986), Nils-Henrik and March (1995). In Nigeria, small-scale businesses represent about 90% of the industrial sector in terms of the number of enterprises (Ajayi, 2002). Similarly, they have also contributed significantly to economic development through employment, job creation and sustainable livelihood Nigerian Investment Promotion Commission (2003). In spite of their significance, and contribution of small industries to the national economy, many problems and constraints still exist in promoting their development and growth.

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