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Government Support for Entrepreneurship in Nigeria : Exploring entrepreneurship in a declining economy



Recognizing the indispensability of the small-scale, private sector enterprise as the dynamic impetus for general economic development, many countries have instituted enterprise support networks and structures to fuel the development of these enterprises. Nigeria is not an exception in this regard. At various times since the 1970s, the government has designed and introduced a variety of measures to promote small and medium enterprise development. These measures included fiscal, monetary and export incentives.

Fiscal incentives introduced included tax holidays and tariff concessions. For instance, small enterprises were given a tax holiday for the first six years of their operation. In terms of monetary authority support, the Central Bank of Nigeria introduced credit guidelines requiring commercial and merchant banks to allocate a portion of their loanable funds to small enterprises. A number of developmental financial institutions and schemes were also established to aid the development of the small and medium enterprises (SMEs) in the country. These included the Nigeria Bank for Commerce and Industry (NCBI), Nigerian Industrial Development Bank (NIDB), the so-called Peoples Bank, the National Economic Reconstruction Fund (NERFUN), and the World bank SME I and SME II loan schemes. There were also export incentives from the Nigeria Export-Import Bank (NEXIM) to stimulate export loan facilities to SMEs, and export duty draw-back schemes administered by the Nigeria Export Promotion Council (NEPC).

Other incentive programs were technical in nature, such as the provision of manpower training, appropriate machinery selection and installation, machine repairs and maintenance, and extension services. These services were provided by institutions such as the Industrial Development Centers (IDCs) the Center for Industrial Research and Development (GIRD), the Center for Management Development (CMD), Project Development Agency (PRODA) and the Raw Materials Research and Development Council (RMRDC).

Such support programs and initiatives have had varied levels of success in different countries around the world. In Korea for instance, public policies were found to be instrumental in the development of the SME sector and the industrialization of the country. But in Singapore this was not found to be the case (Regnier, 1998). In light of the difficult economic conditions and business climate in Nigeria, and the fact that the support initiatives were principally a response to such conditions, it would seem reasonable to expect the intended recipients would patronize these initiatives. Correspondingly, one would expect a positive effect on the performance of supported firms. The effectiveness of the enterprise support programs and initiatives in Nigeria over the period of economic decline remains unclear. Accordingly, the present study will explore three hypotheses concerning whether support is received, how much support is received, and the form of the support that is received:

Hypothesis1: The performance of supported firms will be significantly different from the performance of firms that were not supported.

Hypothesis 2: The performance of firms that received substantial support will be significantly different from the performance of those firms that received limited support.

Hypothesis 3: The performance of firms that received only financial support, non-financial, and both financial and non-financial support will differ significantly from one another.

Exploring entrepreneurship in a declining economy
Journal of Developmental Entrepreneurship, Apr 2000 by Yusuf, Attahir, Schindehutte, Minet


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References: Constraints of growth-oriented enterprises in the southern and eastern African region
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