THE ROLE OF ENTREPRENEURSHIP
TOWARDS EMPLOYMENT GENERATION AND POVERTY REDUCTION: A THEORETICAL DISCOURSE
By
Dr. Mustapha Muktar
mustmuk@umyu.edu.ng
Department of Economics,
Umaru Musa Yar’adua University Katsina
A Lecture Presented at First Annual Students’ Entrepreneurship Lecture,
Organized by the Students’ Union Government,
Umaru Musa yar’adua University, Katsina.
5thMarch, 2013
INTRODUCTION
The concept of
entrepreneurship was first established in the 1700s, and the meaning has evolved
ever since. Many simply equate it with starting one’s own business. However, most
scholars believed it is more than that. To some, an entrepreneur is one who is willing to bear the risk of a new
venture if there is a significant chance for profit. Others emphasize the
entrepreneur’s role as an innovator who markets his innovation. Still others say that
entrepreneurs develop new goods or processes that the market demands and are
not currently being supplied. Entrepreneur can also be viewed as a person that
wants to works for himself; it is sometimes synonymous with self employment
In the 20th century,
economist Joseph Schumpeter (1883-1950) focused on how the entrepreneur’s drive
for innovation and improvement creates change. Schumpeter viewed entrepreneurship
as a force of “creative destruction.” The entrepreneur carries out “new
combinations,” thereby helping render old industries obsolete. Established ways
of doing business are destroyed by the creation of new and better ways to do
them. Entrepreneurship therefore, is more than simply “starting a business.” It is a process through which
individuals identify opportunities,
allocate resources, and create value.
This creation of value is often through the identification
of unsatisfied needs or
through the identification of
opportunities for change. It is the act of being an entrepreneur which is seen as "one
who undertakes innovations with
finance and business acumen in an effort
to transform innovations into economic goods hence
entrepreneurs see “problems” as “opportunities,”
Entrepreneurship therefore by implication is the act of being an
entrepreneur, it involves all the activities and function undertaken by an
entrepreneur. Entrepreneurship is believed to provide an important avenue for
individuals to advance up the income ladder. For some, it may provide a better
route than paid employment, while for others, who may be disadvantaged when
pursuing paid employment; it may provide the only route. Entrepreneurs are charged with the
responsibility of innovating new products, better production method, creation
of markets and managing the production process. They are in a nutshell engaged
in wealth creation. Financing therefore is needed by entrepreneurs to enable
them carry out their function effectively.
WHY BECOME AN ENTREPRENEUR
1.
Entrepreneurs are their own bosses they make the
decisions, they
choose whom to do business with and what work they will do. They decide what
hours to work, as well as what to pay and whether to take vacations or not.
2.
Entrepreneurship offers a greater possibility of
achieving significant financial rewards than working for someone else.
3.
It provides the ability to be involved in the
total operation of the business, from concept to design and creation, from
sales to business operations and customer response.
4.
It offers the prestige of being the person in
charge.
5.
It gives an individual the opportunity to build
equity, which can be kept, sold, or passed on to the next generation.
6.
Entrepreneurship creates an opportunity for a
person to make a contribution. Most new entrepreneurs help the local economy.
A few through their innovations contribute to society as a whole.
CHARACTERISTICS OF AN ENTREPRENEUR
1.
Creativity: this is
the spark that drives the development of new products or services or ways to do
business. It is the push for innovation and improvement. It is continuous
learning, questioning, and thinking outside of prescribed formulas.
2.
Dedication: this is what motivates the entrepreneur to work hard, 12 hours a day or more, even seven
days a week, especially in the beginning, to get the endeavor off the ground.
Planning and ideas must be joined by hard work to succeed. Dedication makes it
happen.
3.
Determination: is the extremely strong
desire to achieve success. It includes
persistence and the ability to bounce back after rough times. It persuades the
entrepreneur to put extra effort. For the true entrepreneur,
money is not the motivation. Success is the motivator; money is the reward.
4.
Flexibility: is the ability to move quickly in response to changing market needs. It is
being true to a dream while also being mindful of market realities. A story is
told about an entrepreneur who started a provision store, but customers wanted a barbing
saloon as well.
Rather than risking the loss of these customers, the entrepreneur modified his vision
to accommodate these needs.
5.
Leadership: is the
ability to create rules and to set goals. It is the capacity to
follow through to see that rules are followed and goals are accomplished.
6.
Passion: is what
gets entrepreneurs started and keeps them there. It gives entrepreneurs the ability to convince others
to believe in their vision. It can’t substitute for planning, but it will help
them to stay focused and to get others to look at their plans.
7.
Self-confidence: this comes from thorough planning, which reduces uncertainty and the level of risk.
It also comes from expertise. Self-confidence gives the entrepreneur the
ability to listen without being easily swayed or intimidated.
8. Smartness: consists of common sense joined with knowledge or experience in a related
business or endeavor. The former gives person good instincts, the latter,
expertise. Many people have smarts they don’t recognize. A person who
successfully keeps a household on a budget has organizational and financial
skills. Education and life experiences all
contribute to smartness.
Every entrepreneur has these qualities in different degrees. However if a person lacks
one or more, then they can be learned. Or, someone can be hired who has strengths that
the entrepreneur lacks. The most important strategy is to be aware of
strengths and to build on it.
ROLES OF
ENTREPRENEURSHIP TO ECONOMIC DEVELOPMENT
Employment Generation/Reduction of Unemployment
Unemployment
refers to a situation where
people who are willing and capable of working are
unable to find employment/jobs to
do.
It is one of the macro-economic problems
which every responsible government is
expected to monitor and regulate.
The
process of entrepreneurship activity reducing unemployment
situation in the economy is termed “Schumpeter
effect”. It has been observed that, unemployment is negatively related to new-firm
startups, that is, as new businesses are
established employment of resources is stimulated and unemployment reduces substantially. In the same vein, it was noted that
high unemployment in the
society is associated with a low degree of entrepreneurial
activities, that is, where propensity to set up
enterprises is low; the rate of unemployment would
be very high. The implication of the above assertions
is that those who are unemployed tend to remain
so because they possess lower endowments of human
capital and entrepreneurial talents required to start
and sustain new firms to keep them going. A low
rate of entrepreneurship culture and skills in any society may be a consequence of the low economic growth, which also reflects higher levels of unemployment.
Wealth
Creation and Poverty Reduction
Entrepreneurship
enables individuals to use their potentials and
energies to create wealth through the
creation of goods and services. Poverty is a condition of
living that is characterized by lack of the basic necessities of life. One of the major cause of poverty is unemployment and since entrepreneurship is preoccupied with
employment generation, then by extension the generation of employment
will therefore reduce the level of poverty. Wealth if created will definately reduce the incidence
of poverty by empowering the citizens and increasing their access to basic
necessities of life (food, clothing, shelter, security and education)
Reduction
in Rural - Urban Migration: The
burgeoning problems of urban un employment
and population congestion owing to the rapid rural
urban drift find its ultimate solution in the restoration
of a proper balance between urban and rural economic opportunity. Rural entrepreneurial activity in generating
employment is the link achieving this balance.
Reduction
of Crime Rate: It is strongly believed that unemployment is responsible to a large extent for the level of social
complication of armed robbery, political thuggery, drugs peddling,
prostitution, money
laundering, currency counterfeiting, e-mail scam, and other such related
crimes. When individuals are
unable to satisfy their needs, most often, frustration
occurs. These frustrations breed fraudulent practices.
Employment generation therefore will reduce
the level of frustration and consequently, crime rate.
Raising the Standard of Living: entrepreneurship
through job and wealth creation raises
the standard of living of people. Owing
to higher income earning and availability
of disposable income, they can therefore, afford the basic necessities of life such as housing, clothing and food,
education, good health care delivery, etc.
Rural
Development: Rural enterprises through employment generation
stimulate
rural development and the achievement of a
meaningful level of broad economic
development. It decreases inequality in
distribution of rural income and reduces urban-rural imbalances
in income and economic opportunities.
Encourages
Capital Formation: One factor responsible for the poor state of an
economy
is low capital formation. When individuals are
employed, they can afford to save out of their disposable
income. Entrepreneurs can therefore, facilitate the use of these savings
thereby stimulating capital formation, which is the engine of economic growth
and development.
Skills Acquisition and Increase
in the Level of Productivity
Employment
generated by entrepreneurship can be
a training ground where individual acquires and develops skills for creativity leading to a general
increase in the level of productivity.
Conclusion
Entrepreneurship has been recorgnized as an
important Economic activity that is
involved in providing unique product and process of doing things, it is the
act of being an entrepreneur and have been playing the role of employment generation, wealth creation,
poverty alleviation among others, it is therefore considered to be the engine
for growth and development especially in developing countries like Nigeria.
Based on its central role in economic development,
respective governments, non governmental organizations, community based
organizations and other stake holders should promote its development in order
to reap its full benefits.
Thank You all for Listening
