Business Environment, Job Creation and Employment Capacities of Small and Medium Enterprises in Lagos State, Nigeria: A Descriptive Analysis

Abstract

Job creation and employment generation are among the core relevance of small and medium enterprises (SMEs) in any economy. The business environment in which SMEs operate is of considerable relevance to their capacities to create jobs and provide employment opportunities. This study employed descriptive approach to examine job creation and employment capacities of SMEs in relation to the Lagos State business environment. Analysis was based on ten elements of the business environment and two indicators of SMEs’ relevance. The study used a composite of survey and co relational research designs to gather relevant information from which data for analysis were derived. Through survey, target population and sample size were determined. The definitional criteria adopted for the study restricted the population to 456 SMEs. The World Bank scientific model for sample size determination was used to select 228 SMEs through judgmental and convenience sampling techniques. Appropriate survey instrument was developed and used to elicit responses respondents. The instrument was validated through scrutiny and evaluation by experts. Cronbach’s alpha coefficients were computed to assess reliability of the instrument. Pre-response scales in the instrument were used to processed responses into quantitative data used for descriptive analysis. The analysis revealed male-dominated SMEs sector, sole proprietorship and services subsector dominant and small-enterprises-dominant sector. The analysis further revealed that inadequate access to external finance, competitive pressures, multiples taxes and other fees and corrupt practices were among the militating factors against the SMEs, while socio-cultural elements availability and costs of labour services did not constrain the enterprises. The constraints notwithstanding, the SMEs created jobs and expanded employment in the State. The study recommended practical policy measures to drive the traditional measures of providing external finance, tax and other incentives and infrastructure.

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