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Chapter one



Prior to the 1970s, the literature emphasised the importance of major enterprises as the foundation of a modern economy. The theory of economies of scale, which is based on the benefits of large-scale activities, prevailed.

Thus, entrepreneurial enterprise was viewed as a relic of the past, outmoded and indicative of technological backwardness. However, this viewpoint has altered in recent years as a result of the critical role that relatively small entrepreneurial businesses play in encouraging industrialization and facilitating long-term economic growth and development.

The concept of entrepreneurship has various meanings or interpretations based on the user’s point of view. According to Duke (2006, p.1), an individual who pioneers a new technology or offers a new technique of doing business exemplifies entrepreneurship.

He is also someone who advances an existing technology or procedure in a unique way. The entrepreneur typically initiates and manages a new company venture, accepting some responsibility for the inherent risks.”

Thus, an entrepreneur is a well-rounded individual who uses creativity to effect change for the benefit of both individuals and society. As a result, the entrepreneur plays an important role in driving socioeconomic development by seeking out new opportunities, developing new processes and products, and coordinating the tasks required to run a business.

In Nigeria, entrepreneurial activity has grown in almost every sector of the economy, including microfinance, personal services, food, apparel, ICT, telecommunications, entertainment and hospitality, and agriculture/agro-allied businesses.

These entrepreneurial endeavours have helped the nation achieve some of its economic development goals. Such contributions include creating jobs for the growing rural and urban labour force, increasing production output, redistributing income, utilising local raw materials and technology, increasing the government’s revenue base, and producing intermediate goods that help to strengthen inter and intra industrial linkages (Osuji, 2005).

Similarly, industrialised countries like the United States of America, Japan, Germany, Italy, and the United Kingdom have been shown to attribute their general economic progress to entrepreneurship (Fasua, 2006).

The government has consistently prioritised the development and growth of entrepreneurship in Nigeria. The relevance of a private sector-driven economy is best articulated and appreciated in terms of its ability to facilitate food security, job development, service delivery, wealth creation, and citizen economic empowerment.

These results are also associated with the aims of the National Policy on Micro, Small, and Medium Enterprises (MSMEs), the National Economic Empowerment and Development Strategy (NEEDS), the State Economic Empowerment and Development Strategy (SEEDS), and the Millennium Development aims.

Unfortunately, the impediments to entrepreneurship development in Nigeria today include the dearth and paucity of credible and reliable databases, weak infrastructure, inconsistent government policies, lack of knowledge of the various laws, policies, or statutes that protect SMEs and can even help them expand and grow, poor credit administration, corruption

and, lack of capital and/or inadequate funding due primarily to poor access to conventional banking facilities ( Lack of cash, particularly inadequate funding, makes it difficult for entrepreneurs to turn their ideas, creations, and discoveries into finished products and services that meet the needs of consumers.

It is widely accepted that banks and other financial organisations can only issue credit to 25% of all clients (Fasua 2006). The situation is much worse for entrepreneurs, with banks serving only 2% of smaller firms (Casson, 1995).

To address this issue, the government and international development agencies have implemented a variety of programmes, strategies, and policies targeted at giving loans to entrepreneurs in order to promote micro, small, and medium-sized business operations.

Typical of these efforts are the various microcredit schemes established by some state governments, multinational corporations (MNCs), the United Nations Development Programme (UNDP), the United Nations Industrial Development Organisation (UNIDO), and private organisations such as the Tony Elumelu Foundation.

However, the impact of these loan initiatives and schemes has as far remained unknown. Worryingly, there is a notion that Nigeria’s micro and small company sectors have yet to realise their full potential.

This calls into doubt the efficacy of the various credit packages. In light of this, the purpose of this study is to investigate and establish the true impact of microcredit initiatives on the development of entrepreneurship in Nigeria’s Akwa Ibom and Cross River States.

1.2 Statement of the Problem

Despite the government’s and other development partners’ intervention tactics, such as direct lending or credit guarantee programmes and schemes for micro and small businesses and entrepreneurs, entrepreneurship growth and development remains notably low. For example, Nigeria is one of the world’s poorest countries, with unemployment and poverty rates rising steadily (World Bank, 2010).

This demonstrates the inefficacy of micro and small firms un addressing these issues. Specifically, microcredit schemes are believed to be inadequately organised and managed.

The credit administration procedures employed for the programmes and programmes are widely regarded as ineffective and unresponsive to the issues of monitoring and regulating the lent monies.

Furthermore, there are concerns about corruption in the management of the monies. Finally, funding for these projects, particularly those established by state governments, is deemed inadequate.


The study’s key aims are:

1. To assess the impact of microfinance schemes on entrepreneurial development in Akwa Ibom and Cross River States.

2. Determine the impact of running costs on the performance of microcredit schemes in Akwa Ibom and Cross River states.

3. Determine the impact of credit administration on the performance of microfinance projects in Akwa Ibom and Cross River States.

4. Make recommendations based on the study’s findings.


The following research questions will be important for this study:

1. How much do microcredit programmes influence entrepreneurship development in Akwa Ibom and Cross River States?

2. To what extent do running costs influence the effectiveness of microcredit schemes in Akwa Ibom and Cross River States?

3. How does credit administration influence the performance of microcredit schemes in Akwa Ibom and Cross River States?

1.5 Research Hypothesis

Based on the aforementioned, the following hypotheses will be stated for the research:

HO1: Microcredit schemes had no substantial impact on entrepreneurial growth in Akwa Ibom and Cross River states.

HO2: Operating costs had no substantial impact on the performance of microcredit schemes in Akwa Ibom and Cross River States.

HO3: Credit administration has no substantial impact on the effectiveness of microcredit schemes in Akwa Ibom and Cross River States.

1.6 Significance of the Study

This study will be useful for governments at the various levels (Federal, State, and Local) and their ministries, departments, and agencies (MDAs) charged with the responsibility of implementing policies and programmes on entrepreneurship development, such as the National Bureau of Statistics (NBS)

SMEDAN, NDE, NAPEP, NDDC, NASSI, CBN (Development Finance Department), Small and Medium Industry Development Agency (SMIDA), and National Association of Small and Medium Enterprises.

Second, the study will be useful to international development and funding agencies, multinational corporations (MNCs) operating in the country, and non-governmental organisations (NGOs) that have been collaborating and supplementing the government’s efforts to provide microcredit for entrepreneurship development in the country.

They include the United Nations Industrial Development Organisation (UNIDO), the United Nations Development Programme (UNDP), the World Bank (SMEs department), Lift Above Poverty (LAPO), and oil and gas companies (Exxon Mobil, Shell, Agip, Chevron, and others)

who will find the work useful as an intervention document for designing and projecting the extent of their involvement in meeting their social responsibility expectations in their area(s) of operation.

Others include private organisations such as the Tony Elumelu Foundation, which recently committed approximately N2.5 billion to the growth of entrepreneurship in Nigeria, and the Dangote Group, which has been working with the government in this regard.

Third, management academics at universities, polytechnics, and professional bodies will profit from this study since it will add to the body of knowledge on microcredit programmes and their impact on Nigerian entrepreneurship development. The findings of this study will also stimulate additional research on similar topics.

1.7 The Study’s Assumptions

It is assumed that the variables utilised in the study are appropriate.

It is considered that the sample used in the study is actually representative of the population.

The methodology used in this investigation is adequate and reproducible.


The study is multidimensional because it includes more than one state. Geographically, the study will focus on Akwa Ibom and Cross River States in South-South Nigeria. The study’s scope will be limited to examining microcredit as a catalyst and facilitator of micro and small business development in the two states.

1.9 Definition of Terms

ENTREPRENEURSHIP: Entrepreneurship is the act of starting a new firm in the face of danger and uncertainty in order to profit and expand by finding major opportunities and gathering the resources needed to capitalise on them (Zimmerer, Scarborough & Wilson, 2013).

MICRO CREDIT: Micro credit is the extension of small loans to active poor people (entrepreneurs) who are unable to obtain traditional bank loans to engage in self-employment projects or finance micro and small business initiatives in order to generate income for themselves and others (Edeghe, 2005).

MICRO ENTERPRISES: These are businesses with total assets of less than five million naira (excluding land and buildings) and a workforce of no more than ten people (SMEDAN, 2010).

SMALL ENTERPRISES: These are businesses with total assets (excluding land and buildings) of more than five million naira but less than fifty million naira, and a workforce of more than ten but no more than forty-nine employees (SMEDAN, 2010).

INNOVATION is the act of bringing about change by introducing new methods, ideas, technology, and ways of doing things. It is the ability to use innovative solutions to challenges and opportunities in order to improve people’s lives.

LATENT CAPACITY: This is an existing capacity for entrepreneurship that has not yet been visible or developed.

GROSS DOMESTIC PRODUCT: GDP is the market value of final products and services produced within a country over a given time period, often a year. It is earned domestically rather than internationally.

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