Sole Proprietorship ,Ijebu North LGA (2)

8/2/2019 Sole Proprietorship ,Ijebu North LGA (2)

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CHAPTER ONE

1.0 INTRODUCTION

Sole proprietorship is a mindset, which occurs throughout the society and at all

levels of a business life cycle. It is about blending risk taking, creativity or innovation

with sound management of an old or new business.

Businesses by sole proprietors contribute much more than can be calculated by just

the spending and profit that they generate. It is more able to respond to changing

consumer demands, and more receptive to creating opportunities.

Ijebu North is a community whose educational system still produces skilled and semi-

skilled labour, which is oriented towards entry into white-collar employment,

academia, and civil service, where it is thought that a sustainable livelihood can be

sustained.

The characteristics of sole proprietorship in Ijebu north are as follows:

Sole proprietorship is not championed in the traditional educational system.

The few individuals who have succeeded as sole proprietors only started

business because they had dropped out of school and had no other

employment options.

Most of the businesses are family-owned and/ or operated as sole

proprietorships.

The start-up capital is either from personal savings, borrowed from family

friends, of other informal sources. Many who start businesses do not generally innovate but duplicate existing

trends therefore differentiation in the market is quite uncommon.

Research has shown that in Ijebu North there is no clear definition of sole

proprietor.


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People try to start all sorts of businesses and when they succeed they are

referred to as sole proprietor.

Sole proprietorship in Ijebu North is inspired by both necessity andopportunity. The informal business dominates the private sector. Many of the

businesses (approximately 97%) are not registered, and there is a dominance of

family labour. Since most of the informal businesses are unregistered, they do not

contribute to taxable revenue. Based on the market research, it was noted that sole

proprietorship model was common among men, youth, widows and single mothers,

with petty trading activities like like liquor selling, roadside trade, tailoring, sale of food

stuffs etc.

1.1 BACKGROUND OF THE STUDY

The right to life, liberty, and the pursuit of happiness is what most citizens value

and respect. This is the foundation that allows individuals the ability to take a unique

business concept and develop it into a full functioning enterprise. Private business

requires a sense of creativity and dedication to a particular idea and has countless

risk for each reward.

Sole proprietorship is the most common form of ownership, a business owned by one

individual. These businesses have the advantage of being easy to set up and to

dissolve because few laws exist to regulate them. Sole proprietors, as owners

maintain direct control of their businesses and own all their profits. On the other hand,

owners of proprietorships are personally responsible for all business debts and,

becausethey are constrained by the limits of their personal financial resources, theymay find it difficult to expand or increase their profit. For those reasons, sole

proprietorships tend to be small, primarily service and retail business.

While some sole proprietors are complacent with maintaining a single business to put

food on the table, others are much more aggressive and strive to juggle multiple


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operations simultaneously. Although sole proprietors start new ventures for different

reasons, certainly all have aspirations to maintain profitability.

Dr. Ade Oyedijo, a financial expert in a paper titled Nigerias Economy and its Career

promise for the Mature Employee affirmed that the plights of entrepreneurs in Nigeria

have to do with key variables and challenges that characterize the nations economy.

These include but are not limited to a very high unemployment rate, high poverty

level, hunger etc. He also mentioned a drastic shift from the production of non-oil

traded goods (mostly agricultural) to traded goods while about 95million Nigerians are

reported to be living below the poverty line.

In a seminar titled Career, Crises and Financial Distress- The Way out, Mr Oluseyi

Oluloba, identified in his paper the following as the main problems of Sole

proprietorship which are however not insurmountable: low level of entrepreneurial

skill, poor management practices, constrained access to money.

The activities of sole proprietors are seen in many avenues of business and in the

economy of Ijebu North Local Government Area. It has no limits or boundaries, and its

vision is the foundation that allows for the capitalization of unique business

opportunities. Possessing the ability to understand and recognize the wants and

needs of consumers is a unique skill that all individual in the business desire.

The communities in Ijebu North Local Goverment are made up predominantly of

farmers, artisans and small business owners, and also with some professionals. This

has in no little way affected the business environment in the region and influenced the

activities of sole proprietors. In the face of the increasing voltaic environment under

which they operate in Ijebu North, many of them have begun to redefine theirbusiness and reposition themselves for the challenges of the future.

Sole proprietorship and economic development are multifaceted models that are

constantly evolving; hence it has become necessary to analyze factors which affect


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sole proprietorship activities and economic development and the strong correlation

between the two in Ijebu North communities.

1.2 OBJECTIVES OF THE STUDY

This study aims to

Analyze what economic, cultural and political factors affect sole

proprietorship and economic development.

How economic recession imparts new venture development.

Determine the management or personal problems, and associated

losses in sole proprietorship in Ijebu North Local Government

communities.

Identify the problems militating against the successful implementation of

restructuring policy to support sole proprietorship in Ijebu North.

Determine the importance of proper management and planning in

entrepreneurship.

The contributions of sole proprietorship to the economy of Ijebu North

Local Government. Highlight the generic challenges/barriers of establishing in informal

sector in Ijebu North Local Government.

1.3 STATEMENT OF PROBLEM

A good number of sole proprietorship businesses have failed to survive owing to

some reasons which include:

Lack of good managerial ability.

Inadequate access to finance.

Lack of motivation.

Lack of government policies in the form of support programmed.


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Reliance on nature, which affects supplies and hence demands leading

to price fluctuation.

Educational challenges, which in turn leads to poor decision making and

record keeping.

The problems are major constraints scaring away many sole proprietors from

establishing their businesses.

1.4 METHODOLOGY

For the purpose of this research work, the following methods will be used to

conduct the research:

Questionnaires will be sent to different entrepreneurs in Ijebu North local

government.

Oral Interviews will be conducted.

Personal observations will be made.

1.5 SCOPE OF STUDY

The study will be based on Ijebu North Local Government Area. It is hoped that

the study will highlight the major problems as faced by other areas.

1.6 LIMITATION OF STUDY

The study is limited to few communities in Ijebu North Local Government. This isbecause of the difficulty to undertake such study in view of the great distances and

cost involved, as well as time and fund constraints. The unavailability of data and the

resistance of respondents are also inclusive.


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1.7 SIGNIFICANCE OF STUDY

The study covers a comprehensive background and current status of sole

proprietorship in Ijebu North, current challenges/ barriers of establishing business in

the informal sector, problems facing the informal sector and suggested key publicinterventions and policy reforms that could be considered to make sole proprietorship

and other degree of informal businesses more visible, hence facilitating the

formalization process.


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CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

In this chapter, the opinions, ideas and views of some other researchers and

authorities on sole proprietorship and its effect on the economy will be reviewed. This

review will situate the present study alongside other studies and help to structure it.

The first part of the review will deal with an overview of sole proprietorship, while the

second part will define sole proprietorship in the view of some authors and famous

scholars.

Building, running, and growing businesses by sole proprietors is a part of a

virtuous cycle of creativity and increasing prosperity that can be applied by dedicated

and thoughtful people anywhere. Sole proprietorship businesses are frequently young

businesses created by self-employed entrepreneurs. Such activities contribute further

to economic growth by challenging traditional technologies and practices. In turn,

economic growth promotes sole proprietorship activities by providing markets and

finance for men and women bold enough to venture alone into the stormy seas of

consistently expanding economy.

Sole proprietorship occupies a place of pride in virtually every country or state. It

represents a veritable vehicle for the achievement of economic objectives of

employment generation and poverty reduction at low investment cost as well as the

development of entrepreneurial capabilities including indigenous technology. Other

intrinsic benefits of vibrant sole proprietorship include the stimulation of economic

activities such as supplies of various items and distributive trades for items produces

locally by sole proprietors, stemming from rural-urban migration, enhancement ofstandard of living of the individuals involved, their dependants as well as those who

are directly or indirectly associated with them.


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2.1 PROFILE OF IJEBU-NORTH LOCAL GOVERNMENT AREA.

Ijebu North Local Government is one of the largest of the 20 local governments

in Ogun State, covering an area of 13,395 hectares of land. The local government is

located at the north- central part of Ogun State; bounded in the North by Lagelu localgovernment of Oyo State; in the east by Ayedede local government of Osun state;

Ikenne local government is to the west; and Odogbolu and Ijebu North- east to the

south- east and south-west respectively.

Ijebu North Local Government is basically tropical in nature with two distinct

seasons; the rainy season and the dry season, with an annual mean rainfall of

between 2023mm and 2540mm. The heavy amount of rainfall explains why the

vegetation of the area is made up mainly of thick forest, except for areas that have

been influenced by human actions, through lumbering, farming activities, settlement

and other land uses.

Ijebu North Local government is abundantly blessed with a host of natural

resources, which are mainly water and vegetal resources. The local is prominent in

vegetal resources, and has a large number of sawmills; and the consequent

employment of a large proportion of its citizenry is in the lumbering business.

Also, the local government is well endowed with good arable and fertile soil,

which explains why the greatest proportion of the inhabitants of the local government

is employed in agriculture and the local government is one of the leading food

producing area in the state.

As a result of the importance of agriculture in the local government, it is

customary to find people coming from all over the country to the many markets which

are found in the local government. In these markets, cash crops (such as palm oil,

kola nuts, rubber, cotton and cocoa), food crop (such as melon, garri, yams, maize,

plantains and banana), fruits (oranges, mangos, etc) and manufactured goods and

commodities are available in large quantities.


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Another major thriving business for which the local government is noted is in the

area of cow meat selling, especially Ijebu Igbo and this attracts people from places far

and wide. The importance and development of the local government can also be

measured in terms of the number of hotels, bars and motels present in the local

government.

In conclusion, it would be correct to state that the potential of Ijebu North Local

Government have not been fully harnessed.


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2.2 VARIOUS DEFINITIONS OF SOLE PROPRIETORSHIP

The definition of sole proprietor has proved controversial. Not only do different

people have divergent views of what sole proprietorship is, but also the same

individuals may use different definition when researching sole proprietorship indifferent economic and social context. Some scholars have defined sole

proprietorship as follows:

According to Economist Joseph Schumpeter (1934) who popularized the

concept, sole proprietorship is defined as a persons ability to be innovative, in terms

of goods and services produced methods of production, markets, sources of supply

and industrial reorganization. He added that sole proprietorship is essentially a

creative activity, not a fixed state of existence, but rather it is a role that individuals

undertake to create organizations.

Kirzner(1973) depicts sole proprietors as people who are alert enough to spot

previously unseen profit opportunities and act on them.

Hisrich (1990) described sole proprietorship as a behavior that includes

demonstrating initiatives and creative thinking as well as organizing social and

economic mechanisms to turn resources and situations into practice, thus accepting

risk and failure.

Drucker (1993) defines sole proprietorship as behavior in which one always

searches for change, responds to it and exploits it as an opportunity. He further

defines it as the ability to increase the value and satisfaction obtained from resources

by consumers.

Wikipedia (2005), a sole proprietorship, also known as a sole trader is a type of

business entity that is owned and run by one individual and in which there is no legal

distinction between the owner and the business. The owner receives all profit (subject

to taxation specific to the business) and has unlimited responsibility for all losses and

debts. Every asset of the business is owned by the proprietor and all debts of the

business are the proprietors. This means that the owner has no less liab ility than if


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they were acting as an individual instead of a business. As a business becomes

successful, the risk accompanying the business tends to grow, the small size of the

business limits the breadth of management skills because there are fewer people

working together.

Sunday A. Enikanselu (2008), a sole proprietorship is a business owned and

managed by a single individual. It is a form of business ownership in which a single

individual assumes the risk of operating the business, owns its assets, and controls all

profits. It is the oldest and most numerous form of business organization in a capitalist

economy.

From the above definitions, sole proprietorship covers an individuals motivation

and capacity, independently or within an organization to identify an opportunity and to

pursue it in order to produce new value or economic success.

From my own point of view as the researcher to this topic, any business enterprise

exclusively owned, managed and controlled by a single person with all authority,

responsibility and risk is defined as sole proprietorship. A sole proprietor is one who

undertakes an endeavor of starting a new business venture which has many factors

involved and require an extremely strong sense of passion, enthusiasm, and

determination.

2.3 EVALUATION OF THE CHARACTERICTICS OF SOLE PROPRIETORSHIP

A major characteristic of sole proprietorship relates to ownership structure or

base, which largely revolves around a key man or family. Other common features

among others include:

Concentration of management on one key man.

Limited access to long term fund.

High mortality rate especially within their first two years.

Poor managerial skill due to their inability to pay for skilled labour.

Poor documentation policy, strategy, financials, plans, information.


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Low entrepreneurial skills, inadequate educational background.

Lack of adequate financial record keeping.

Poor capital structure, i.e. low capitalization.

Poor management of financial resources and inability to distinguish between

personal and business finance.

Lack of succession plan.

Use of rather outdated and inefficient technology especially as it relates to

processing, preservation and storage e.g. fufu and pomo production in Ijebu

North.

Poor access to vital information.

It is not a legal entity because the owner cannot be separated from the

business.

It is relatively simple to set up and has no legal requirement expected to be

met by the proprietor.

It is set up for profit maximization.

It has unlimited liability because the owner is personally responsible for

meeting all financial obligations that may arise from the operation of the

business.

2.3.1 ADVANTAGES OF SOLE PROPRIETORSHIP

The business can be established easily with minimum regulatory and

registration requirement, and also easy to wind up.

It provides the best opportunity for self-employment and business venturing.

It generates personal satisfaction of working for oneself.

It is flexible to run- the owner can change the object of business depending

on the environment. If the sole trader deals in fufu and finds out that pomo(skin) are doing better he/ she can change over without questioning.

The sole trader can take prompt decision without consultation.

The owner enjoys the profit realized from the business absolutely.


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2.3.2 DISADVANTAGES OF SOLE PROPRITORSHIP

The sole proprietorship has limited sources of fund as banks and other

financial institutions are reluctant to lend them loans.

The owner bears all losses.

The management quality is low and therefore resulting into poor allocation

of scarce resources.

Limited capability to face serious competition.

Lack of continuity, as the business dies as soon as the owner of the

business dies.

Most sole proprietor company cannot enjoy economies of scale in

production and marketing because of the relatively small size of thebusiness.

2.4 ENTREPRENEURIAL INNOVATION AND ECONOMIC DEVELOPMENT.

In Ijebu North communities, the informal business dominates the private

sector. Many of the businesses are not registered and there is a dominance of family

labour in this sector. Since most of the informal businesses are unregistered, they donot contribute to taxable revenue. House hold ownership is common in these

communities where families own most of the businesses.

The informal sector can best be described as follows:

Ownership is at the household level and is mostly unregistered

enterprises with almost non-existent record keeping, no kept record of

accounts.

Most enterprise are not registered under specific forms of national

legislation (commercial acts, social security and professional bodies).

The number of employees is small and not paying relevant taxes or

statutory social security contributions.


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As a business this sector generally employs no more than 5-10 persons including

owner and family members, with a low start-up capital. (UN Office of Special

Coordinator for Africa, 1996).

In 1991 informal employment in Africa accounted for 25% of the total Africa labourforce and 65% of the labour force. The total number employed in the informal sector

has more than doubled in the last decade, and the sector stands out as the most

important contributor of labour to Africas markets in the 1990s.

The ILOs Jobs and skills Programmed in Africa (JASPA) claims that in addition to

contributing more than 40% of GDP, this sector will provide 6 or 7 new jobs to the

continent (1993).

Small businesses survive in these communities more as a result of economic

realities and its own ingenuity. In some industries in Ijebu north- furniture making,

lumber milling, and other service businesses for instance, sole proprietorship

businesses continue to play an important role because the kind of economies of scale

that allow them to grow in other sectors were largely absent. One other role sole

proprietorship is that in economic downturns, many people who lost their jobs in larger

companies form their small businesses and become sole proprietors to stay afloat

through the hard times.

According to Walt Rostov (1960), world renowned economist and political

scientist, all countries progress linearly through five distinct stages throughout their

economic development. These stages are: traditional society, preconditions for take-

off, the drive to maturity, and the age of high mass-consumption. All countries seek to

constantly modernize and mature economically. Such modernization can occur when

agricultural nations progress towards manufacturing and increase their level of

innovation

Ijebu North belongs to a factor-driven economy, one that is primarily comprised

of agricultural influenced commerce and small manufacturing companies. Because of

some primitive and basic character of this community, there is little dependence on

knowledge and innovation. Owing to the fact that the type of economy are primarily


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will carry on driving economic, political, and social systems globally and will continue

to remain at the fore front of economic progress and development.

Sole proprietorship and economic growth surely have a symbiotic relationship

that is both directly correlated to numerous political, cultural and social implications.Sole proprietorship by itself does not create economic growth. Rather an institutional

environment that encourages it attracts human and physical capital, which is why

investment and growth are correlated.

When the key role of sole proprietorship is taken into account, it is apparent

that emphasis should be placed on market institutions rather than production function

input. The importance of market institutions has now been generally recognized in

practice, but has not been integrated into the mainstream theory of economic growth.

When sole proprietorship is seen as the engine of growth the emphasis shifts

around the creation of an environment within which opportunities for entrepreneurial

activities are created, and successful sole proprietorship is rewarded.

2.5 SOLE-PROPRIETORSHIP IN THE NIGERIA ECONOMY.

There is something common about most countries with high-income and fast

growing economy: generally they have unleashed capitalism and backed it up with

sound political and legal systems that firmly protect property rights and prohibit fraud,

theft, and coercion. So doing, a level playing field has being created for prosperity to

take root.

According to Dwight Lee (1991), No matter how fertile the seeds of

entrepreneurship, they wither without the proper economic soil. In order for

entrepreneurship to germinate, take root, and yield the fruit of economic progress it

has to be nourished by the right mixture of freedom and accountability, a mixture that

can only be provided by a free market economy.


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Fundamentally, capitalism is an economic system founded on the private

ownership of the productive assets within an economy. These include land, labour

and all other tangible property(e.g., cars, houses, factories e.t.c) and intangible

properties (e.g., radio waves, intellectual property, etc). Individuals are free to make

decisions regarding the use of their property rights of others. Economic freedom is

synonymous with capitalism, more specifically, the key ingredient of economic

freedom and capitalism are:

Personal choice and accountability for damages to others.

Voluntary exchange, with unregulated prices negotiated by buyers and

sellers.

Freedom to become an entrepreneur and compete with existing businesses.

Protection of persons and property from physical aggression, theft, lawsuit,

or confiscation by others, including the government.

The concept of capitalism is deeply rooted in the notions of individual liberty and

economic freedom. Economic freedom is based in the same philosophies that support

political and civil liberties (like freedom of speech and the freedom to elect

representatives). Individuals have a right to decide how they will use their assets and

talents.

Because private property rights, and their protection, are critical to economic

progress, it is worthwhile to be more specific about private property rights.11 Private

property rights entail three economic aspects:

(1) Control rights the right to do with your property as you wish, even to exclude

others from using it, so long as you do not use your property to infringe on the

property rights of someone else.

(2) Cash flow rights the right to the income earned from the property or its use (i.e.

being the residual claimant, which is also critical for enabling the property to be used

as collateral for loans.


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(3) Transferability rights the right to sell or divest of your property under the terms

and conditions you see fit.

A government policy that weakens any one of these components of property rights

weakens property rights in general. Taxes, for example, restrict the cash flow rightsassociated with property and so weaken private property rights on that dimension.

Regulations, on the other hand, restrict how owners may use their property, infringing

on control rights, and weakening private property rights on that dimension. Outright

takings, or other forms of outright expropriation, by removing the property from an

owners possession (such as eminent domain or shoreline property takings, especially

when allowing the state to remove the property from an owners possession and

transfer it to another private owner) actually weaken property rights on all of the

dimensions considered above, making property a contingent right (contingent on the

states arbitrary will) rather than an absolute right guaranteed and protected by law.

In order to nurture capitalism, government must do some things but refrain from doing

others.

Governments promote capitalism by establishing a legal structure that

provides for the even-handed enforcement of contracts and the protection of

individuals and their property from aggressors seeking to use violence, coercion, and

fraud to seize things that do not belong to them. However, governments must refrain

from actions that weaken private property rights or interfere with personal choice,

voluntary exchange, and the freedom of individuals and businesses to compete.

When these government actions are substituted for personal choice, economic

freedom is reduced. When government protects people and their property, enforces

contracts in an unbiased manner, and provides a limited set of public goods like

roads, flood control, and other major public works projects, but leaves the rest to theprivate market, they support the institutions of capitalism.

The positive relationship between economic freedom and growth has been

shown to be robust in a large number of studies. Gerald Scully (1988), for example,

finds that politically open countries that respect private property rights, subscribe to


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the rule of law, and use markets instead of government to allocate resources, grow

three times faster than countries that do not.

Harvard economist Robert Barro (1996) finds a positive relationship between

economic freedom and growth. Gwartney, Lawson, and Holcombe (1999) take intoaccount demographics, changes in education and physical capital and find that

economic freedom is still a significant determinant of economic growth.

John Dawson (1998) finds that economic freedom positively affects growth

and it does so by directly affecting the productivity of capital and labor and indirectly

through its influence on the environment for investment. This is consistent with Hall

and Joness (1999) finding that policies consistent with economic freedom improve

labor productivity.

In Nigeria, where Ijebu North is one among the numerous local government the

mixed economy is the system that is operative, and this incorporates the advantages

of a capitalist economy and government involvement in the running of the economy.

2.6 CHALLENGES/ BARRIER OF ESTABLISHING A SOLE PROPRIETORSHIP

BUSINESS.

2.5.1 Lack of information

A sole proprietor requires adequate information about the business before

venturing into starting one. This information is vital to decision making that can help

business to succeed. Sole proprietors or entrepreneurs in Ijebu North are faced with

this challenges because different support services, various type of taxes, laws related

to the business and the way they apply are not in the various businesses are not

known to them. This knowledge enables them to utilize sources of information and

business organs, fulfill various requirements expected of them and their business.

2.5.1 Ownership challenge


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Sole proprietorship in the informal sector as it is in Ijebu North, is easy to

manage, requires less capital, no registration procedures is required and decision

making is rapid. Unfortunately, there can be lack of continuity in case of death and

under-capitalization.

2.5.2 Trade liberalization challenges

Due to large numbers operating in the informal sector, there are a number of

competition issues that arise key amongst them, the struggle to stay in business in

a market where there is very little product differentiation and the lack of access to

finance to improve in a competitive situation. Sole proprietors in such a situation

cannot take advantage of market opportunities because of the short-term outlook,

lack of business plans and failure to separate business activities from personal ones.

This has led to market congestion and low product demand.

2.5.3 Educational challenges

Many of the respondents in the market had finished the primary level or

dropped out of school at secondary level. This affected their business due to poor

decision making and record keeping.

2.5.4 Socio- cultural challenges

These mainly affected women in the because they were found to have

hardship indeals- credit facilities in terms of loans, suppliers and even rental charges.

2.5.5 Institutional challenges

For example crititcal decisions such as ground rents and rates were fixed by

the city or other government agencies without adequate stakeholder involvement or

consultation. This state of affairs was exacerbated by traders lack of knowledge

about their rights.

2.5.6 Management challenges


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Many in the markets in Ijebu North LGA did not have management skills.

Planning was more or less driven by responses to crises, and the market generally

characterized by no formal business principles.

2.5.7 Reliance on nature

Owing to the fact that a good population of sole proprietors in Ijebu North deal

in agricultural and other seasonal products, the reliance on nature and the seasons of

abundance affects expectancy and hence supplies and demand leading to price

fluctuation.

2.6 SOLUTIONS TO THE CHALLENGES/ PROBLEMS.

Sensitizing the public especially at the grassroots on the advantages of

starting a decent business.

The government should make available (easy access) of business

information right from the grass roots. Information should be on areas of

operation of such a market, suppliers of raw materials, financial services,

labour, quality requirement etc.

Business support organizations like The Chamber of commerce and

Industry, direct private sector development and promotion centres for all

type of business support services, information for micro and small

enterprises should be strengthened to provide services to the marginalized

groups and poor who dominate this type of business.

Individuals in this sector could be encouraged to develop a saving culture by

forming small saving groups which would in turn help in accessing finance

and credit from commercial banks and microfinance institutions. The savingcredit and groups would also train the members on business skill and loan

management.

2.6.1 PUBLIC INTERVENTIONS AND POLICY REFORMS


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The poor can directly get involved in the reform process by participating in all

types of reforms, such as legal, economic, political and socio-cultural aspects.

Economic reforms should involve the poor in all areas. The poor should be provided

with information concerning business in different local languages and the forms of

registration should be simplified. Bureaucracies and red tape in the registration

processes should be reduced or completely eliminated.

Leadership in relevant government institutions should be trained in good

governance to reduce corruption and improve accountability and transparency, and to

increase public confidence in government could encourage and protect whistle

blowing.

Gender equality in terms of service provision (training, credit) must be encouraged.

Training programmes and extension services should be tailor made to suit the various

gender needs e.g. a deliberate policy by service providers to balance gender /affirmative action.

The specific needs of marginalized groups (women and youth) in rural and

urban areas should be identified and approaches tailored to suit the various economic

activities.

2.6.2 Additional Reforms and Recommendations

Specific policy reforms to address the problem of lack of access to credit

Encourage credit and saving schemes owned by the people.

Formalize the need for innovative saving schemes and regulate their activities.

Credit guarantee schemes that place emphasis on lending but backed by the

viability of the underlying business transaction.

Education and training of people to encourage saving and investment.

Explore cluster financing schemes which give farmers and traders stable and


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lucrative markets.

Research and development aimed at solving natural calamities, reducing

competition, improving and increasing markets and appropriate technology.

Training in entrepreneurship skills right from the grassroots.

Infrastructural development: road networks, communication networks, social

services etc.

Extension services can bridge the gap of lack of information and business

skills.

Provision of storage facilities to market vendors to safeguard their stock

against thefts, floods, rodents etc.

2.6.4 Institutionalreforms

Institutional reforms should start by strengthening the institutions involved in

provision of finance, leadership and management. Institutional reforms should

address informality and bribery plus accessibility of these services.

There should be legal empowerment where the poor have legal protection, have

access to a justice system and know their property rights. There should be a formal

way to document properties of the poor through recognized tools like deeds and

contracts, laws and legal procedures that guarantee rights should be enforced and

designed to work for the poor.

2.6.5 Legalempowerment

This can be achieved by having:

Working groups bring expert knowledge together in areas like rule of law and

access to justice, property rights, labour rights, entrepreneurship and legal


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business organizations, roadmaps for implementation of reforms. These five

groups collaborate with international and civil society organizations, donor agencies

and countries that have implemented reforms, analyzing lessons learnt from the

past projects and participating in on- going development initiatives.

National and regional consultants who involve local stakeholders ranging from

high-level policy makers to representatives of the poor. This process places legal

empowerment in local realities and contributes to recommendations that reflect

diverse cultural, social, economic and political environments.

There should be a formal policy document with input from the poor on the five

intervention areas. This removes ad hoc government interventions, duplication of

efforts and will attract donor support and finally become a basis for sustainability.

2.6.3 The way forward

A coordinated approach to entrepreneurship policy is necessary because of its

horizontal nature of involving people in all walks of life. Policy should embrace all the

influential elements within the relevant policy areas to allow action in a mutually

reinforcing way.

Within public authorities, coordinating services can forge links between

different departments, regions or local authorities to identify priorities and ensure a

coherent approach.

Benchmarking among entrepreneurs is vital to promoting entrepreneurship. While

Identifying priorities or implementing policy, a country or region should take its specific

context into account because it affects policy. Common guidelines should be adapted

to national or regional circumstances.

In essence, to have an entrepreneurial society, which is formal, action must be

directed to three areas, which include:


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a) Bringing down barriers to business growth and development

b) Balancing the risks and rewards of entrepreneurship

c) Building a society that values entrepreneurship.

2.7 GOVERNMENT ROLE IN ENCOURAGING SOLE PROPRIETORSHIP

With most of the business in Ijebu North being conducted by small entrepreneurs

and sole proprietors, it makes good economic sense for governments to implement

policies that encourage the growth of such businesses.

2.7.1 Government Support Programmes.

Government schemes support and complement other policies to create an

environment conducive to sole proprietorship activities. The support programmes are

a significant policy tool for addressing specific issues that constitute direct barriers to

sole proprietorship behavior and for improving skills formation e.g programmes that

focus on business needs of disadvantaged groups like women, youth and people with

disabilities. Supporting the participation of disadvantaged enterprises and groups in

entrepreneurship is crucial for opening up economic resources and sole

proprietorship potential critical to long-term economic prosperity.To have an impact, government support programmes should be well designed,

targeted and administered. Government can also promote sole proprietorship through

information programmes, introduction of individuals to existing economic incentives

for entrepreneurial activities and motivation to take advantage of them.

2.7.2 Teach Entrepreneurship.

There are many things that go into creating a successful business economy,

but surely a significant one is a collection of entrepreneurs willing to start new

businesses. For that to occur, an individual needs to learn business skills. There are

several ways in which the governments can assist them in doing this:

Create business incubators. A business incubator is a facility that

offers start-up business a place to grow. The business incubators


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should be associated with organizations where experts donate their time

and expertise teaching new entrepreneurs everything from sales and

marketing to laws and probably taxes in case the business finally grows

into a taxable one.

2.7.3 Make capital available.

If a government wants to promote sole proprietorship and other entrepreneurial

activities, it must advance policies that reduce the risk inherent in it. One of such is

the one that assists would-be-entrepreneurs find the money they need to get started.

The government should establish a pool of federally guaranteed loans. Easy access

to capital creates the foundation for a lively business sector.

2.7.4 Celebrate and foster small businesses.

Not only must new entrepreneurs be thought the skills necessary to succeed,

but existing ones should be promoted so as to encourage more people to start small

businesses. Small business fairs and expos should be organized to promote their

products.

2.7.5 Protect Intellectual property.

Any government that wants to encourage small business needs to produce

laws that protect the innovation of sole proprietors and entrepreneurs. Innovation is at

the very heart of small-business growth.

In the end, any government wanting to promote sole proprietorship needs to

implement policies that help entrepreneurs take less risk and make more money.


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CHAPTER THREE

3.0 RESEARCH METHODOLOGY

The purpose of this chapter is to define the research methodology, used for the

collection of data, and information.

The method used for the collection of the data in the research work, are as

follows:

(I) Questionnaire

(II) Oral Interview

(III) Personal observation.

(I) QUESTIONNAIRE METHOD:

The questionnaire was constructed in simple English Language bearing in

mind that it was meant especially for market people and small business

owners in Ijebu North communities. It was made up of questions, aimed at

drawing information about the sole proprietors sex, age, marital status,

qualification, management, motivation and working condition.

(II) INTERVIEW METHOD:

Oral interviews were conducted asking different questions relating to the

business, among which includes:

What are the problems you faced starting up and the problems you are

facing even now that you are in the business?

Which among these problems is the major?

(III) Personal observations were made as I conducted round the various

markets and business places in the communities in Ijebu North Local

Government. So as to get acquainted with the conditions under which the


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sole proprietors operate their business and also the business environments.

This method was adopted because it is aimed with the other two above at

checking the reliability of some of the information to be used in the research

work.

3.1 LIMITATION OF THE METHODOLOGY.

The major constraint to the research methodology was the time factor. The

time available for the completion of the study was very short. For the reason it was

not possible to interview as much individuals as was earlier scheduled.

Another limitation was that a greater percentage of the sole proprietors at IjebuNorth were semi-illiterates and illiterates. It therefore took more time convince

them to accept the questionnaires and complete them, since data were collected

essentially through questionnaires. In addition to these apart from paucity of data,

it took more time to interpret and explain the contents of the questionnaire, despite

the fact it was written in simple English Language for better understanding.

Effort was made to ensure that data were consistent and reliable through

various visits and cross- checking with published data where available. However, it

is important to state that the data may exhibit some problem; hence a critique of

this work must take into account the nature of data.

Sole Proprietorship ,Ijebu North LGA (2)

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