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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 semiskilled 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.

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 and opportunity. 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, because they are constrained by the limits of their personal financial resources, they may 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

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 their business 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

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.

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 is because 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.

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 public interventions and policy reforms that could be considered to make sole proprietorship and other degree of informal businesses more visible, hence facilitating the formalization process.


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 of standard of living of the individuals involved, their dependants as well as those who are directly or indirectly associated with them.

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 local government 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.

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.

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 in different 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 liability than if

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.

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.

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 the business.


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 do not 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.

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 labour force 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 takeoff, 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

agricultural and lack innovation opportunities, individuals are required to start new ventures out of necessity. Initiation of a new venture is extremely intricate and requires considerable amount of capital, resources, and the ability to effectively manage a business entity. While any one can conceptualize a unique business venture, development of a business plan requires specific skills attributed only to knowledgeable and experienced entrepreneur. Sole proprietors put together all the resources needed: the capital, the management, the people, and the business strategy to transform the ideas into product, process, or service innovation that find a market and affect the economy. Importantly, all sole proprietors are different and have different expectations and goals. While some have aspirations to develop a business with unlimited growth, others are content with slow and steady progression. Rapid growth not only requires the perfect environment but can be risky. Entrepreneurs often assume a large amount of risk in order to execute a new venture. Often times- financial security, personal relationship are put on line in order to implement a business idea. Even though failure rates of new businesses are high, they often have aspirations of overcoming adversity and pursuing their dreams. While developing a business has many risks, the rewards are often worth the uphill struggle. Autonomy, self-management, personal satisfaction, and hopefully financial success give entrepreneurs the motivation they need to initiate new ventures. Sole proprietorship is much more than starting a business but rather a collaboration of knowledge, innovation, and fortitude to take and expand a personal project in other to influence others. Starting a new business venture incorporates many different elements and is the backbone of economic financial system. In the realm of sole proprietorship, small start-up ventures are key incubators that grow innovation to a new level. New start-ups that rapidly grow to become big multinational will be an important part of success. Innovation and new ideas are a direct by-product of sole proprietorship that impacts growth on an extreme scale. Sole proprietorship

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.


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.

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.

(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 rights associated 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 the private 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

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 into account 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

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 in deals- 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

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 saving credit and groups would also train the members on business skill and loan management.


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.


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

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 Institutional reforms 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 Legal empowerment 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

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:

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

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.


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) (II) (III) Questionnaire Oral Interview Personal observation.


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.


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?


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

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 Ijebu North 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.