Skills needs of SMEs and the informal sector in Africa: problems and prospects for employment creation in Nigeria

This investigation is about how Small and Medium-sized Enterprises (SMEs) in both the formal and informal sector of the Nigerian economy can contribute to employment generation and by so-doing reduce poverty especially amongst the youth. In spite of the title, this paper concentrates on Small and Micro-Enterprises in the informal sector. The paper is divided into three parts. The first part is a review of World Employment Report (1998-1991). The report is not only relevant to the theme of our investigation, but also focuses solely on how training can help in employment creation especially in developing countries. The second part of this paper is a case study based on mechanics and tradesmen operating in the informal sector. The case study is presented within the context of the World Employment Report. We will demonstrate that despite the potential and optimism regarding the role SMEs and Micro enterprises can play in employment generation and poverty reduction, there are inherent problems and issues which, unless addressed, no amount of training can result in the achievement of the sector’s potential. The third and final part of the paper raised important policy and research questions which are partially answered by recommendations.