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EFFECTS OF BUSINESS FORMALITY ON THE CAPACITY OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN POVERTY ALLEVIATION: EVIDENCE FROM ADO-ODO LOCAL GOVERNMENT AREA, OGUN STATE, NIGERIA.

Dr Kayode Bowale1, Dr Adedayo Odukoya1, Dr Philips Alege1

1Covenant University, Ota,Ogun State, Nigeria

Correspondence: Kayode Bowale, PhD. Senior Lecturer, Covenant University,Ota.Nigeria Tel. 234-80-346-4522. E-mail: [email protected]

Abstract

There are divergent views on the importance of business formality. While various governments regard the different forms of business formality, such as registration of business, licensing and tax payment, as planning tools to promote development of the economy and businesses; business owners see them as a burden. Even among the academics and researchers there is no consensus on the contribution of formality to development of enterprises, especially the small enterprises. This study analyzed the characteristics of Small and Medium Enterprises (SMEs) in Ado-Odo Local Government Area in Ogun State, Nigeria; this is with a view to investigating the effects of business formality on the capacity of SMEs in poverty alleviation. Primary data were collected from three hundred and seventy three SMEs owners from 31 randomly selected towns using cluster sampling. Descriptive statistics was used to analyse the data collected. The result revealed that more male (69.4 per cent) were involved in small businesses than female (30.6 percent).Furthermore, majority of the business owners were literate (85.3 percent). The result showed further that trading activities were more predominant in the study area (39.9 percent). Few SMEs were registered with government agency (28.2 percent), while 44.8 percent of the entrepreneurs were registered with local trade associations; and only few SMEs owners (34.6 percent) of the business owners had license. Majority of the people, 74.5 percent agreed that there was a general improvement in their living conditions after registration and licensing of their businesses. However, registration had more effect on the wealth index. The study concluded that business formality had positive effect on capacity of SMEs in poverty alleviation through improved income and enhanced living conditions.

Keywords: Business Formality, Poverty Alleviation, Small and Medium Enterprises, Nigeria

Acknowledgment

We acknowledge with thanks the financial assistance we received for this project from Covenant University, Ota, Nigeria. We also appreciate those who assisted in data collection.

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1 Introduction

The decision to formalize a business is usually based on the owner’s perception of the advantages and disadvantages of formality. Some entrepreneurs operating in informal sector are quite aware of the benefits of formalization and would be ready to formalize their businesses if the entry barriers, such as high costs of registration and cumbersome procedures are removed (Maxwell Sandada, 2014). Participating in the informal sector is associated with high poverty levels because it reinforces the marginalization of these traders (Williams and Windebank, 2001). A lot of people in working class are in the informal sector in developing countries. Most of them engage in roadside businesses. Informality has many disadvantages. Aside from its negative impact on international competiveness, it discourages foreign direct investment and negatively affects trade policy and ultimately development in emerging economies. Literature is replete with studies on informality and microenterprises. According to some studies, Business formality enhances productivity and employment levels in an economy.(Fajnzylber, Maloney and Montes-Rojas’s (2011) and (McKenzie and Sakho, 2010). The Federal government of Nigeria recently reduced the cost of SMEs business registration by 60% in a bid to reduce the cost of doing business by the SMEs owners There is a need to assess the extent to which such policy has affected the level of formality in the country and to investigate the effect on the perception of SMEs owners. Business informality involves businesses that are legal but not registered for business law purpose. They operate outside the regulated economy and source their inputs locally. Results of some studies have indicated positive correlation between the level of informality and costs of regulation and procedures (Loayza, Owedo and Serven (2005), Klapper, Laeven and Rajan (2006). Some studies identified the barriers to formalization as lack of finance, lack of education, bureaucracy, weak institutions(Loayza 1994). But Most of the previous studies did not consider the relative effects of the different forms of formality separately on business growth and living conditions, hence this study. Undoubtedly, proper understanding of the traits and characteristics of SMEs and the impact on local economy is important in designing relevant and appropriate development policies. Therefore, the research questions are viz: What are the characteristics of the SMEs in Ado-Odo Local Government Area? And, to what extent can Business Formality impact on income and living conditions of SMEs owners in this study area. The broad objective is to examine the effects of business registration and licensing on the capacity of SMEs in poverty alleviation in the study area.

2 Literature Review

The labour market is divided into primary, secondary, informal and illegal, depending on racial and gender classification in the economy (Saint- Paul, 1997). The primary is made up of office jobs and heavy industry job, while the secondary sector offers less security, and it involves service jobs. According to the theory, the informal sector involves people who cannot access primary or secondary work, but operate their own business. Illegal work includes all criminal activities. Some economists have taken informal economic activity as a temporary alternative to unemployment; and that poverty disappears as economy develops into a larger urban industrial base (Marcelli et al 1999). Some are of the view that informality is a result of perception of the relative costs and benefits of entering legal systems (De Soto, 1985).There is no consensus over the conceptual definition of informal work. The economists view informal work in term of unregulated but cash exchanges (Gutmann,1977 and Ferge 1979) while sociologists view informal from the point of view of household economic activities, involving cash and non-cash exchanges in households(Levitan et al 1991). Some theorists also believe that the informal economy is a channel of cost cutting mechanism and it

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is always short changed, until there is intervention, it would not be able to muster enough capital necessary to develop the high level entrepreneurial capacity needed to displace foreign- dominated enterprises. However, in most cases people who are involved in informal economy are successful small business owners. The origin of the concept- informal economy can be traced to the study of urban labour markets in Ghana, which was conducted by International Labour Organisation (ILO) (Hart, 1973).

Literature is replete with different classifications of SMEs. SMEs can be classified as formal and informal SMEs, rural and high technology and knowledge driven small scale enterprises (Akinlo, 2012). SMEs in the informal sector are difficult to control as they fall outside the formal sector of the economy, thereby escaping official record keeping. In most cases, these informal SMEs are based on indigenous technology e.g dyeing, pot making and brick making. However they contribute to job creation (Fluitman, 1989). Many of these enterprises usually make use of simple and crude method of production (Dutta, 2005). Those SMEs in the formal sector are usually registered under the statutory company’s laws. It is important to note that it is not necessarily the type or nature of the business that constitute the formality but the way and the place the economic activity is carried out. Classification can be viewed from the angle of the size of business. The United Nations Development Programme, in its study UNDP (1988), defines micro enterprise as business engaging one to four employees while small enterprises are those with 5 to 25 employees. Others have classified those enterprises engaging 1 to 9 employees as micro enterprises and those engaging 10 to 49 as small enterprises while those engaging 50 to 250 employees as medium enterprises (Central Bank of Nigeria 2005). We have adopted this classification in our study. There is no consensus on the definition of poverty due to its multidimensional nature. Soludo (2004) defines poverty as a condition of low consumption. Poverty can also be viewed in a broader term as a condition of inability to meet basic material needs of life such as food, shelter, clothing, education, health as well as other physical requirements such as clean air; and non-material needs such as political involvement and identity (Ajakaiye 2001).Poverty may be absolute, relative, chronic or transient. Absolute poverty is lack of physical minimum requirement for a person for existence. Relative poverty involves comparison of a group or individual state of poverty with the other. The problem with concept of relative poverty is that it lacks scientific basis for determining the lowest limit to which the average income could fall. Poverty is measured at national level in term of indicators such as Gross Domestic Product (GDP) or Gross National Product, the United Nations later introduced the Human Development Index (HDI) as an indicator of poverty within a society. This considers life expectancy at birth, adult literacy rate, and school enrolment ratio.

3 Research Methodology

Study Area

The study was conducted in Ado-Odo Local Goverment Area in Ogun State Nigeria.. The area is peopled by virtually Yoruba-speaking race of different ethnic groups. Industrial activities are recently witnessing a rapid development in the area. Other major economic activities include transport, trading and agribusiness. Owing to the level of literacy and education and the fact that the area represents the economic hub of the country, the region has the largest concentration of all forms of small and medium enterprises in the country. The presence of the sizeable proportion of businesses might also be attributed to its proximity to Lagos, which was the former seat of power of Federal Government of Nigeria and the fact that Lagos is still the economic nerve of Nigeria.. The growing number of small and medium

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scale enterprises (SMEs) in the area attests to this fact. The area reflects the typical Nigeria business environment and has good representation of all traits and features that shape the business landscape of Nigeria.

Sampling and Data analysis

The target population comprised all registered small and medium scale businesses in Ado-Odo Local Government Area. The choice of this area was based on size and concentration of SMEs. Cluster sampling was used to select 450 SMEs owners from thirty- one(31) randomly selected towns in Ado-odo Local Government Area. The questionnaire had three sections with socio-economic profile in section A, Businesses Characteristics of the SMEs in Section B. Section C focused on Business Formality and changes in well being cum standard of living. The sampling frame for the survey consists of SMEs which employ not more than 10 people for micro, 50 people for small (SSEs) and 250 people for medium (MEs).A sample of 450 questionnaires was administered within a 6- week period.. A returned rate of 83% (373) was recorded. These were the ones correctly filled and considered valid. The content validity of the instrument was ascertained by three experienced researchers who checked the questions before administering. Furthermore, the questionnaire was pre-tested with 10 informal traders to further establish the validity of the instrument. Trained research assistants conducted the field work.

4 Results and Discussion

Socio–Economic Characteristics of business owners

Gender of Entrepreneurs

The sex of business owners in the area under consideration was in favour of male as shown in Table 1 in appendix 2. For example, 69.4 percent and 30.6 percent of the respondents were male and female respectively. The implication of this is that more men are having access to means of economic activities than female. Suffice it to say the Millennium Development Goal of gender equity by year 2015 was not yet realised

Age

The age structure of entrepreneurs sampled shows that most of the entrepreneurs, i.e. 224 or 60.1% of them are in the age bracket of between 21 and 40 years. This shows that majority of respondents are youth; and they are in the active economic years.

Education Qualification

Majority of the business owners were literate. This is contrary to the notion that small scale businesses are dominated by illiterate. Out of 373 entrepreneurs sampled, 52 (13.9%) have been to primary school,122 or 32.7% have attended secondary schools while 144 or 38.6 % have been to tertiary institutions.. The least number 55 (14.7 %) have no formal education.

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Marital Status

The analysis of marital status of the respondents in this study area showed that 309 or 82.8% are married, 54 (14.5%) are single, 3 or 0.8% are divorced and 7 or 1.9% are widows as depicted in Table 4 in appendix 2.

Nature of Business and Formality.

Nature of Business

Six major business lines were predominant among the respondents in the study area as shown in Table 5 in appendix 2; these are agro-allied business such as food processing, light manufacturing, professional services, trading, transport and vocational services. Among these six lines of business, trading is the most prominent form of business that SMEs engage in 146(39.9%). This is followed by vocational services, 87(23.3%) and Light manufacturing, 49(13.1%), transportation, 38(10.3%) and Professional services, 34(9.1%). The least is agro-allied business, 19 (5.1%).The low proportion of agro-allied was due to the perception of the youth that agribusiness is not a lucrative business despite high level of energy that usually goes into it. The trading business occupies the top position. This is a reflection of the Nigerian economy, which depends largely on imported goods. Most people find trading more lucrative and less risky.

Ownership Structure and Business Type

Table 6 shows the ownership structure of the selected SMEs. The majority, 312 (83.6%) of the businesses are under sole entrepreneurship 58 (15.5%) of the businesses are owned by different people outside the family, while 3(0.8%) are owned through partnership. The notion of social recognition and status among Nigerians might have contributed to this structure. In Nigeria, most people are sceptical in engaging in joint business.

Year of Operation

The respondents were asked for the years of establishment of their businesses in order to validate the general view in literature that most small businesses collapse within five years of formation. Table 7 shows that most of the businesses 130(35%) were established within the last five years. 31.8% were established within the last ten years while 123(33.2%) have been in operation for more than 10 years. Suffice it to say that a sizeable number of the businesses are older than five years showing high survival rate of businesses in Ado-Odo Local Government Area.

Business Registration

Table 8a showed the formality in terms of business registration. Most of the businesses 272(73%) were registered one way or the other. But more 167(44.8%) registered with local trade associations ostensibly to derive benefits of membership. Some of the businesses 101(27.1%) were not registered at all thereby depriving themselves of advantages of business formalisation, which in most cases include access to bank loans, corporate and government patronage among others. There is fear among small businesses in Nigeria about the entry barriers to formalisation such as cost of registration and cumbersome procedure. Suffice it to say that the fear of tax payment and registration cost are important barriers to business registration From Table 8b, out of 373 businesses surveyed, 88(23.6%)

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got registered after 4 years of establishment, 39(10.5%) got registered between the first year and third year after inception and 25(6.7%) got registered within a year after establishment.

Business Licensing

Another important element of business formality is product licensing. Table 8 shows that most businesses 225(60.3%) in the study area have not obtained product license, while only 129 (34.6%) have license to operate. 19(5.1%) did not give any response at all. This has confirmed the general belief among small business owners in Nigeria that product license is not really important. To most of them, it is just a way government makes money from them without contributing anything to their businesses. According to them, product licensing usually involves a lot of bureaucratic inertia. Suffice it to say that the proportion of businesses that remained unregistered and without licence is still high. This indicates the level of misconception about the relevance and the importance of business formality.

Effects of Business Registration and Licensing on Living Conditions of SMEs Owners

This study explores the extent to which the economic status of the SMEs owners have changed over the year due to business registration and licensing by presenting the estimates and distributions of the respondents perception about some of the key measures of economic condition. The study tested the null hypothesis that business formality (business registration and licensing) has no effect on the wealth index of SMEs owners. The null hypothesis was rejected with a probability value of 0.120 and F-statistics of 2.448 for Business registration and a probability value of 0.001 and F-statistic of 17.203 for licensing using General Linear Model (as shown in Appendix1), It is important to know that wealth index includes incomes and other socio-economic measures of living standard such as improvement in toilet facilities, sources of water, electricity among others as shown in the table 12-14 in appendix2. These indicators of standard of living are explained below.

Distribution of Business owners based on the Changes in their Socio-Economic Status

Income Level

In case of income, there was a reduction in the number of SMEs in the less than N5,000 income bracket per month. In Table 12, the percentage of SMEs in the less than N5,000 reduced by 94.7% while the proportion of SMEs owners in the income bracket of N5,000 –N50,000 also reduced by 5%. Majority moved from lower income to higher income. Since most of the respondents had claimed that they depend mainly on the small businesses for their income generation one can then argue that the bulk of such increment in their income level might have come from the businesses.

Sources of water

Majority of SMEs moved from the use of well water to personal borehole. Table 13 showed that there was a reduction by 46.2%, in the number of the SMEs that used well water. 43 SMEs owners moved away from the use of well water to borehole water. In Nigeria, sinking borehole is a regular feature in the houses of those who are in the middle class in the society.

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Sources of Energy for Cooking

In Nigeria, one of the measures of social status is the type of energy sources being used in the household. The proportion of the business owners that use wood and charcoal reduced by 80%, that of Kerosene stove reduced by 32.4% as depicted in Table14 while the proportion of SMEs owner who used gas and electricity to cook has increased after business registration and licensing.

Type of School attended

In view of the dilapidated nature of most public schools in Nigeria. The type of school a child attends has now become a social symbol. The level of income of a household determines the type of school the child in the household attends. Most the middle class and the rich people send their children to private schools ostensibly to acquire better education. Table 15 shows that the proportion of the children in public has reduced by 41(42.2%) after improvement in their living standard.

Adequate Meal per Day

The quality of food and the number of times an individual eats per day is also a measure of wellbeing. The respondents were also asked about the adequacy of meals they take daily. The proportion of those who ate once before formality reduced by 100% and those who ate twice a day reduced by 46.1%.The number of those who ate thrice daily increased by 16.9% as indicated in Table 15. This shows that the establishment of SMEs had enhanced the quality of life of SMEs owners.

Sources of Electricity/Power Supply

The sources of the energy can also be used as a measure of wellbeing. Owing to paucity of funds and low purchasing power, the poor naturally use crude means of power supply such as lantern. They move up in the energy ladder as soon as the economic condition improves. Table 17 shows a reduction in the proportion of those who were using lantern by 26(65%) after business formality when the living condition had improved while those who used generator now moved up by 27 (16.8%)

Use of Toilet Facility

The use of toilet was also considered as indicator of living condition. From table 18, it is certain that number of people using the least form of toilet facility, i.e ‘Bush’ reduced by 75% while the use of pit toilet reduced by 41.8%. However, the use of water closet increased by 5.6%. This shows that with business formality, the SMEs owners were able to have access to better basic facilities and improved living condition.

5. Summary, Conclusion and Recommendation

The role of SMEs in poverty alleviation has been the focus of research globally. However, not many studies have been conducted in developing countries on the various forms of business formality especially registration and licensing and the perception of the effects in the wellbeing of the small and medium scale enterprises owners. Hence, this study focused on the impact of business formality on income generation capacity of SMEs. Specifically, the study investigated whether the business registration and product licensing had contributed to the growth and performance of businesses in Ado-0do Local Government Area in Ogun State, Nigeria. The study also analysed the types of the businesses and the nature of the formality. It

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also examined the changes in socio-economic status as a result of business registration and Licensing in the study area.

To achieve these objectives, the first part of the study provided the background to the study by properly identifying the research problem. And existing literature were later reviewed with the aim of identifying the empirical gap. A descriptive analysis of socio-economic profile of SMEs owners was examined. We examined whether the improvement in the wellbeing of the SMEs owners could be attributable to the growth in SMEs and business Formality. The socio-economic profile of the respondents showed that that more male were involved in business than the female. Most of the business owners were literate and most of them were also involved in trading activities. It was discovered that most businesses were in the category of sole proprietorship. The age structure showed that most respondents were mature people whose economic survival instinct had been driven into business. The study further discovered that very few businesses were registered and those that were registered with trade associations were more than those that registered with the government agency- Corporate Affairs Commission. Furthermore, those that obtained license were few. Majority of the SMEs owners agreed that there was a general improvement in their living conditions as reflected by the positive changes in the indicators of the living standard. The study showed that business registration had more significant effects on wealth Index of SMEs owners than licensing. It is important to mention that it was discovered that many of those that did not obtain registration were not aware of the relevance and importance of the business formality, those that were aware had the fear of cost implications and unnecessary exposure for tax purpose as well as the cumbersome processes involved.

Recommendation

In view of the above-mentioned findings, it is recommended that conscious efforts are made by the government, especially at the ‘grassroot’ or local government level to promote enlightenment campaign about the relevance and importance of business registration in order to allay the fear of the business owners. The presence of the government agency-Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) should be extended to the rural areas where there are a lot of ‘unenlightened’ small business owners SMEs; and the agency should work with the local associations and groups. There is a communication gap presently in the system. It is not enough to have a programme, it is equally important to look at the pragmatic way of passing the programme to the target group of people for their benefit. All the entry barriers to business formalisation must be removed so as to encourage the SMEs owners. This would bring about increase in growth of their businesses. It would also improve their living conditions as shown in this study. The government should reduce to the barest minimum the cost of registration and licensing. The government can also introduce free registration and free licensing scheme, especially for businesses in agricultural and manufacturing sectors of the economy so as to encourage people to get more involved in the real sector of the economy. All government officials that are involved in licensing and registration should be trained to be more courteous and make the processes customers friendly. The need for human capital development and skill development among the SMEs cannot be overemphasised. Even though some of the business owners sampled can read and write, they lack basic knowledge of the fundamentals of business growth and formality. Small businesses cannot perform satisfactorily in an economy no matter the efforts made at reducing formality cost, without an enabling environment and robust institutions. Finally, the government should put in place a comprehensive SMEs Development package, especially in the areas of financing, human

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capital development, good market and social infrastructure, which would guarantee smooth and efficient operation of small businesses.

Conclusion

The study has shown that SMEs can contribute more to poverty alleviation if the issue of formality is fully embraced and given more attention, This study showed that registration and licensing of businesses have brought about improved capacity to alleviate poverty through wealth creation of business owners in the study area.

Contribution to Knowledge

The study has shed more light on the extent to which formalisation of business has contributed the growth of the SMEs and the living conditions of the owners in Ado-Odo local Government Area in Ogun State, Nigeria. The study has validated that business registration has more positive influence than licensing on the capacity of SMEs in poverty alleviation. The study has contributed in shifting the frontier of knowledge by examining not only income but other socio-economic indicators of measuring living standard and the role business formality can play in improving living conditions of SMEs owners.

Limitation of the Study and Suggestions for Further Research

It is important to mention the limitations of this study, even though the findings and conclusion are not affected by these limitations. Firstly, the survey was conducted in a local government of a geo-political zone in Nigeria. It did not examine the regional variations. Furthermore, the study only considered the situations prevailing at the time of the interview, giving less attention to dynamics of responses to situations at different times. Further research can be carried out in other regions in order to consider the regional variations.

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REFERENCES

Akinlo, A.E. (2012): Determinants of Small and Medium Scale Enterprises(SMEs) Performance and Poverty Alleviation in Developing Countries: Evidence from South-west Nigeria. European Journal of Humanities and Social Sciences. 17(1) pp847-863 .

Dutta, S. (2005) Dynamics in the Small and Medium Enterprises Sector in Indonesia, Edinburgh University Press, London.

Fajnzylber, P., Maloney, W. F., and Montes-Rojas, G. V., (2011).Does formality improve micro-firm performance? Evidence from the Brazilian SIMPLES program. Journal of Development Economics.94:262–76.

Feige E (1979) how big is the irregular economy? Challenge 12,5,13

Fluitman. M.(1984) Training for the Work in the Informal Sector, ILO Geneva, 1984 Training Ed.

Gebremania G.H. (2004) The Role of Small Business in Economic Growth and Poverty Alleviation in West Virginia: An Empirical Analysis. Research Paper 2004-10

Gut mann, P. (1997).the subterranean economy. Financial analysis journal 33, 22-27

Klapper, L. Laeven, L., Rajan R. (2006): Entry Regulation As A Barrier To Entrepreneurship, Journal of Financial Economics 82 (3), 591–629.

Levitan I. & Feldman S (1991) For Love Or Money; Nonmonetary Economic Arrangements Among Rural Households In Central New York:In D.Clay And H.Schwarz Wller (Eds) Research In Rural Sociology andDevelopment (Vol 5 Pp 149-172) Greenwich CT:JAL Press.

Loayza, N. A. M., Oviedo L. Servén (2005): The Impact Of Regulation On Growth And Informality: Crosscountry Evidence, Washington, DC: World Bank. (World Bank Policy Research Working Paper 3623

Maxwell Sandada (2014). ‘Transition From Informality To Formality ’ Perceptions Of Informal Traders In The Harare Metropolitan Area. International Journal of Economics, Commerce And Management. Vol. II, Issue 12

McKenzie, David and YayeSeynabouSakho, (2010) .Does it Pay Firms to Register for Taxes? The Impact of Formality on Firm Profitability .Journal of Development Economics 91(1):15-24.

Saint-paul G(1997) Dual Labour Markets A Macroeconomic Perspective, Boston.MA MIT Press.

Williams, C.C. (2001) Tackling The Participation Of The Unemployed In Paid Informal Work: A Critical Evaluation Of The Deterrence Approach. Environment and Planning C, 19(5): 29-49.

Soludo, D (2004). Challenging of Reducing Poverty In Nigeria. Paper Delivered At The Annual NIB Lecture On Sustainable Reforms The Banking Sector September 3 2003.

Ajakaiye A.(2001) Industrial Transformation Effort In Nigeria, Some Reflection.NISER Occasional Paper No.1 Ibadan.

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Appendix 1

General Linear Model –

Comparing BizProdLicense and BizRegistration on Wealth Index

Between-Subjects Factors

Value Label N

B1BizRegistration

1 CAC 103

2 Local trade association

160

3 None 27

Multivariate Testsa

Effect Value F Hypothesis df

Error df Sig.

Intercept

Pillai's Trace .811 612.978b

2.000 285.000 .000

Wilks' Lambda .189 612.978b

2.000 285.000 .000

Hotelling's Trace

4.302 612.978b

2.000 285.000 .000

Roy's Largest Root

4.302 612.978b

2.000 285.000 .000

B5BizProdLicense

Pillai's Trace .014 2.008b 2.000 285.000 .136

Wilks' Lambda .986 2.008b 2.000 285.000 .136

Hotelling's Trace

.014 2.008b 2.000 285.000 .136

Roy's Largest Root

.014 2.008b 2.000 285.000 .136

B1BizRegistration

Pillai's Trace .323 27.545 4.000 572.000 .000

Wilks' Lambda .681 30.183b 4.000 570.000 .000

Hotelling's Trace

.463 32.844 4.000 568.000 .000

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Roy's Largest Root

.450 64.281c 2.000 286.000 .000

a. Design: Intercept + B5BizProdLicense + B1BizRegistration

b. Exact statistic

c. The statistic is an upper bound on F that yields a lower bound on the significance level.

Tests of Between-Subjects Effects

Source Dependent Variable

Type III Sum of

Squares

df Mean Square

F Sig.

Corrected Model

WealthIndexbefore

1119.321a 3 373.107 33.839 .000

WealthIndexAfter

1230.689b 3 410.230 38.863 .000

Intercept

WealthIndexbefore

10417.896 1 10417.896 944.859 .000

WealthIndexAfter

11713.297 1 11713.297 1109.647

.000

B5BizProdLicense

WealthIndexbefore

22.660 1 22.660 2.055 .153

WealthIndexAfter

.028 1 .028 .003 .959

B1BizRegistration

WealthIndexbefore

1118.494 2 559.247 50.721 .000

WealthIndexAfter

1213.760 2 606.880 57.492 .000

Error

WealthIndexbefore

3153.400 286 11.026

WealthIndexAfter

3018.980 286 10.556

Total WealthIndexbefore

109305.000 290

12

WealthIndexAfter

109930.000 290

Corrected Total

WealthIndexbefore

4272.721 289

WealthIndexAfter

4249.669 289

a. R Squared = .262 (Adjusted R Squared = .254)

b. R Squared = .290 (Adjusted R Squared = .282)

Custom Hypothesis Tests

Contrast Results (K Matrix)

B1BizRegistration Simple Contrasta Dependent Variable

WealthIndexbefore

WealthIndexAfter

Level 1 vs. Level 3

Contrast Estimate 4.285 3.509

Hypothesized Value 0 0

Difference (Estimate - Hypothesized) 4.285 3.509

Std. Error .720 .705

Sig. .000 .000

95% Confidence Interval for Difference

Lower Bound 2.868 2.122

Upper Bound 5.702 4.895

Level 2 vs. Level 3

Contrast Estimate .181 -.890

Hypothesized Value 0 0

Difference (Estimate - Hypothesized) .181 -.890

Std. Error .691 .676

Sig. .793 .189

95% Confidence Lower Bound -1.178 -2.221

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Interval for Difference Upper Bound 1.541 .441

a. Reference category = 3

Multivariate Test Results

Value F Hypothesis df

Error df Sig.

Pillai's trace .323 27.545 4.000 572.000 .000

Wilks' lambda .681 30.183a 4.000 570.000 .000

Hotelling's trace

.463 32.844 4.000 568.000 .000

Roy's largest root

.450 64.281b 2.000 286.000 .000

a. Exact statistic

b. The statistic is an upper bound on F that yields a lower bound on the significance level.

Univariate Test Results

Source Dependent Variable

Sum of Squares

df Mean Square

F Sig.

Contrast

WealthIndexbefore

1118.494 2 559.247 50.721 .000

WealthIndexAfter

1213.760 2 606.880 57.492 .000

Error

WealthIndexbefore

3153.400 286 11.026

WealthIndexAfter

3018.980 286 10.556

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T-Test

Group Statistics

B5BizProdLicense

N Mean Std. Deviation

Std. Error Mean

WealthIndexbefore

Have license 127 19.0472 4.37318 .38806

Have no Licence

144 18.9375 3.52854 .29405

WealthIndexAfter

Have license 127 19.4567 4.33838 .38497

Have no Licence

144 18.7361 3.43976 .28665

]

Independent Samples Test

Levene's Test for Equality of

Variances

t-test for Equality of Means

F Sig. t df Sig. (2-

tailed)

Mean Differe

nce

Std. Error

Difference

95% Confidence

Interval of the Difference

Lower Upper

WealthIndexbefore

Equal variances assumed

9.814 .002 .228

269 .819 .10974

.48044

-.83616

1.05565

Equal variances not assumed

.225

241.94

8

.822 .10974

.48688

-.84932

1.06881

WealthIndexAfter


17.208

.000 1.523

269 .129 .72058

.47312

-.21091

1.65208

15


1.501

239.56

2

.135 .72058

.47997

-.22491

1.66607

T-Test

Group Statistics

B1BizRegistration

N Mean Std. Deviation

Std. Error Mean

WealthIndexbefore

CAC 103 21.6505 3.95739 .38993

None 27 17.4444 2.83296 .54520

WealthIndexAfter

CAC 103 21.8447 2.97953 .29358

None 27 18.3333 3.54097 .68146



Variances



tailed)

Mean Differe

nce

Std. Error

Difference

95% Confidence


Lower Upper

WealthIndexbefore


9.064 .003 5.179

128 .000 4.20604

.81215

2.59907

5.81301


6.275

55.688

.000 4.20604

.67029

2.86311

5.54897

WealthIndexAfter


2.448 .120 5.236

128 .000 3.51133

.67063

2.18436

4.83829

16


4.732

36.229

.000 3.51133

.74201

2.00679

5.01586

T-Test

Group Statistics

B1BizRegistration N Mean Std. Deviation

Std. Error Mean

WealthIndexbefore

Local trade association

160 17.6125 2.93534 .23206

None 27 17.4444 2.83296 .54520

WealthIndexAfter


160 17.4438 3.35292 .26507

None 27 18.3333 3.54097 .68146



Variances



tailed)

Mean Differe

nce

Std. Error

Difference

95% Confidence


Lower Upper

WealthIndexbefore


.573 .450 .277

185 .782 .16806

.60776

-1.030

98

1.36709


.284

36.080

.778 .16806

.59253

-1.033

57

1.36968

17

WealthIndexAfter


.170 .680 -1.265

185 .207 -.88958

.70322

-2.276

95

.49779


-1.217

34.334

.232 -.88958

.73120

-2.375

02

.59586

Towns in Ado-Odo Local Government Area

Frequency

Percent Valid Percent

Cumulative Percent

Valid Ado-Odo Ota 4 1.1 1.1 1.1

Agbara 96 25.7 25.7 26.8

Atan 55 14.7 14.7 41.6

Chelsea 3 .8 .8 42.4

Estate 1 .3 .3 42.6

Idedo 10 2.7 2.7 45.3

Idiroko 29 7.8 7.8 53.1

Idiroko Road 1 .3 .3 53.4

Igangan 1 .3 .3 53.6

Igbesa 8 2.1 2.1 55.8

Iju 12 3.2 3.2 59.0

Ijuri 12 3.2 3.2 62.2

Ilo-Awela 8 2.1 2.1 64.3

Industrial Estate

1 .3 .3 64.6

18

Iyana 1 .3 .3 64.9

Iyana-Yesi 12 3.2 3.2 68.1

Joju 3 .8 .8 68.9

Ketu Oluyomi 2 .5 .5 69.4

Lion Base 2 .5 .5 70.0

Lusada 22 5.9 5.9 75.9

Mupin 5 1.3 1.3 77.2

Obasanjo 7 1.9 1.9 79.1

Obere 25 6.7 6.7 85.8

Oju-Ore 22 5.9 5.9 91.7

Onibokun 3 .8 .8 92.5

Onipan 3 .8 .8 93.3

Opic Estate 3 .8 .8 94.1

Ota 1 .3 .3 94.4

Owode 9 2.4 2.4 96.8

The Bells 2 .5 .5 97.3

Toll Gate 10 2.7 2.7 100.0

Total 373 100.0 100.0

Source: Fieldwork 2015

19

Appendix 2

Table 1: Gender

Frequency Percent Valid Percent

Cumulative Percent

Valid

male 259 69.4 69.4 69.4

female 114 30.6 30.6 100.0

Total 373 100.0 100.0

Source:Fieldwork 2015

Table2:Age


Cumulative Percent

Valid

21-30 78 20.9 20.9 20.9

31-40 146 39.1 39.1 60.1

above 40 149 39.9 39.9 100.0

Total 373 100.0 100.0


Table 3: Education Qualification

Frequency

Percent Valid Percent

Cumulative Percent

20

Valid

no formal education

55 14.7 14.7 14.7

primary 52 13.9 13.9 28.7

secondary 122 32.7 32.7 61.4

tertiary 144 38.6 38.6 100.0

Total 373 100.0 100.0


Table 4: Marital Status


Cumulative Percent

Valid

Married 309 82.8 82.8 82.8

Single 54 14.5 14.5 97.3

Divorced

3 .8 .8 98.1

Widow 7 1.9 1.9 100.0

Total 373 100.0 100.0


Table 5: Nature of Business

Frequency Percent Valid Percent Cumulative

Percent

Valid agro-allied 19 5.1 5.1 5.1

light manufacturing 49 13.1 13.1 18.2

professional 34 9.1 9.1 27.3

trading 146 39.1 39.1 66.4

transport 38 10.3 10.3 76.7

21

vocation 87 23.3 23.3 100

Total 373 100 100

Table 6:Ownership Structure


Cumulative Percent

Valid

sole entrepreneurship 312 83.6 83.6 83.6

partnership 3 .8 .8 84.5

limited liability company

58 15.5 15.5 100.0

Total 373 100.0 100.0

Source: Fieldwork,2015

Table 7:Year of Operation


Cumulative Percent

Valid

btw 1-5yrs 130 34.9 35.0 35.0

btw 5-10yrs 118 31.6 31.8 66.8

above 10yrs

123 33.0 33.2 100.0

Total 371 99.5 100.0

22

Missing System 2 .5

Total 373 100.0


Table 8a: BizRegistration


Cumulative Percent

Valid

CAC 105 28.2 28.2 28.2


167 44.8 44.8 72.9

None 101 27.1 27.1 100.0

Total 373 100.0 100.0


Table 8b:WhenBizwasRegistered


Cumulative Percent

Valid

Less than 1 year 25 6.7 6.7 6.7

1 to 3 years 39 10.5 10.5 17.2

4 years and above

88 23.6 23.6 40.8

N/A 221 59.2 59.2 100.0

Total 373 100.0 100.0


Table 9: B5BizProdLicense


Cumulative Percent

23

Valid

Have license 129 34.6 34.6 34.6

Have no Licence

225 60.3 60.3 94.9

No Response 19 5.1 5.1 100.0

Total 373 100.0 100.0


.Table 10:How License improves Growth

Frequency PercentValid Percent

Cumulative Percent

access to market 1 .3 .3 .5access to product 8 2.1 2.1 2.7business recognition 6 1.6 1.6 4.3customer patronage 15 3.8 3.8 8.0enhances professionalism 3 .8 .8 8.8

increased profits 10 2.7 2.7 11.5legal operating environment 2 .5 .5 12.1

No impact 295 79.1 79.1 91.2product acceptability 3 .8 .8 92.0unhindered operation 30 8.0 8.0 100.0Total 373 100.0 100.0


Table 11:HowRegPromGrowth

Frequency PercentValid Percent

Cumulative Percent

access to input 1 .3 .3 .5

24

access to international market 4 1.1 1.1 1.6

access to loan 34 8.8 8.8 10.5

access to organisational benefits 3 .8 .8 11.3

access to product 1 .3 .3 11.5

business recognition 7 1.6 1.6 13.1

customer confidence 1 .3 .3 13.4

enhances professionalism 1 .3 .3 13.7

increased patronage 30 8.0 8.0 21.7

increased profit 1 .3 .3 22.0

legal operating environment 1 .3 .3 22.3

none 262 70.2 70.2 92.5

smooth operation 27 7.2 7.2 100.0

Total 373

100.0 100.0


Table 12: Income per month

tem Before After Increase/Decrease %Increase/Decrease< 5000 37 1 -36 - 94.745000 – 50,000 155 138 -17 -5.8050,000 – 100,000

60 74 14 10.45

>100,000 31 76 45 42.05Source: Fieldwork 2015

Table 13: Sources of Water

25

Item Before After Increase/Decrease %Increase/DecreaseWell 68 25 -43 -46.24Personal borehole

90 139 49 +21.40


Table 14: Sources of Energy for Cooking

Item Before After Increase/Decrease %Increase/DecreaseWood& Charcoal

9 1 -8 80.0

Kerosene stove 196 100 -96 -32.4

Gas/Electricity 85 189 104 37.95Source: Fieldwork 2015

Table 15: Type of School Attended

Item Before After Increase/Decrease %Increase/DecreasePublic 69 28 -41 -42.26Private 164 187 23 6.55Elite International

14 32 18 39.13


Table 16: Meals per day

Item Before After Increase/Decrease %Increase/DecreaseOne per day 8 0 -8 -100Two per day 103 38 -65 -46.10Three per day 179 252 73 16.94Source: Fieldwork 2015

Table 17: Light and Electricity Source

Item Before After Increase/decrease %Increase/DecreaseCandle/lantern 33 7 -26 -65Electric generator

128 180 52 16.88

PHCN 126 99 -27 -12Source: Fieldwork 2015

Table 18: Toilet Facilities

item Before After Increase/Decrease %Increase/DecreaseBush 7 1 -6 -75Pit toilet 39 16 -23 -41.82Water closet 244 273 29 5.61Source: Fieldwork 2015

26

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