EFFECTS OF ENTREPRENEURIAL COMPETENCIES ON THE PERFORMANCE OF CASSAVA PROCESSORS IN NIGERIA

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ABSTRACT

This study analyzed the Effects Entrepreneurial Competencies on the Performances of Cassava  Processors in Abia State, Nigeria. Specially, the study described the socio-economic characteristics of the processors, described the entrepreneurial competencies possessed by the processors, estimated the factors influencing the entrepreneurial competencies among the processors, estimated the cassava processors entrepreneurial performance along the value chain, determined the differences in entrepreneurial performance of the processors, estimated the factors that influence the processors entrepreneurial performance and examined the constraints militating against the processors performance. A multistage sampling technique was used to select 120 cassava processors while a well-structured survey instrument was used to elicit the required data. The data collected were analysed using descriptive statistics, Principal Component Analysis (PCA), budget analysis, analysis of variance (ANOVA) and Multiple regression analysis. The results reveal that the cassava Processors had formal education with 63.3% of them having secondary education while the distribution according to their level of experience shows that 89.2% had an experience in cassava processing above 5 years. The cassava processors are involved in the production of flour, fufu, garri, and tapioca though most of them were found to produce more than one value added product. The significant of entrepreneurial competence with a mean X > 3.00 as shown in the results of the analysis are business understanding, communication skill, risk taking, good operational planning, good financial control, task coordination, ability to explore new idea etc. Cassava Processors entrepreneurial competencies were found to be profitable and viable with entire Cassava Processing enterprises having a return per naira of N5.265 There is a significant difference in the performance of various enterprises.  Household size, income, competence and experience were the significant variables affecting the entrepreneurial performance of the processors. The major limitations faced by the enterprises include low output, entrepreneurial orientation, poor capital access etc. Based on the findings, it is recommended that cassava processors should be given enough orientation to enable them manage their inputs and also to understand the business environment in order to identify the market needs.

 

 CHAPTER 1




TABLE OF CONTENTS

Title                                                                                                                                        i

Declaration                                                                                                                             ii

Certification                                                                                                                           iii

Dedication                                                                                                                              iv

Acknowledgements                                                                                                                v

Table of contents                                                                                                                    vi

List of Tables                                                                                                                          ix

Abstract                                                                                                                                  x

 

CHAPTER 1:   INTRODUCTION                                                                                     

1.1       Background to the Study                                                                                            1

1.2       Statement of Problem                                                                                                 3

1.3       Research Questions                                                                                                                        5

1.4       Objectives of the Study                                                                                              6

1.5       Hypothesis                                                                                                                  6

1.6       Justification of the Study                                                                                            7

 

CHAPTER 2:   LITERATURE REVIEW                                                                        

2.1       Conceptual Framework                                                                                              9

2.1.1    Description of Cassava and its origin in Nigeria                                                        9

2.1.2    Processing of Cassava products                                                                                 10

2.1.3    Cassava processing operations                                                                                  11

2.1.3.1 Peeling and washing                                                                                                   12

2.1.3.2 Grating                                                                                                                        13

2.1.3.3 Fermentation                                                                                                              13

2.1.3.4 Chipping/Slicing                                                                                                        15

2.1.3.5 Pressing                                                                                                                       15

2.1.3.6 Sieving                                                                                                                        15

2.1.3.7 Sun-Drying                                                                                                                 16

2.1.3.8 Frying/Roasting or Drying                                                                                         16

2.1.3.9 Soaking                                                                                                                       17

2.1.3.10 Boiling                                                                                                                      17

2.1.4 Cassava processed products                                                                                          17

2.2 Overview of Nigerian agriculture                                                                                    18

2.2.1 Entrepreneurship as a mechanism for poverty reduction                                              23

2.2.2 Factor that contribute to entrepreneur business performance                                       25

2.2.3  Challenges to processing in Nigeria                                                                             26

2.2.5 Cassava processing technologies                                                                                  30

2.2.6    Constraints faced in Cassava processing                                                                    35

2.2.7 Global situation of cassava                                                                                            36

2.3       The Nigerian Cassava industry                                                                                   37

2.4       Postharvest handling and storage                                                                               39

2.4.1    Processing techniques of cassava root                                                                        40

2.4.2    Storage techniques                                                                                                      41

2.4.3    Demand estimates of Cassava supply in Nigeria                                                       45

2.5       Value Chain of Cassava Product                                                                                45

2.5.1    Secondary Products From Cassava                                                                            46

2.6       Profitability                                                                                                                51

2.6.1    Repayment Capacity                                                                                                   53

2.6.2    Financial Efficiency                                                                                                   55

2.7       Theoretical Framework                                                                                              57

2.7.1    Farmers/Processors As An Entrepreneur                                                                   57

2.7.2    Approaches to assessing entrepreneurs                                                                      62

2.8       Empirical review                                                                                                        72

2.9       Analytical Framework                                                                                                77

2.9.1    Budgetary Analysis                                                                                                    77

2.9.2    Multiple Regression Analysis                                                                                     78

2.9.3    Principal Component Analysis                                                                                   79

 

CHAPTER 3:  RESEARCH METHODOLOGY                           

3.1       Study Area                                                                                                                  81

3.2       Method of Selection of Respondents                                                                          82

3.3       Method of Data Collection                                                                                         82

3.4       Method of Data Analysis                                                                                            82

3.5.      Model Specification                                                                                                   83

3.5. 1. Budgetary analysis                                                                                                     83

3.5.2.   Profitability Index                                                                                                       84

3.5.3.   Multiple regression model                                                                                          84

3.6. 4   Principal component factors analytical model                                                           81

 

CHAPTER FOUR:  RESULTS AND DISCUSSION                                                       

4.1       The Socio Economic Characteristics of the cassava processors                                    86

4.2       Attributes of entrepreneurial competencies processed by the respondent in the

 study area                                                                                                                   92

4.3       Entrepreneurial competencies along the value added products of the cassava

            Processing                                                                                                                   98

4.4       Cassava processors’ entrepreneurial performance along the value chain               102

4.5       The differences in entrepreneurial performance of the Cassava processors                   106

4.6       Factors that influence the cassava processors entrepreneurial performance                108

4.7       The Constraints Militating Against Entrepreneurial Performance of the Cassava Processors                                                                                                                   111

                                      

CHAPTER 5:     SUMMARY, CONCLUSION AND RECOMMENDATIONS                        

5.1 Summary                                                                                                                          113

5.2  Conclusion                                                                                                                  114

5.3  Recommendation                                                                                                                                                                                                            

Reference                                                                                                                   117

 

 

 

 

 

 

 

 

 

 

 

LIST OF TABLES

 

 2.1:     Traditional and Improved Cassava Processing Equipment                                        34

 4.1:     Socio-Economic Characteristics of the Cassava Processors                                      88

 4.2:     Value Added Products by the Cassava Processors                                                     92

 4. 3:    Description of the entrepreneurial competencies by the cassava processors                   94

 4.4:     Entrepreneurial competencies among the cassava processors along the value chain                                             98

 4.5:     Entrepreneurial Competencies among the Cassava Processors along the Value chain continued                                                      101

 4.6:     Cassava Processors’ Entrepreneurial Performance (53,333 kg of Cassava root)              102

 4.7:     Cassava Processors Entrepreneurial Performance continued

             the fufu processing enterprises are viable.                                                                104

 4.8:        Cassava Processors Entrepreneurial Performance continued                               105

 4.9:     Differences in the Entrepreneurial Performance of the Cassava Processors                   106

 4.10:   Ordinary least square estimates of the Factors Influencing Entrepreneurial  Performance                             108

 4.11:     Constraints Militating Cassava Processors Entrepreneurial Competence                111

 

 

 

 

 

 


                                            CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Currently, Nigeria is the largest producer of cassava in the world with an annual output of 50,000,000 metric tons (FAO stat, 2017). Its importance forms the premise of the presidential initiative on cassava production and processing which is one of the major reforms in Nigeria economy from 1999 (Adebayo and Sangosina, 2005). Some of the inherent features which make cassava attractive especially, to the marginal farmers in Nigeria are that, it is rich in carbohydrate, starchy and consequently has a multiplicity of end uses. It also has the ability to withstand adverse conditions, available all year round and thus providing food security. According to Ezike, Nwibo and Odoh (2011), commercialization of cassava is not all about growing the crop in large quantity but an integration of such with effective value addition in form of processing. They also noted that, without value addition to cassava roots, cassava cannot be stored or exported.

The entrepreneurial competency approach is becoming increasingly popular as a way of studying entrepreneurial characteristics Man, Lau & Chan (2002).  Lans, Bergevoet, Mulder and van Woerkum (2005) have stated that, the issue of competency development has been a focal point for literature on entrepreneurship. The competency approach is thus proven to be an appropriate approach for measuring entrepreneurship.

 

In other to increase performance, the focus should be to minimise cost, and increase business growth and sustainability within the volatile market. Thus, the abilities needed to improve profitability and increase business growth include decision making skills, networking skills, opportunity seeking behaviour and problem solving abilities. The decision-making abilities of a processor/owner are considered to be part of the skill of an entrepreneur. However, for processors to be successful in their business operation, innovative decision-making abilities are needed linking with entrepreneurial characteristics and competencies in order to guarantee success. Sanchez (2011) defines competencies as “a cluster of related knowledge, traits, attitudes and skills that affect a major part of one’s job; that correlate with performance on the job; that can be measured against wellaccepted standards; and that can be improved via training and development”. Entrepreneurial competencies are defined as people characteristics which enhance their performance or effectiveness at work. Entrepreneurship research has shown that entrepreneurial competencies have a positive impact on SME performance. According to Bird (1995), competencies are seen as observable behaviours that are more tied to performance than other entrepreneurial characteristics such as personality traits, intentions or motivations. Gartner and Starr (1993) noted that entrepreneurial competencies play an important role in enhancing firm performance, having both direct and indirect effects on firm performance. An entrepreneur is expected to interact with these environmental forces which require him to be highly competent in different dimensions like intellectual, attitudinal, behavioural, technical, and managerial aspects. Entrepreneurs are therefore permanently challenged to deploy a set of competencies to succeed in their entrepreneurial endeavours.

It is expected that the processor with enhanced entrepreneurial competencies would enjoy improved entrepreneurial performance. According to Van Vuuren (1997) entrepreneurial performance is the achieving of set entrepreneurial goals. In addition, Ladzani and Van Vuuren (2002) argues that entrepreneurial performance utilizes the available opportunities to grow the business idea. However, entrepreneurial performance can be measured subjectively and objectively; absolute performance is used to measure objective values using quantitative data by asking perceptive views about performance. Moving the argument along, Performance measurement uses multi – dimensional set of performance measures that include both financial and non-financial, which quantify what has been achieved  as well as predict the future (Alhyari et. al., 2013).  Cassava processors  need financial statements to compare the actual performance of the business against the planned performance and past performance. Efficient production of farming operations has been shown to be an important factor in financial performance. However, most farmers and or entrepreneurs prefer not to concentrate on their planning, record-keeping and marketing, but rather on production. They further explain that effective entrepreneur must be competent and able to determine the financial performance of the farming business at any given time. The reason for this being that a farmer can learn from past performances. 


1.2 STATEMENT OF PROBLEM

Agro – based processing enterprises have been identified as driving force for economic growth, job creation, and poverty reduction in developing countries. (Sauser, 2005). Fabayo (2009) succinctly stated that in developing countries, agro processing enterprises are the feeder services to large- scale industries, a major employer and an essential contributor to community civic environments. However, despite the huge contributions of agro – based processing enterprise to development generally, researchers  have  revealed that entrepreneurs  face many obstacles that limit their long-term survival and development (ILO, 2005).

 

Researchers have indicated that starting a business is a risky venture and that the chances of small-business owners making it past the five-year mark are very slim (ILO, 2005). Some researches into business development have also shown that the rate of failure of agro businesses in developing countries is higher than in the developed world (Marlow, 2009). Factors affecting agro - based enterprise performance have been a good research area by researchers for many years. Previous researches indicated that several factors that influence performance include among many others owners professional background, entrepreneurship capabilities and preferences, cultural and religious beliefs, as well as the technology and micro –environment (Buttner, 2001; Makhbul, 2011).

 

In Nigeria, Akabueze, (2002) explains that despite the support and  programmes to agro business, it would seem reasonable to expect that agro processing businesses would grow and flourish, but the rate of business failure continues to increase because of the obstacles affecting business performance. Such factors according to Akabueze (2002) include: lack of financial resources, lack of management experience, poor location, laws and regulations, general economic conditions, as well as critical factors such as poor infrastructure, corruption, low demand for products, services, and poverty.

While Akabueze (2002) has argued in general terms about factors affecting performance of agro-based entrepreneurs, there are no specific data segregation on factors that influence the processors entrepreneurial performance and constraints militating against the processors performance.

Entrepreneurial competencies, linked with entrepreneurial behaviour and decision making skills influence the performance of cassava processors. In Abia State however, there is no reported research on the influence of the processors entrepreneurial competences on their  performance or profitability or business performance.

 

      1.3. RESEARCH QUESTIONS

The study was intended to provide answers to the following questions:

i.        What are the socio – economic characteristics of the processors in the study area?

ii.       What are the entrepreneurial competencies possessed by the processors along the value chain?

iii.     What are the processors’ entrepreneurial performance  along the value chain in the study area?

iv.     What are the differences in entrepreneurial performance of the processors’ along the value chain?

v.       What are the influence of entrepreneurial competency and associated socio-economic variables on the processors entrepreneurial performance in the study area?

vi.     What are the constraints militating against the processors performance?

 

1.4 OBJECTIVES OF THE STUDY

The broad objective of the study is to analyse the effect of entrepreneurial competencies on the performance of cassava processors in Abia State, Nigeria . Specifically the study objectives are to:

i.      describe the socioeconomic characteristics of the processors in the study area;

ii.     identify and describe the entrepreneurial competency attributes possessed by the processors along value chain  in the study area;

iii.    estimate the processors’ entrepreneurial performance among the processors along the value chain in the study area;

iv.   determine the differences in entrepreneurial performance of the processors’ along the value chain in the study area;

v.     analyze the influence of entrepreneurial competency and associated socio-economic variables performance on the processors entrepreneurial performance in the study area;

vi.   identify the constraints militating against the processors entrepreneurial performance.


1.5 HYPOTHESIS

Ho: There is no significant difference between the processors’ entrepreneurial competencies and their performance

H1: There is a significant difference in the entrepreneurial performance of the cassava processors along the value chain.

 

1.6 JUSTIFICATION OF THE STUDY

The importance of food to human existence cannot be over emphasized because it is one of the necessities. It is from the foregoing backdrop that this study is justified and was useful in numerous ways.

This study will guide potential entrepreneurs and or farmers in selecting the most profitable cassava value chain for processing to ensure high quality and profitability of cassava by-products. This study was also  useful to all stakeholders, government at federal and state level especially Abia State Government as the finding will spur Government in understanding the dynamics of cassava processing as data gathered will enhance the understanding of major factor that militates against entrepreneurial performance of processors and participation in development processes and the best strategies for eliminating the constraints.

Based on this, government and other stakeholder was able to mount effective policies and empowerment programmes that was beneficial to farmer and or entrepreneurs as well as effective allocation of resources.

Apart from contributing to the existing body of knowledge this research on entrepreneurial education was used as a proactive strategy to build entrepreneurial personalities, organizations and societies. Entrepreneurial education is vital as entrepreneurs who undergo an entrepreneurial education will show a high propensity to take risk, creativity, motivation, growth mindset and awareness of cassava / farm support services and Researchers- who will conduct on further research on the need to harness entrepreneurial competences and their benefits to the economy. This research was use to expound on the birth and growth of entrepreneurial mindset and the effect of such a mindset in an emerging economy such as Nigeria.    

Lastly, it is hoped that information from the study will form a source of reference material to students, institutions, and researchers and provide a basis for further studies on related issues.

 

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