The Supply of High Quality Entrepreneurs in Developing Countries: Evidence from Nigeria

A common feature of developing country economies is their large informal sector. Typically, it consists of small, poorly managed firms and is characterised by low productivity growth relative to the formal sector. Consequently, research suggests encouraging the expansion of the formal sector in order to drive economic growth. One mechanism to achieve this is to increase the supply of high quality entrepreneurs. Indeed, a crucial difference between formal and informal firms is the quality of management, which has been shown to have a considerable impact of firm productivity and performance. For instance, one extra year of manager education has 30% returns. Thus, channelling talented individuals towards entrepreneurship should increase the number of productive firms in formal sector. The resulting increase in competition and innovation should cause unproductive informal firms to exit and eventually lead to a reallocation of resources towards to the formal sector and to growth.

This project focuses on the question of how to increase the supply of high quality entrepreneurs in Nigeria. It aims to quantify and explore the link between entrepreneurial interest and practice, and to provide data and insights on the profile and motivations of potential entrepreneurs. The researcher uses a several rounds of a large-scale survey of 47,560 undergraduate students enrolled in Nigerian tertiary institutions, gathering data on entrepreneurial interest, business ownership, and personal characteristics. He then analyses the extent to which students who expressed an interest in entrepreneurship were indeed more likely to start a business, and examines how other personal characteristics, such as gender, shape the link between entrepreneurial interest and practice.

Given that highly educated entrepreneurs tend to become better managers than the uneducated ones, it is important to identify the factors responsible for translating an interest in business into actual entrepreneurial practice. By analysing new data on the traits and motivations of potential and actual entrepreneurs in Nigeria, this project will identify such factors, which should help design targeted policy interventions to increase the supply of high quality entrepreneurs. 


Caleb Adelowo

Obafemi Awolowo University

Abiodun Egbetokun

De Montfort University