Texila International Journal of Management Special Edition Dec 2019 Impact of Small and Medium Scale Enterprises in the Generation of Employment in Nepal Article by Dipti Sharma MBA, healthcare management, Texila American University E-mail: crazzy0deep@gmail.com Abstract For an underdeveloped nation uplifting economy is a challenge. Raising economy in such context must have accelerated growth and development that improves quality of life. Small and medium scale enterprises are provisions for fast growth and fulfillment of economic prosperity by any nation. The economic reform in the early 1990s in Nepal pulled the attention of the private and joint investment to seek the financial sector. National development strategies, the strategies towards poverty reduction of individual member countries should underline the importance of commercial sector promotion. In this research the total of 200 copies of the questionnaires to be administered. The instruments to be used are gathering information for this study includes questionnaires and interview. Two different statistical methods are to be employed to analyze data for the study. The tools are simple percentage and chi square test. The results of the study reveal that the most common constraints hindering small and medium scale business growth in Nepal are lack of financial support, poor management, corruption, lack of training and experience, poor infrastructure, insufficient profits, and low demand for product and services. SMEs expansion boosts employment more than large firm growth because SMEs are more labour intensive thereby subsidizing SMEs may represent a poverty alleviation tool, by promoting SMEs and individual countries and the international community at large can make progress towards the main goal of halving poverty. Entrepreneurial development is therefore important in the Nepalese economy which is characterised by the following heavy dependence on agricultural production, high unemployment, low utilization of industrial capacity, high inflation rate, and lack of industrial infrastructural base. Key words: Youth, Employment, Economic growth, Small and medium enterprises Definition of keywords Youths Youth is the time of life when one is young and often means the time between childhood and adulthood. It is also defined as "the appearance, freshness, energy, spirit, etc., characteristic of one who is young." Employment Employment is a relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee. Employees work in return for payment, which may be in the form of an hourly wage, by piecework or an annual salary, depending on the type of work an employee does or which sector she or he is working in. Economic growth Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used. 1 DOI: 10.21522/TIJMG.2015.SE.19.02.Art025 ISSN: 2520-310X Small and medium enterprises Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the European Union, the United Nations and the World Trade Organization (WTO). Introduction Economies of developing and transition economies, harmony among policy makers, economists, development partners that of small and medium enterprises (SMEs) are a potent factor for the industrial growth and economic development. In advancement of new technologies in the competitive world the processes of globalizing to meet the standards internationally and liberalizing, both processes combined with fast growth advancement in information technology and communication techniques creating new variation of production, enterprise development and internationally competitive. Evidences show that in regions or economies where enterprises have been actively helped the poverty rates have declined. This is especially applicable for Asia more precisely Indian sub-continent. Economic growth is fast in the region of youthful confident population. It is thus believed that Nepal through its young population has great expectation designed to meet the needs of economic growth. Nepal shares much in common with India in that they being supplied with a young energetic population. Youth entrepreneurship has vitally got primary expected to the strong rate of youth unemployment situation in Nepal. Recent experiences in Nepal with the high rate of child labour, involvement in violent crimes such as armed robbery and political gang fights, drugs trafficking and human trafficking are all side effects of unemployment. Methods Design and setting of study The primary objective of this study was to establish the impact of small and medium scale enterprises on employment creation and the role of this on sustainable development of the Nepalese economy. Sample survey research on unemployed youths of Tokha municipality Sampling design and procedure It is practically impossible to study all the unemployed youths and small and medium manufacturing and services enterprise owners in Tokha municipality, the technique adopted is random sampling technique to select samples adopted for this study. A total number of 200 samples are to be selected for this study. 200 questionnaires are administrated to them so as to solicit the needed data. Nature and sources of data Due to the nature of this study, primary data appropriate for this study. The source for data, both questionnaire and interview are adopted. Impact of small and medium scale industries Foreign Currency Earnings: small and medium scale industries are good means of foreign currency earnings. The amount of export is increasing constantly. So that we can say that it provides foreign currency in a reliable way. It earns foreign currencies and reduces the trade deficit. Export based form creates the employment opportunities. Baseline characteristic questionnaires are listed in table below Table 1. Respondent and analysis of data S/N Questionnaire 1 2 Total Administered Returned Unreturned 2 Frequency 160 40 200 Percentage 80 20 100 Texila International Journal of Management Special Edition Dec 2019 Interpretation Data collected through the questionnaires distributed and retrieved in order to ascertain if small and medium scale enterprises and employment generation are related in the Nepalese economy. The responses were collected and chi-square method. A total of two hundred copies of the questionnaires was administered out of which one hundred and sixty copies representing eighty percentage of the questionnaire were properly completed and retrieved while forty copies representing twenty percentage were not retrieved. Socio economic questions posed to the respondents and discussion of data analysis of responses from the one hundred and sixty responses that were properly filled, completed and retrieved through the research instruments adopted. Table 2. Sex of respondent Feature Code Frequency Sex Female 1 112 male 2 48 Total 160 Percentage 70 30 100 Interpretation Table number 2 shows that one hundred and twelve respondents representing seventy percentage of the sample size were females while forty-eight respondents representing thirty percentage of the sample size were males. Thus, majority of the respondents were females. Table 3. Age of respondent Feature Age Below 25Years 25-35Years 36-45Years Above 45 Years Total Code Frequency Percentage 1 2 3 4 26 100 32 2 160 16 63 20 1 100 Interpretation Table 3above shows that twenty-six respondents representing 16% of the sample size were of the age group below 25 years, 100 respondents representing 63% of the sample size were of the age group 25-35 years, 32 respondents representing 20% of the sample size were of the age group 36-45years while option above 45 years attracted 2 respondent representing 1% of sample size. Thus, majority of the respondents were of the age group25-35 years. Table 4. Marital status Feature Marital Status Single Married Divorced/Separated Widow/Widower Total Code Frequency Percentage 1 2 3 4 76 84 160 48 52 100 Interpretation Table number 4 shows that seventy 76 respondents representing 48% of the sample size were singles, 84 respondents representing 52% of the sample size were married while other options made available in the question attracted no respondent. Thus, majority of the respondents were married. 3 DOI: 10.21522/TIJMG.2015.SE.19.02.Art025 ISSN: 2520-310X Table 5. Education status Feature Education Illiterate below slc intermediate bachelors professionals Total Code Frequency Percentage 1 2 3 4 5 10 36 40 70 4 160 6 23 25 44 2 100 Interpretation Table number 5 shows that 10 respondents representing 6% of sample size were illiterate,36 respondents representing 23% sample size were educated below school leaving level, 40 respondents representing 25% were educated till intermediate level,70 respondents representing 44%were educated till bachelors’ level, 4 respondents representing 2% were professionals. Thus, majority of respondents were educated up to bachelors’ level. Table 6. Years in service Feature Years in Service Less than 5 Years 5-10 Years 11-15Years 16-20Years Above 20 Years Total Code Frequency percentage 1 2 3 4 5 128 24 5 3 160 80 15 4 2 100 Interpretation Table 6 above shows that 128 respondents representing 80% of the sample size have been on the job for less than five years, sixteen 24 respondents representing 15% of the sample size have been on the job for a period of 5-10 years, 5 respondents representing 4% of the sample size have been on the job for a period of 11-15 years, 3 respondent representing 2% of the sample size has been on the job for a period of 16-20 years while option20 years and above attracted no respondent. Thus, majority of the respondents have been on the job for less than five years. Table 7. Accelerated economic growth and development and quality of life SME’s Code Frequency Percentage Accelerated economic growth and development and quality of life Strongly Agree 1 48 30 Agree 2 48 30 Undecided 3 32 20 Disagree 4 18 11 Strongly Disagree 5 14 9 Total 160 100 Interpretation Table7 above shows that 48 respondents representing 30% of the sample strongly agreed, 48 respondents representing 30% of the sample agreed, 32 respondents representing 20% of the sample undecided, 18 respondents representing 11% of the sample while another 14 respondents representing 19% of the sample strongly disagreed with the statement. Thus, a majority of the respondent agreed with the statement. 4 Texila International Journal of Management Special Edition Dec 2019 Table 8. Contribute to global economic growth and development. SME’s Code Frequency Percentage contribute to global economic growth and development. Strongly Agree 1 70 44 Agree 2 74 4 Undecided 3 8 5 Disagree 4 5 3 Strongly Disagree 5 3 2 Total 160 100 Interpretation Table 8 above shows that 70 respondents representing 44% of the sample strongly agreed, 74 respondents representing 46% agreed, 8respondents representing 5% of the sample undecided, 5 respondents representing 3% of the sample size disagreed while 3 respondents representing 2% of the sample strongly disagreed with the statement. Thus, majority of the respondent were agreed with the statement. Table 9. The role of enabling environment on sustainable employment generation should be alike SME’s Code Frequency Percentage The role of enabling environment on sustainable employment generation should be alike Strongly Agree 1 36 23 Agree 2 24 15 Undecided 3 74 46 Disagree 4 8 5 Strongly Disagree 5 18 11 Total 160 100 Interpretation Table 9 above shows that 36 respondents representing 23% of the sample strongly agreed, 24 respondents representing 15% agreed, 74 respondents representing 46% of the sample undecided, 8 respondents representing 5% of the sample size disagreed while 18 respondents representing 11% of the sample strongly disagreed with the statement. Thus, a majority of the respondent were undecided about the question. Table 10. Youth encouraged for entrepreneurial spirit SME’s Code Frequency Percentage The youth should be encouraged to develop and nurture entrepreneurial spirit Strongly Agree 1 74 46 Agree 2 40 25 Undecided 3 38 24 Disagree 4 3 2 Strongly Disagree 5 5 3 Total 160 100 Interpretation Table 10 above shows 74 respondents representing 46% of sample size strongly agreed, 40 respondents representing 25% of sample size agreed, 38 respondent 23 respondents representing 19% of the sample undecided, 3 respondents representing 2% of the sample size disagreed while 5 respondents representing 3% of the sample strongly disagreed with the statement. Thus, a majority of the respondent strongly agreed with the statement. 5 DOI: 10.21522/TIJMG.2015.SE.19.02.Art025 ISSN: 2520-310X Table 11. Sustainable employment generation solve socio-economic problem inherent in national economy of Nepal SME’s Code Frequency Percentage Sustainable employment generation solve socio-economic problem inherent in national economy of Nepal Strongly Agree 1 84 52 Agree 2 61 38 Undecided 3 10 6 Disagree 4 5 4 Strongly Disagree 5 Total 160 100 Interpretation Table number 11 above shows that 84 respondents representing 52% of the sample strongly agreed, 61respondents representing 38% agreed, 10 respondents representing 6% of the sample undecided, 5 respondents representing 4% of the sample size disagreed no one strongly disagreed in the statement. Thus, majority of the respondent strongly agreed with the statement. Table 12. Entrepreneurship reduces poverty and improve standard of living SME’s code Frequency Percentage Entrepreneurship reduces poverty and improve standard of living Strongly Agree 1 64 40 Agree 2 38 24 Undecided 3 29 18 Disagree 4 19 12 Strongly Disagree 5 10 6 Total 160 100 Interpretation Table above shows that 64 respondents representing 40% of the sample strongly agreed, with the statement, 38 respondents representing 24% agreed, 29respondents representing 18% of the sample undecided, 19 respondents representing 12% of the sample disagreed while 10 respondents representing 6% of the sample strongly disagreed with the statement. Thus, a majority of the respondents strongly agreed with the statement. Table13. Youth employment reduces social vices in an economy SME’s Code Frequency Percentage Youth employment reduces social vices in an economy Strongly Agree 1 84 52 Agree 2 61 38 Undecided 3 10 6 Disagree 4 5 4 Strongly Disagree 5 Total 160 100 Interpretation Table 13 above shows that 84 respondents representing 52% of the sample strongly agreed, 61 respondents representing 38% agreed, 10 respondents representing 6% of the sample undecided, 5 respondents representing 4% of the sample size disagreed while none of the respondents strongly disagreed with the statement. Thus, majority of the respondents agreed with the statement. 6 Texila International Journal of Management Special Edition Dec 2019 Table14. Entrepreneurship can promote industrial and technological growth SME’s Code Frequency Percentage Entrepreneurship can promote industrial and technological growth Strongly Agree 1 35 22 Agree 2 32 20 Undecided 3 31 19 Disagree 4 30 18 Strongly Disagree 5 32 20 Total 160 100 Interpretation Table 14 above shows that 35 respondents representing 22% of the sample strongly agreed, 32 respondents representing 20% agreed, 31 respondents representing 19% of the sample undecided,30 respondents representing 18% of the sample size disagreed while 32 respondents representing 20% of the sample strongly disagreed with the statement. Thus, majority of the respondents agreed with the statement. Table15. Promotion of SMEs and improvement in employment generation are related SME’s Code Frequency Percentage Promotion of SMEs and improvement in employment generation are related Strongly Agree 1 56 35 Agree 2 58 36 Undecided 3 13 8 Disagree 4 16 10 Strongly Disagree 5 18 11 Total 160 100 Interpretation Table 15 above shows that 56 respondents representing 35% of the sample strongly agreed, 58 respondents representing 36% agreed, 13respondents representing 8% undecided, 16 respondents representing 10% of the sample disagreed while 18 respondents representing 11% of the sample strongly disagreed with the statement. Thus, a majority of the respondents agreed with the statement. Table16. The economy depends on its working population for economic growth and development. SME’s. Code Frequency Percentage The economy depends on its working population for economic growth and development Strongly Agree 1 64 40 Agree 2 58 36 Undecided 3 Disagree 4 22 14 Strongly Disagree 5 16 10 Total 160 100 Interpretation Table 16 above shows that 64 respondents representing 40% of the sample strongly agreed, 58 respondents representing 36% agreed, none were undecided, 22 respondents representing 14% of the sample disagreed while 16 respondents representing 10% of the sample strongly disagreed with the statement. Thus, a majority of the respondents strongly agreed with the statement. 7 DOI: 10.21522/TIJMG.2015.SE.19.02.Art025 ISSN: 2520-310X Table 17. The youth can enhance sustainable development of the Nepalese economy SME’s Code Frequency Percentage The youth can enhance sustainable development of the Nepalese economy Strongly Agree 1 80 50 Agree 2 48 30 Undecided 3 16 10 Disagree 4 8 5 Strongly Disagree 5 8 5 Total 160 100 Interpretation Table 17 above shows that 80 respondents representing 50% of the sample strongly agreed, 48 respondents representing 30% agreed, 16 respondents representing 10% of the sample were undecided, 8 respondents representing 5% of the sample disagreed while 8 respondents representing 5% of the sample strongly disagreed with the statement. Thus, a majority of the respondents agreed with the statement. Employment in small and medium scale enterprises 900 800 700 600 500 400 300 200 100 0 number in lakh person Figure1. Employment in small and medium scale enterprises The growth of employment can be clearly seen in the figure 1. Employment in small and medium scale enterprises has played vital role in national economy. Number of employment generation in small and medium scale enterprises 31 small medium 69 Figure 2. Employment generation in small and medium scale enterprises Figure 2 shows employment generation in small scale enterprises is more than medium scale enterprises. 8 Texila International Journal of Management Special Edition Dec 2019 chart showing percentage of enterprises engaged in service and manufacturing sector 13 service manufacturing 87 Figure 3. Percentage of enterprises engaged in service and manufacturing sector Manufacturing enterprises are large in number than service sectors as shown in figure 3. Table 18. Challenges and opportunities of small and medium scale industries Challenges faced by small and medium scale industries Little developed markets for many products and high price fluctuations Many producers with small quantities of products receive only a small portion of the total revenue. Lack of market information such as product prices and available volumes and projections of future supply and demand Lack of marketing knowledge and skills amongst traders Limited access to information and technology for product development Lack of marketing infrastructure Lack of branding, certification and recognized standards for Nepali products to ensure that products are produced organically, traded fairly, and environmentally sustainable Opportunities in small and medium scale industries Growing international and domestic market demand Income and employment opportunities. Availability of external support Conducive forestry policies Discussion Analyses of the research statement reveal that small and medium scale enterprises are strategic to attainment of economic prosperity objective of the nation. For an economy to live up to expectation in the committee of nation’s development wise, such economy must achieve accelerated economic growth and improves quality of life. The economic growth and development depend on its working population for economy in which the youths constitute greatest percentage and this further establishes the reason why the youth should be encouraged to be employed. The youth must be encouraged to develop and nurture entrepreneurial spirit since entrepreneurship reduces poverty and improves standards of living. The youth can enhance sustainable development of the Nepalese economy. The hypotheses tested reveal that small and medium scale enterprises and growth of the Nepalese economy. 9 DOI: 10.21522/TIJMG.2015.SE.19.02.Art025 ISSN: 2520-310X Conclusions Adequate and primarily attention must be given to wide spread of economic activities through entrepreneurship. Small and medium scale enterprise generation. The youth is the major contributor to all round economic growth and development. Security must be primary and paramount for greater process capability to move economically forward. Acknowledgement I express my deep sense of gratitude and profound thanks to all individuals and institutions that have kindly and generously extended their support and help in accomplishing this report. I am highly indebted to Tokha municipality for providing me such an opportunity to conduct research as fulfillment of MBA program. I am grateful to my research guide Mr. Suman kafle for his valuable guidance, supervision and constructive feedback during the study period. 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