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This paper investigates the potential contribution of small and medium sized enterprises (SMEs) in Nigeria to employment creation and poverty alleviation, particularly among youth. The paper begins with a brief review of the World Employment Report, published by the International Labour Organisation (ILO) in 1999 (indexed at TD/INT 58.518), which demonstrates how training can help in the creation of jobs, especially in developing countries. The authors then summarise their investigation of the skill requirements of the SME sector. They highlight the problems that will need to be overcome if the SME sector is to fulfill its potential in terms of employment generation and poverty reduction. The paper concludes with a number of questions that will need to be addressed if the skill development needs of the informal sector are to be met by the vocational education sector.