DEPARTEMT OF BANKING & FINANCE, PROJECT TOPIC: THE ROLE OF UNIVERSAL BANKS IN THE DEVELOPMENT OF THE SMALL-SCALE BUSINESS IN THE NIGERIA ECONOMY (A CASE STUDY OF FIRST BANK NIGERIA PLC ILORIN BRANCH)
THE ROLE OF
UNIVERSAL BANKS IN THE DEVELOPMENT OF THE SMALL-SCALE BUSINESS IN THE NIGERIA
ECONOMY
(A
CASE STUDY OF FIRST BANK NIGERIA PLC ILORIN
BRANCH)
TABLE OF CONTENTS
Contents Pages
Title page i
Certificate ii
Dedication iii
Acknowledgements iv
- vi
Table of contents vii
- viii
Chapter
one:
1.1 Introductions 1
- 4
1.2 Objectives of the study 5
I.3 Scope and limitation of the study 5
- 6
1.4 Significance of the study 6
1.5 definitions of key terms 7
1.6 organization and Plan of the study 8
Chapter
two:
2.1 Literature Review 9 - 12
2.3 importance of small scale Industries 3 - 15
2.2 small scale Industries and government polices
15 - 18
2.4 small scale Industries and finance 18 - 20
2.4 problem of finance small scale business 20 - 21
Chapter
three: Research Methodology 22
3.1 historical background of first bank in Nigeria
22
- 25
3.2 Banking services 25 - 31
3.2 Types of finance available to small scale
Industries 31 – 35
Chapter four
4.1 Data Interpretation and
analysis 36 - 38
4.2 Presentation
of result according to research Question38 - 46
4.3 Presentation of result
according to Hypothesis 46
- 50
4.4 Procedure for processing data 51
4.5 Generalization 51
- 53
Chapter five
Summary, recommendation and conclusion 54
5.1 Summary of the finders 54 - 55
5.2 Conclusion 55
- 57
5.2 Recommendation 58
References 60
- 61
Appendix 62 - 65
CHAPTER ONE
1.1
INTRIDUCTION
The
working definitions of small scale industries varies among countries,
industrial group, authors and form one financial institution to another.
For
instance, the united nations in define “small scale business as one operated mainly with hired labour not
exceeding fifty (50) workers for motive power. This definition is based on
manpower 1953 define small scale business as one that is independently owned,
operated and dominated in its field of operation.
The
Nigeria economic recommendation funds (NERFUND) defined a small scale business
as one which total asset cost must not exceeding N15 Million as per total
constant figure (i.e U.S & 1.00 TO N4.00 ) .
The
central bank of Nigeria monetary and credit policy guidelines for 2000 define
small scale business for universal and merchants banks loan purpose as one
whose capital investment does not exceeding N10 Million ( including loan and
working capital ).
Moreover,
the centre for industrial research and development (CRD) at the Obafemi Awolowo
University Ile- Ife define as a small scale business as those enterprises with
project cose (investment and working capital not exceeding N750, 000.00k)
In
the newly launched industrial policy, small scale industries are defined as
those with total investment of between N10 million and N2 million excluding
cost of capital but including working capital.
The
importance of small business industries in the promotion of economic
development of any developing nation has always been at the forefront of any
developmental strategies. The industry has been recognized worldwide as the
wheel to a nation’s industrialization.
Apart
from the generating more than half of the total workforce of the industrialized
nations, the fact that they often bound up with rural development which today
forms that significance part of the nations over ruling economic development priority.
In
most cases unlike the large scale enterprises, the small scale industries are
less capital intensive and uses more labour absorption inputs. Also they are
known to make maximum utilization of the entrepreneurial resources of a country
as well as being less dependents on infrastructure for their operations.
The
industrial development (insceory / experience) of the industrialized nations
affects to indispensability of small scale industry as the bedrock of any developing economy,
countries such as Japan, South Korea, to mentions but few, are where they are
today economically is through the small scale industries.
However,
many developing countries such as Nigeria have failed to adopt this
strategy to their belief that it is a relatively slow process of
industrialization, which may not be compatible with their desire to catch up
with industrialized countries.
One
should observe that the small – scale business can be defined from the range of
capital, the workforce, turnover and capital, investment and from managerial
point of view.
However,
small – scale business can engage in various sector of the economy including
trading general merchandise service, farming etc. but they have the same things
in common which are relatively small, managerial manpower and financial
standing.
1.2 OBJECTIVES OF THE STUDY
The objectives of the study is to make a
critical examination of the following
i.
The problems and prospect of small
scale industry in Nigeria
ii.
The role of the banks (Universal banks
) in the development of small scale industry in revitalizing the downing
economy of the country.
1.3 SCOPE AND LIMITATION OF THE STUDY
The study shall cover
most of the universal banks in operation in the country. The focal points of
the study shall include the following
1. The
study shall undertake an indept knowledge into the nature and management of the
small scale industry in Nigeria,
its problems and prospects
2. the
study shall highlight the various finances available to the small – scale
industries
3. the
study is intended to take on examination of the nature and problem of various
bank finances available to the small scale industries.
4. the
study shall also highlights concerted effort being made to develop the small
scale industry in Nigeria
1.4 SIGNIFICANCE OF THE STUDY
The
study is intended to highlight the various hindrance to the development of the
small scale industry in Nigeria
and means of reducing or eliminating them.
Furthermore,
it is intended to address the commercial banks in re-defining the status aims
in terms of their indifference and respond to the small – scale industries in Nigeria.
This becomes inevitable considering the
number of banks that respond to the loan demand of the industry.
1.5 DEFINITION OF TERMS
1. working capital: this
can be define as money that is needed and used in running a business, it can be
calculated as; current assets – current liabilities
2. bank:
it can be defined as institution for the keeping , leading and exchange of
money.
3. credit:
it can be also be defined as to delay payment for goods and service given to
customer to a future date
4. loan:
can be defined as money lend usually from a financial institution used for
business running and are refunded on install mental basis
5. industrialization:
can be define as a process of development of raw materials into a qualified and
stratified finished goods
1.6 ORGANIZATION AND PLAN OF THE STUDY
In
order to provide for an explicitly analysis, the study is divided into five
chapters
Chapter 1; Deals with
introduction
Chapter 2; Deals with
literature review
Chapter 3; Deals with
Research Methodology
Chapter
4; Deals with an appraisal of the role of universal banks in the development of
small scale industry, while
Chapter
5; Deals with summary, conclusion and recommendation
CHAPTER
TWO
2.1
LITERATURE
REVIEW
Different
definition of small – scale business has been propounded by different authors.
the definitions are in actual facts, relative to the author point of view,
their country and their point in time .
The
definitions are classified by the authors using different criteria number of
employers, sales values financial strength, record, independent ownership and
type of industry. In fact there has been a lack of agreement among authors as
to what constitute small scale business.
For
instance, one limited nations report on the development of manufacturing
industries in Egypt, Israel and Turkey” (1988) defined small scale business as
an establishment that employed ten or more people” to the Indonesia it refers
to those establishment that employing less than ten full time workers. Peoples” To the Indonesia it refers to that
establishment employing less than ten fulltime workers.
To
the Japanese and Americans, it refers to those industries employing than 300
and 500 workers respectively.
According
to ROGER LERDY MILLER (1978) “they are business whose abilities are under
&100,000”.
In
countries such as united state of America,
Britain and Canada,
small scale business is defined in terms of annual turnover and the number of
paid employees. In Britain
for instance, a small scale business is defined as that industry within an
annual turnover of $20 million or less with fewer than 200 paid employees.
With
specific reference to Nigeria,
there has been the disagreement as to what constitutes a small scale business.
According
to ADENOWO (1988), he identifies a group of small scale industry
”as companies with average number not exceeding 500 employees, annual scale value or turn over not exceeding #1.4 million and gross asset of #7 million
”as companies with average number not exceeding 500 employees, annual scale value or turn over not exceeding #1.4 million and gross asset of #7 million
According
to the third nation development plan, volume one, page 353, it was described as
“manufacturing establishment employing less than ten employees or people or
whose investment in machinery and equipment do not exceed #600,000 as small
scale industries”
Similarly,
some federal and state financial institution especially those that provide
special kinds of assistance the small scale business. In the credit guidelines
of the central bank of Nigeria
(1997), small scale enterprises are classified as “those businesses which their
annual turnover does not exceeded #10 million”.
According
to the Government ( federal Government) small scale industry development
programme of early 80’s it defined small scale industry in Nigeria as “ any manufacturing ,
processing or service industry with a capital investment not exceeding #150,000
in machinery and equipment alone.
According
to Anderson, he
defined a small scale business from management point of view as “ a company
which hires an average number of employees not exceeding #1.4million and a
balance sheet total of #7 million
Federal
ministry of commerce and industry defines small scale industries as “those
establishments with their capital but excluding the cost of land”
Natural
Economic Reconstruction Fund (NERFUND) put the ceiling for small scale
industries at #10 million
Section
376 (2) of companies and allied matter decree of (1990) defined a small scale
company as one with:
a)
Annual turnover of not more than #2 million
b)
Net Asset value not more than #1
million
2.2
IMPORTANCE
OF THE SMALL SCALE INDUSTRIES
The
essence of large scale industries without the small scale industries has been
seen as the life of a human being without legs.
This
is based mainly on the various roles, which the small scale industries play,
and some important advantages it has over the large scale industries. Their
roles in the economic development of any developing economy cannot be over emphasized.
The importance of the industry in the promotion of economic development
strategies. The industry as been recognized worldwide as the “inch pin” to a nation’s
industrialization. They are mostly pronounced in the are4a of employment
opportunities and effective sourcing of the requirement of industries attract
indigenous managers instead of expatriates. This and its high dependence on
local raw materials emphasis is aimed towards self sufficiency and economic
reconstructions. Besides the contribution to a reasonable growth race in the
Gross Domestic Product (GDP) and their
provision of employment to many idle stabilized prices and ensure a viable
balance of payment position where they captive their targeted markets.
According
to LATERU OLAGEGI (1990) “the small scale industries provide a training ground
for dynamic enterprise who is motivated to invest in large scale project due to
their creditable performance in small scale ventures. They make meaningful
contribution of foreign exchange earning.
The
small scale industries are mostly found in the areas of farming, soap,
plastics, tissue paper and shoe manufacturing e.t.c. they provide inputs to
medium and large scale industries, and some times depends on their waste
product which are recycled as further input raw-materials to other industries.
Further more, in the area of rural development, the small scale industries has
been identified as a significant part of the development strategy. No wonder
the Federal and State Government laid more emphasis on the industry.
2.3
SMALL
SCALE INDUSTRIES AND GOVERNMENT POLICIES
The
government is very conscious of the unique roles of small scale industries in
the development of the natural economy: hence it has initiated some polices and
programme along this line. Notable among them are : establishment of the
federal loan board and the regional corporations, the small scale industries
credit scheme (SSICS),The creation of industries centers and state level in the
civil services, the CBN monetary guidelines, and the Nigeria Bank for Commerce
and industry various initiations.
Regrettable,
some of this polices and programmes has been attributed to a number of factors
which may include the orientation of the small scale industries operation
towards these policies: non- compliance with the term and condition of these
policies: non –compliance with the term and conditions of these policies and
schemes by their operation and many more. For instance, it was revealed by the
CBN (1997), that despite its guidelines that the commercial banks are required
to give a certain percentage of their aggregate loans and advance to the small
scale wholly indigenous business, their percentage allocation has not been
significant even with the introduction of sanctions and penalty for
non-compliance. The reason for this nonchalant attitude of commercial banks as
given was that they consider the industry as high risk area for lending purpose
due to the high percentage of default in repayment of loans.
To
redress this state of affairs, the federal government new national industrial
policies accord high priority to the development of the small scale industries.
One of the high point of the policy as that it pave way for the establishment
of the National Economic Reconstruction Fund (NERFUND) under Decree 2 of small
scale and medium scale industries.
Though
the fund is not a bank, but it will mobilize fund through provision of medium
and long term loans, within Naira or foreign currency to participating
commercial and merchant bank to onward lending to small and medium scale
enterprises
Those
eligible for the loan are those enterprises or project which are wholly owned
by Nigerians and its fixed assets, other than land do not exceed #10 million
preference will be given to enterprises or projects located in the rural areas
in its loans disbursements.
In
case of manufacturing enterprises or projects, at least 60% of its raw
materials are locally sourced.
The
fund as expected to provide soft loan (Naira) at interest rate slightly lower
than the prevailing commercial rate in the country and will be fixed for the
duration of the loan.
The
fund as currently funded by world banks African Development Bank and the
Czechoslovakians government.
Considering
the operations of fund. It is disheartening to note that it has not been
performing to expectation. There is therefore a pointer that something needs to
be done especially to facilitate affective operation of the fund.
According
to OWATUNMISE (1990) “ there is an urgent need to further enlighten the
populace, particularly the business minded people, of the available facility
and the modalities of the fund.
2.4
SMALL
SCALE INDUSTRIES AND FINANCE
The
major problem hindering the growth and development of the small scale
industries in many countries is finance. Fund constitute the lifeblood of many
business either big or small scale, while other things follows. Hence, a
carefully identified and excellently promoted business can be strangled along
the line by inadequacy of fund.
In
Nigeria,
universal and some development bank constitute the major financiers of the
industries. Their total loans and advance to the industry weight that of the
government financing agencies and small scale finds.
The
commercial and merchant banks are directed and guided by the monthly annual
credit guidelines of the CBN which stipulate the minimum percentage allocations
of the loans and advance of the Banks that should go to various sectors and
small – small enterprises respectively.
According,
in the 1997 CBN credit guidelines to
banks loans they are directed to provide a total of 20% of the bank loans and
advances to the small scale industries wholly owned by Nigerians.
2.5
PROBLEMS
OF FINANCING SMALL SCALE BUSINESS
However,
it has been observed that most of the banks shy away from the small scale
industries this is attributed to the relatively small size low financial
involvement and the inherent risk associated with the small scale business.
Hence,
the bank falls short of the expectation of the credit guidelines, sanctions and
strict penalties not withstanding. Another area of concern are the condition
and string attracted to most universal banks loan where as it given the bank
often request for past year accounting record, reasonable and reliable
collaterals as securities and excessive monitoring of loans or protected time
lay between approval and release of such loans. All these hinder the
development of many small scale industries and could discourage an investor
According
to TOYIN PHILLIPS(1989) “most of the banks prefers to pay the penalties rather
than comply with the CBN credit policy guideline to lend the small scale
business”
Overall,
there has been a lot of distrust between the small scale industrialist and the
banks. Both have constantly neglected the small scale industries. To reduce the
situation, the federal governments have had to come in as an intermediate
between the industrialist and the banks.
This,
it does through the introduction of various industrial policies and scheme, one
of which the National Economic Reconstruction fund (NERFUND) introduced in
1989.
CHAPTER
THREE
3.0 RESEARCH METHODOLOGY
3.1 HISTORICAL BACKGROUNG OF FIRST BANK IN NIGERIA
There
is no precise date when the business of banking started in Nigeria.
However , rudimentary banking activities actually started in Nigeria in about 1861 when a shipping company (
elder Dampster shipping line) started banking activities in Lagos
with the objectives of making easier transaction with the company’s customer in
Nigeria.
However, the business of modern banking
was started in Nigeria in
1892 by the bank of British West Africa to which the standard bank of Nigeria
Limited, now first bank of Nigeria
limited, is a successor bank. This banks remain the only bank in operation in Nigeria until 1917, when the colonial bank, now
bank of Nigeria opened its
offices in Lagos.
For about two decades, the two banks are
only banks operating in Nigeria.
They were later joined by some indigenous banks, some of which later failed as
a result of mis-management among other things, the National Bank of Nigeria
Limited, was established in 1947.
The united bank of Africa
limited, was established initially as the British and French Bank in 1947 soon
after the second world war, and took on his present name in 1961, while Bank of
the north was established in1961. Most of the banks operating in Nigeria at this period were incorporated abroad
and only come to do business in Nigeria,
and as such were basically foreign companies until the passing of the company
act 1968, which made mandatory for all foreign companies to register in Nigeria.
All other commercial
co-operative and specialized banks, such as the Nigeria bank for commerce and
industry were established in the late sixties, seventies and eighties all of
them wholly owned by Nigeria institutions and individuals.
Prior to the enactment of the banking
ordinance act 1952 and its amendment ant of 1958, there was no law or steatite
governing the establishment, control and operations of banking business ion
Nigeria the banks operated in accordance with the law governing the operations
act made it compulsory for the first time in Nigeria for any wishing to
established a bank to obtain a valid license. This was later confirmed in
obtain a valid license. This was later confirmed in section four of the banking
act 1969 and now replaced by decree 25 of bank and other financial INSTITUTION
DECREE OF 1991. the license is granted by the governor of CBN with the approval
of the president on recommendation of the central bank of Nigeria.
The Governor is also
empowered to revoke a license of the federal republic of Nigeria
by notice published in the Gazette.
3.2 BANKING SERVICE
The
list of available services rendered by the universal banks is now so long that
it as asking a lot to expect a man comprehends it all yet, the modern view is
that the cashier on the bank counter as the selling outlet to the customer,
banking covers so many activities or services that it or services that it is
difficult to define it
However,
three basic services have always been recognized as the hallmarks of the
genuine banker. These are the receipt of the customer deposit, the collection
of their cheque drawn on other banks and the payment of the customer cheque
drawn on themselves.
From
this historical foundation, has been built a wide variety of service. These are
A ADVANCE
I overdraft
Ii loans
Iii personal
loans
Iv prodding
loans
V farming
loans etc
B DEPOSITE
I savings account
Ii current account
Iii
deposit account
Iv safe custody
V sale deposit etc
C FINANCIAL
SERVICE
I accepting of credit facilities
Ii bill discounting
Iii business advisory services
Iv factoring
V hire purchase etc
D FOREIGN
SERVICES
I bill for negotiation
Ii documentation credit
Iii bill for collection
Iv foreign exchange
V letter for credit etc
E MONEY
TRANSMISSION
I bankers draft
Ii cheque
Iii credit card
Iv letter of introduction
V status enquiries etc
F STATUS
I bankers draft
Ii cheque card
Iii credit card
Iv letter card
V status enquire etc
Before
going further, below (table 3) which show the banking sector loans and advance
to SMES from 1995-2000
From
the table we can see that total aggregate loans and advance to SMES have
increased over the years.
As
mentioned earlier, banks regard most of these small scale industries as risky
ventures that are vulnerable to external shocks and government policies the
bank prefer to pay the penalties rather than comply with central bank of
Nigeria credit guidelines to lend not less than 20% of their loans and advance
to the small scale enterprises.
In
1996, for instance, the bank reluctantly allocated between 1.8 and 9.3 percent
of their total loans and advances to small scale business. But by 1997 out of
#42,531.90 million aggregate loans and advance of the banking sectors, about
#13,587.30 million (or 31.95%).
However,
in 2008, about 33.09% of the total loans and advances of the banks went to the
small scale enterprises. CBN annual report (1999). Also in 2003, the universal
bank loans to small scale enterprises amounted to #17,462.9 million; this how
ever exceeded the stipulated 20% by 14.8%, CBN Annual Report (2003).
It
is however, pertinent to note that the bulk of theses loans and advances by the
bank went to small scale an industry that engages in trade distribution of
goods (who can pay back the loan within the shortest period of time) rather
than those ones engaging in the actual production of good in the economy.
This
they do in order to complied with the CBN guidelines, so as to avoid penalties
of good in the economy.
This
they do in order to complied with the CBN guidelines, so as to avoid penalties
of depositing short falls with the CBN for onward transfer to NBCI for on
leveling to small scale industries that contribute less to the industrial
growth and economic development of the nation.
It
should be bear in mind, however, that considering the vast resource base in Nigeria
and the importance of the small scale industries in the nation’s economic
growth, the bank must nevertheless take considerable credit for the ability of
the small scale enterprises to be an operational component of the productive
sector. Both in the agricultural and industrial sector, very little could have
been achieved without the active co-operative and expertise available in
universal banks.
In
practice, a few banks offer advisory services to small scale industries. On the
whole however, it would be safe to that the support given to small scale
industries be first bank remain inadequate
3.3 TYPES OF FINANCE AVIALUABLE TO SMALL SCALE
INDUSRIES FROM FIRST BANK
TO BRING ABOUT DEVELOPMENT.
At
present, first bank and some development bank constitute the major financials
of small scale industries out weight that total loan and advance to the
industries out weight that of the
Government financing
agencies and small scale fund.
The various sources of finance available
to the small scale industrialist through the banks are
1) Overdraft
2) Loans
3) Business
development loans
4) Business expansion
loans
5) Personal loan
6) Others
1)
OVERDRAFT
This
is an arrangement whereby a bank customer is allowed to withdraw up to a
maximum unit over the credit balance in the customers account with the
overdraft, interest is calculated on a daily basis. It is by far the cheapest,
if the bank manager is satisfied with the customer’s proposal.
2)
LOAN
A
loan is more expensive the amount agreed is made available by transfer from
loan account ion the customer’s name to his current account.
The loan is supposed to be reduced at
agreed interval, often a month, by an instrument from the current account.
Interests are chargeable on the loan the
interest will be charge quarterly or half- yearly on the amount of the loan
outstanding.
3. BUSINESS DEVELOPMENT LOAN
This type of loan as designed to meet
the needs of small scale industries for extended credit with planned and agreed
repayment, which include interest charges. It is available for expenditure on
property purchase or extension, the purchase of plant, machinery, vehicles, or
professional practice and by way of additional working capital for a new or
existing business the borrowers is normally required to have life policy
covering the amount of the loan
4. BISINESS START LOAN
Business start loans are intended to
provide finance for few companies but also available to establish companies
wishing to launch project or product.
5. BUSINESS EXPANSION LOANS
This type of loans was established to
help small and medium scale industries to finance capital expenditure projects
for term of up to twenty years. The security normally required is the asset
purchased.
6 PERSONAL LOAN
This is the loan intended as a cheapest
form of hire purchase to bank customers. The interest is added to the amount
borrowed and the total is then repaid by regular monthly repayment over an
agreed period.
7 OTHERS
Other types of assistance provided by
the banks to the small scale business are :
I factoring
Ii hire purchasing
Iii leasing
Iv business advisory services
However, the bank shy
away from small scale industries, due to their relatively small scale, low
financing involvement and inherent risk. Their argument is that the cost of
giving loans to the industry always accounts Is between 25% and 40% at the
value of loan defaulters
Other reasons why the industries have
been low funded over the past year are:
a) banks often
request for past years accounting records which may not have been kept by small
scale industries
b) The traditional
demand for reasonable and reliable collateral for borrowing from the bank
c) There is also the
excessive monitoring of loans
d) The maturity of
loans extended to the small scale industrialist are usually very low are this
hindered the growth of the business.
CHAPTER
FOUR
4.0 INTRODUCTION,
DATA PRESENTATION AND ANALYSIS
This chapter analysis the data collected from
respondent though questionnaire, the research made use of description and
vertical statistical. All the questions are coded or used for logical
conclusion recommendation.
4.1 The future of small scale
industries in Nigeria
is blink but considering the valuable rules of the industries to the
development of the country. It must be stress that is the need to ensure the
survival of the industry.
To minimize the problem facing the small scale
industry especially the effect of structural adjustment programme (SAP) and to
ensure survival of industries, the government (either federal or state) have
not been Luke warn
Beside the stipulation of the credit guide line of
the CBN to ensure enough fund of the banks is another buster.
Furthermore, the catalogues of incentives to agro
and other type of small scale industries in term of succession and prices of
raw-materials, location etc are motivating factors to the industries.
Similarly,
the introduction of the national economic reconstruction fund (NERFUND) is
another buster to the development of the small scale industries. The fund is
expected to provide soft naira loans at interest rate slightly lower than the
prevailing commercial rate in the country and will reflect the agree term,
which the loan are made available to the fund.
There is also the introduction of small scale
scheme, the scheme is expected to provide among other things, finance for
cooperative society, machinery and equipment to aid production etc. The scheme
has improves considerably the production of the rural dwellers in the areas of
farming, servicing trading etc if however the scheme is allowed to persist for
a longer period, there very hope that it will enhance the development of small
scale industries.
4.2 PRESENTATION
OF RESULT ACCORDING TO RERSEARCH QUESTIONS.
This is aim at analysis the bin, data of the respondent and present
position of the respondent.
TABLE 4.2.1 DEPARTMENT
|
DEPARTMENT
Operation
|
FREQUENCY
16
|
PERCENTAGE (%)
40
|
|
Accounting
|
8
|
20
|
|
Marketing
|
4
|
10
|
|
Administration
|
12
|
30
|
|
Total
|
40
|
100
|
Table 4.2.2 shows that 16(40%) of the despondence are in operation
department, 8(20%) are in accounting department,4(10%) marketing while 12(3%)
are in administration.
This shows the questionnaire circle the major department in the
organization
Table 4.2.3 SEX
|
SEX
|
FREQUENCY
|
PERCENTAGE (%)
|
|
Male
|
28
|
70
|
|
Female
|
12
|
30
|
|
Total
|
40
|
100
|
Table 4.2.3 show that 28(70%) of the respondent are male while 12(30%)
are female staff
TABLE 4.2.4 AGE
|
AGE
|
FREQUENCY
|
PERCENTAGE (%)
|
|
0-20
|
0
|
-
|
|
21-30
|
8
|
20
|
|
30-40
|
12
|
30
|
|
40-above
|
12
|
50
|
|
Total
|
40
|
100
|
Table 4.2.4 shows that 20 years below has no despondence 8(20%) are
between the age 21-30 12(30%) of the respondent are between 31-40, while
20(50%) are In the age of 41 above.
Hence, on indication that
the banks employ above 41 who has neatly gained.
Table 4.2.5 MARITAL STATUS
|
MARITAL STATUS
|
FEQUENCY
|
PERCENTAGE (%)
|
|
Single
|
7
|
17.5
|
|
Married
|
33
|
82.5
|
|
Total
|
40
|
100
|
TABLE 4.2.5 shows that 7(17.5%) are single, while 33(82.5%) of the
respondent are married.
This indicates that the higher percentage of the respondent have already
married.
Table 4.2.6
EDUCATIONAL QUALIFICATION
|
QUALIFICATION
|
FREQUENCY
|
PERCENTAGE (%)
|
|
O level below
|
0
|
-
|
|
NCE - OND
|
12
|
30
|
|
HND – BSC
|
18
|
45
|
|
Others
|
10
|
25
|
|
Total
|
40
|
100
|
Table 4.2.6 shows that, no respondent has O level below, 12(30%) of the
respondent has NCE/OND has qualification, 18(48%) of the respondent has HND /
BSC as qualification, while 10(25%) has other qualification, or as part of
their qualification
This indicate that the
staff of a bank are educated in the large percentage of the respondent has at
least OND/NCE certificate.
TABLE 4.2.7
|
QUALIFICATION
|
FREQUENCY
|
PERCENTAGE (%)
|
|
Junior
|
6
|
15
|
|
Semi senior
|
28
|
70
|
|
Senior
|
6
|
15
|
|
Total
|
40
|
100
|
Table 4.2.7 shows that 6(15%) of
the respondent are junior, 28(70%) are semi senior while 6(15%) of the
respondence are senior staff.
This indicate that the largest percentage of the respondent falls in the
middle class of the organization.
. It is indeed to their specialized bank the most industries firm for
projector business finance
v. Government:- other sources
of finance available to the industries are that forms the government both
(state and federal).
Federal agency such as, the national economics reconstruction fund
(NERFUND), Nigeria
export and import bank (NEIM) etc.
The
government can also use for exclusive directive through the central bank of
Nigeria that a certain % of the bank aggregate loans and advances should be
made available to small scale industry sector. This is usually contained in the
CBN credit guideline issued personally to various bank in the country.
Before talking on NERFUND, let look at the small
scale industry scheme (SSIC) which was introduce in 1980 as revolving grant by
the federal and state government to assist in meeting the credit need of small
scale enterprises institution.
The problem of inadequate financial resources
especially at the state level coupled with the report of rampant mismanagement
of the merger funds both administration of the loan as well on benefiting small
scale enterprises. Analysis the scheme consequently the federal government will
out the scheme in 1979 to establish the Nigeria bank of commerce and
industrial (MBIC) as the apex credit institution of small scale enterprises.
National Economic and reconstruction fund (NERFUND)
The federal governments
under decree 2 of 1989 establish the national economic reconstruction fund
(NERFUND), this fund was created in order to finance, this it selves is jointly
finance by the world bank and central bank of Nigeria on behalf of the federal
government and the united state government
As at the end of June 1998,
a total and 206 project received loan approval estimate at #2.4 billion under
the NERFUND of this 77 were for agro allied 59for manufacturing 28 for textile
milling and quarry and is for industrial support service.
SAMPLING PROCEDURE
DEFINITION OF THE SMALL SCALE ENTERPRISIES
In chapter two, it was
highlighted that the definition of small scale industry varies from one country
to another as different indicators were used. However, for the purpose of
comparative analysis, we shall in his study limit ourselves to the current and
up to data definition that taking the infection and depression situation of the
country into consideration given by the first bank of Nigeria plc.
According to first bank of
Nigeria plc, small scale business is that business which there capital is not
exceeding 750 thousand industry working capital but excluding the cost of land,
the cost of land excluded because of the different in its cost indifferent part
of the country. By this definition small scale business in Nigeria could be categorize into
classes namely
a)
The
organized but non manufacturing enterprises engage in transportation
construction and services
b) Non
organized enterprises such as artist, wayside repair shop, walls etc
c)
Modern small manufacturing enterprises such as
small scale textile mill
4.3 PRESENTATION
OF RESULT ACCORDING TO HYPOTHESIS
The base fundamental for testing the hypothesis involve the formulation
of the null hypothesis (ho) and the alternative hypothesis. From the data collected, it can be seen that
first bank of Nigeria plc in consolidation with other universal bank are really
contributing to the development of small scale business in Nigeria economy
Despite this fact, a lot of people are not
ready to take risk of going into small scale business because of the present
economic situation in the country.
The government needs to
stand all to see that the few willing people in the country who want to go into
small scale business are given necessary encouragement in order to be able to
approach appropriate quarters from the successful collection of materials from
the take off in such business. The contribution of financial institution to the
implementation of government SMES policies were found to have improve over
finally, it is commendable of government that as the professional graduate are
given the opportunity in taking for self employment programme, with this
programme, we belief that the rate of jobless would reduce drastically,
successful business graduate in the country backing so that many people would
help in developing the country.
TEST OF
HYPOTHESIS
Here question 8,9,10,11,12,13,14,15 are cross tabulated and that they
are analysis using chi square method of analysis, the result is showed in the
table below.
WORKING HYPOTHESIS
Ho: The role of
banks in development of small scale business in Nigeria economy is grate.
Hi: The role of
bank in development of small scale business in Nigeria economy is not grate
The level of significant 0.05 that is 5% of the objective
value
TABLE 4.3.1
 |
12.592 33.34
DECISION RULE: we would reject the null hypothesis and accept the alternative of the
calculated value is great than the value and vice versa
CONCLUSION: since the calculated value fall on the critical region the null
hypothesis is rejected and we accept the alternative hypothesis which say that
the role of banks on the development of small scale business is greater.
Table 4.3.2: CHI SQUARE COMPUTATION
|
Cell
|
Fo
|
Fe
|
Fo-fe
|
(fo-fe)2
|
(fo-fe)2/fe
|
|
A
|
40
|
33.75
|
6.25
|
39.0625
|
1.157
|
|
B
|
0
|
3.75
|
-3.75
|
14.0625
|
3.75
|
|
C
|
0
|
2.5
|
-2.5
|
6.25
|
2.5
|
|
D
|
25
|
33.75
|
-8.75
|
76.5625
|
2.27
|
|
E
|
10
|
3.75
|
6.26
|
39.0625
|
10.42
|
|
F
|
5
|
2.5
|
2.5
|
6.25
|
2.5
|
|
G
|
30
|
33.75
|
-3.75
|
14.0625
|
0.417
|
|
H
|
5
|
3.75
|
1.25
|
1.5625
|
0.417
|
|
I
|
5
|
2.5
|
2.5
|
6.25
|
2.5
|
|
J
|
40
|
33.75
|
6.25
|
39.0625
|
1.157
|
|
K
|
0
|
3.75
|
-3.75
|
14.0625
|
3.75
|
|
L
|
0
|
2.5
|
-2.5
|
6.25
|
2.5
|
|
|
|
|
|
|
33.34
|
Y2=33.34
Level of significant =0.05
Df=(r-1)(c-1)
I:e e = row
C = column
=(4-1) (3-1)
= 3 x 2 = 6
=12.592
4.4 PROCEDURE
FOR PROCESSING COLLECTION DATA
The procedure use for processing the data collected in the course of the
research work is chi square (x2) dated by the formula
X2E (F0-FE) 2
FE
Where x2 = chi square
Fo = frequency observed
Fe = frequency expected
Fr = frequency of row
Fc = frequency of column
A critical region was define which 0.05 statistic
was computed from the data and logical conclusion was made.
4..5 GENERALIZATION
Base on the out come of the tested hypothesis, it
can be generalized that the role of bank is great in the development of small
scale business in Nigeria
economy. Thus, rejecting the null hypothesis, which says that the role of banks
in the development of small scale business in Nigeria economy
|
QUESTION
|
YES
|
NO
|
INDIFFERENT
|
TOTAL
|
|
8
|
40a
|
-b
|
-c
|
40
|
|
9
|
25d
|
10e
|
5f
|
40
|
|
10
|
30g
|
5h
|
5i
|
40
|
|
11
|
40g
|
-k
|
-1
|
40
|
|
Total
|
135
|
15
|
10
|
160
|
Workings
Fe (a) 135
x 40/160= 33.75
(b) 15 x14/160=3.75
(c) 10 x
40/160=2.5
(d) 135 x
40/160 = 3.75
(e) 15 x
14/160 = 3.75
(f) 10 x 40 / 160 = 2.5
(g) 135 x 40/160 = 33.75
(h) 15 x 14/160 =
3.75
(i) 10 x 40/160 = 2.5
(j) 135 x40/160 = 2.5
(k) 15 x14/160 = 3.75
(l) 10 x
40/160 = 2.5
CHAPTER FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATION
5.1 SUMMARY
The research study has briefly explored the
role of the small – scale industries in revitalizing the economy of Nigeria.
In
chapter one, the aims and objectives of the study were highlighted, moreover,
the scope, organization and plan of the study was given. This chapter gave rise
to the subsequence chapters
Chapter two deals with the review of
related literatures various definition of small scale industries as given by
different authors was highlighted here.
It was concluded that the best due is
the revision of any accepted definition from time to time include suit the need
of our easily identifiable small – scale industries , which share some familiar
problems.
Furthermore, the relationship of the
industry with finance and government polices were also highlighted.
The next two chapters from the core of
the study, chapter three deals with the research methodology. Various sources
of finance for the small-scale industries were given.
However, one will see that inspite of
the federal government support and encouragement towards achieving the goals of
economic development, the actualization of this ambition has continued to elude
Nigeria
economy
5.2 CONCLUSIONS
From
the data colleted, it can be seen that the first ban in consolidation with
other are really contributing to the development of small –scale business in Nigeria economy
Despite
these facts, a lot of people are not ready to take the risk of going into small
– scale business because of the present economic situation in the country.
The government need to stand tall to see
want the few willing people in the country who want to go into small – scale
business are given necessary encouragement in order to be able to approach
appropriate avaters for the successful collection of materials for the take off
in such business.
The contribution of the financial
institutions to the implementation of government SMES polices were found to
have improved overtimes and the impact of those polices have increased SMES
access to the institutional credit, broader, the country’s industrial base and
created employment opportunities for many Nigerians.
It is important to not that all these
efforts made by government to facilitates small – scale business access to
credit require the co-operation and commitment of the banking institution in
general.
They should embraced the NEREFUND
Program with enthusiasm and should also take note to the various criticism
leveled against them in order to adopt a more marketing oriented posture to
serve the changing financial needs of small – scale business and create and
secure their future deposit base.
In a nutshell, however the state
ministry of commerce and industry has to up and doing as regard the few
business enterprises use in their records. Those concerned needed courage and
so that others sitting on the face can easily take the decision of either to go
into business field or not.
Finally, it as commendable to the
government that as the professional adequate are given the opportunities in
taking for self – employment programme with this programme, I belief that the rate of jobless graduates will reduce
drastically “successful business graduates in the country needed backing so
that many more help will help in developing the country.
5.3 RECOMMENDATIONS
Bases on the findings
of the study, it is suggested that a small – scale industries Administration
(SSIA) as obtained in USA be set up to undertake the promotion and management
of our small – scale industries.
This will go a long way to eliminate
conflict of authority and responsibilities and agencies charge with the
promotion and financing of small – scale industries.
Also to minimize the risks and cost
associated with financing of small – scale ventures and to encourage the
universal banks to increase their credit extension to the industry, the federal
and state government should equally considered guarantees scheme for small
–scale industries.
Moreover, in addition to the increment
in the minimum credit allocation ceiling to small – scale industries should be
seriously pursued.
Finally, the government should intensify
effort in enforcing small – scale industries enlightenment programme on our
various median.
They should also help in providing
roads, telecommunication networks and suitable industrial estates. This will
allow for location of number of small – scale industries in both the rural and
urban centres. This will facilitates universal repaired and maintenance
services and inter- industry linkage and
subtracting.
However. It should be well understood
that the development of the small – scale industries is not in words and good
polices only, but in action.
This is the time, for whatever a “nation
sue she shall reap”
REFERENCES
Adeniyi
O.A. (2004). The law and practices of
banking in Nigeria.
University of Ife press
Anamah
B.O.B (1989) Sap and small – scale industries Business times. Mondsy August 14th
pg 18 and 22
Marshal
R.A (1999) Central Bank as promoted of
Economic self Reliance. The official Journal of the chartered institute of Banker,
Volume 7, No 1 pg 9
Ogundipe
V. (1989) Commercial Banls and the
promotion of the chartered institute of Banker Volume 7 No, 1 pg 13
Omorodiong
O. (1989) The role of small – scale industries in the industrial development
process. Buiness times, Monday, May 15th and 22nd.
Oshinbiyi
O. (2006) Ensuring the Survival of small –
scale industries. Business times, Monday April 19th.
Okigbo,
P. (1981) Nigerian financial system,
structure Growth, Essex Longman publishing co.
Okojie,
Ibiayo (2004) Element of Banking, A, contemporary Approach, Emmanuel concept Lagos.
QUESTIONNAIRE
Kwara
state polytechnic
Department
of banking and finance
12 – 05-
2011
The management
First bank plc
Dear sir
I
am a final year student of the department of banking and finance, kwara state
polytechnic ilorin.
As part of the condition for the award
of National Diploma (ND) I am conducting a study on the role of universal banks
in the development of small – scale business in the Nigeria economy
I shall therefore be very gratefully if
you could do me a favour in completing the attached questionnaire as
objectively as possible. Please be assure that any information given in this
regard we be treated confidentially and used for the purpose of this academic
exercised
Thank for your unreserved
assistance
Yours
Faithfully
Ipadeola
Adam
1. Name of Organization ……………………………………….
2.
Sex (a)
Male ( )
(b) Female ( )
3. Age of the respondent 20 year below ( )
21 – 30 ( )
31 – 40 ( ) and above
4. Marital Status (a) Single ( ) (b)
Married ( )
5. Educational qualification OND / NCE ( ) HND/ BSc ( )
MSI / PGD ( )
6. Present position? Manager ( )
senior staff ( ) Junior
staff ( )
semi senior staff ( )
7. Operating department ……………………………………………
SECTTON B:
8.
What are the contribution of banks in the development
of small – scale business in the economy of the country?
Yes ( ) No
( )
9.
Are the banks willing to give loan
without any condition? Yes ( ) No (
)
10. What types of loan that banks give to a small
– scale business, Small, Medium or long term ? ……………………………………………………………………………
I1. Do you agree that banks are the major
sources of finance to the small scale business ?
Yes ( ) .No
( )
I
2. Does the small – scale business
willing and ready to go into borrowing?
Yes (
) No ( )
I
3. Does the problem and prospect of
small – scale business affect the Nigeria
economy ? Yes ( ) No
( )
14. Do you fully understand the criteria for
given loan ( credit to small – scale business in the country)
Yes
( ) No
( )
15. Does the small – scale business able to meet
the condition for borrowing in your banks?
Yes
(
) No ( )
SECTION
C
General
conclusion
I
6 generally, what do you think will
make you satisfied with small – scale business in Nigeria economy ?
i.
…………………………………………………………………………
ii.
………………………………………………………………………..
iii.
……………………………………………………………………….
17. If you were to asses the bank, would you say
they tired to make the job interesting?
Yes ( ) No ( )
18. General Comment
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
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