1.0 INTRODUCTION
Banking service when introduced in our
rural areas will bring development or specifically economic development
to the doorstep of every citizen in this country since between 70 – 80
percent of Nigerians lives in the rural area.
Every Nigeria want to go to the urban
area because of availability of infrastructural amenities like
electricity, good roads, pipe borne water, civilized market operation,
job opportunities and so on. If these social amenities continue to
exist in urban areas, life in rural areas will still remain
underdeveloped. Money they say is the blood that nourishes or gives
life to any prosperous economy of a nation. For money to accomplish its
aims in an economy, it needs to be properly managed and controlled in
the banking sector.
Agriculture is the second major sources
that generate revenue to the Nigeria government after oil industry. The
sector of the economy right from time has been neglected. The rural
areas have not felt any positive impact on the development plan but only
recorded a decline in agricultural productivity, which shows that the
rural areas have been neglected at the expense of the urban areas.
The banking industries one of every
nations sectors that has a controlling impact on the economy
particularly in terms of monetary policy, this is why federal government
has continuously encouraged banks to expend their services and
facilities not only to the urban cities but also rural areas.
1.1 AIMS AND OBJECTIVES
This research work is aimed at
investigating the impact the rural banking services, commercial banks
have on the productivity of small and medium agricultural farmers and
the entire economic activities of the rural areas. This project work
also aimed at acquainting ourselves with the benefit of rural banking
services in terms of mobilizing and organizing present farmers into
efficient and active co-operative groups, small and medium scale farmers
and integrated rural communities.
The objective of this research is to
evaluate how effective credit allocation among productive activities the
rural areas have been realized.
Finally, the aim of the project work is
to suggest policy measures to government in improving rural banking so
as to have the desired development impact on the rural areas in Nigeria.
1.2 STATEMENT OF RESEARCH PROBLEMS:
The commercial bank is a profit making
organization. There is a great fear in establishing in rural areas
where it cannot maximize profit. Rural banking has been seen as
indispensable if the nation is to develop its rural areas. The
development of one rural area may not be a reality if services of
commercial banks are not at the reach of our rural dwellers.
The problem therefore is how to resolve
the profit motive of the rural commercial banks and the essential
services being rendered to the rural dwellers. This project work is
designed to measure to what extent the rural commercial banks have been
able to involve the rural dwellers in the economic activities in terms
of awareness and
1.3 SIGNIFICANCE OF STUDY:
Nigeria is a developing country with
more than 70 percent of her population living in the rural areas. These
rural dwellers are faced with lot of hardship in terms of basic
infrastructures. The rural dwellers are mostly farmers, definitely
require loans, to reduce the hardship involved in acquiring input as
well as cultivating their farms, therefore, the services of banking
becomes very essential.
This study is essentially significant in
that it is directed towards evaluating the effect the growth of rural
banking activities has on the rural inhabitants which is a criteria
aimed by measuring economic standard. It is also significant in the
sense that it shows to what extend the rural banking programme in
Nigeria has been successful.
Conventional economics and experience
suggest that by supplying food, labour and invisible surplus, the rural
areas help to generate urban income and employment. They also help to
stabilize if not reduce production cost for industries and cost of
existences of commercial banks in the rural areas will speed up
investment.
1.4 SCOPE OF STUDY:
This study is limited to Enugu State, a
state comprising of eighteen (18) local government area each having one
or more rural bank(s). For ease of information we would restrict to
Awgu, Nkanu East dwellers. This project work is designed to measure to
what extent the rural commercial banks have been able to involve the
rural dwellers in the economic activities in terms of awareness and
influence on their style of living through banking activities and how
successful the banks are measuring up with their major aim of
existence. The government has accepted banking persuasive rather than
forcing banks to establish branches in the rural areas.
Most villages are without electricity
and pipe borne water and the banks spend much more that customers
deposit to provide these amenities for workers.
A major problem is that the rural
dwellers don’t patronize the bank industries. Most of the rural
dwellers are farmers. They go to the farm before the bank starts its
business and return only after they have closed to customers. Hence the
bank finds it difficult to make profit.
The rural banks encounter lot of
problems cultivating banking habit in the rural dwellers. Rural
dwellers live in mutual suspicion with strangers, for that rural
branches workers are affected.
The rural banks also encounter problems
of granting loans to rural dwellers and small scale businessmen in the
rural areas. Because they are not too aware about why bank lend them
loan, they use this loan for marrying wives, thus means of repayment
becomes a problem.
Although United Bank for Africa (UBA)
has been chosen as a case study, other banks like Union Bank of Nigeria
(UBN), first Bank of Nigeria, All States Trust Bank, Citizens Bank etc,
can find this study beneficial to hem since they are all operating the
same economic environment.
The study focuses attention to the impact of rural banking in the development of rural areas.
1.5 LIMITATION OF SCOPE:
In the process of carrying out the
research focuses on the development of rural banking in Nigeria with
United Bank for Africa (Rural Branches) as case study concrete efforts
were been made to arrive at a logical conclusion. However, the work was
subject to certain limitations.
Financial constraint is another
limitation to this works which is as a result of high cost of
transportation fare to the various bank branches together data, cost of
material to carry this work to conclusive standard was equally
important.
Respondents turned out to be co-operating by completing the questionnaires, which took lot of time and energy to convince them.
1.6 STATEMENT OF RESEARCH HYPOTHESIS:
The following hypothesis has been formulated to which the study will attempt providing answers.
Ho: The United Bank of Africa UBA makes use of techniques/methods in determination of its return in rural banking.
H1: Apart from the rural farmers, the United Bank of Africa does not source fund from other activities of the rural banking.
Ho2: The United Bank of Africa make adequate benefit from the accumulated investments of urban banking.
Ho3: The United Bank of Africa does not derive any benefit from the accumulated investments of rural banking.
1.7 DEFINITION OF TERMS:
BANK:
According to the Nigerian Banking Act,
1969 (as amended Bank amendment act 1979), a bank is described as the
business of receiving money from outside source as deposits irrespective
of the payment of interest and the granting of money, loan and
acceptance of credited or the purchase of bills and cheques or the
purchase and sale of securities for account of those or the incurring of
the obligation to acquirer claims irrespective of loan prior to their
maturity or the assumption of guarantees and other warranties for others
or the commissioner may on the recommendation of the central bank by
order publish the federal gazette designed as banking business.
RURAL AREA:
According to Webster’s New Word
Dictionary, it refers to that not being characterized with citizen or
urban life. That is usually associated with farming and agriculture.
The rural area has the features of low level of literacy, poor health
facilities, and inadequate family planning, low technology and
inadequate infrastructures. In addition, a prominent phenomenon in
rural areas is that the people who live there have as integrated culture
and social system as their way of life. Development is carried out as
group efforts in a community. In Nigeria, majority of people who live
in rural areas earn their main income from agriculture.
RURAL BANK:
A rural bank can be described as a brand
of existing bank established in the rural area to provide banking
services for rural population. These services could be in the form of
motivation, rural saving, credit allocation among productive activities
of the rural population and linkage of money market in the rural areas
with the capital market in the urban centers, in other words, the
adequate efficient and equitable allocation of resources amongst
different sectors of the rural economy.
The scope of the activities and
operations of a rural bank is similar to that of commercial bank
establishing it but limited due to a verity of reasons. The primary
role expected of a rural bank should be the finance of identified rural
development projects of short and medium terms duration. But given
constraints in finding and the need to have it becomes obvious that it
will be desirable and viable that projects of the following categories
should be financed by any rural banks.
RURAL BANKING PROGRAMME:
This is a programme embarked upon by the
Nigeria government in 1977 with the aim of extending banking habit to
the rural area by mobilizing rural savings, assisting government in
implementing monetary and other development policies. The programme is
also aimed at making productive an activity receive adequate attention
by way of allocating credits. The implementation of the programme is
the moments in 1977-1980; 1980-1983 (later extended to 1985) and
1985-1989).
DEVELOPMENT:
Development should be perceived as a
multidimensional process involving the re-organisation and orientation
of entire economic and social system. In addition, to improve income
and output, it typically involves radical changes in population,
attitude customer and belief.
Finally, although development is usually
defined in the national context its wide spread realization,
modification of the international, economic and social order.
ECONOMIC DEVELOPMENT:
This term has generated a lot of
controversies over the years. Some economics see it as political and
structural change while others are of the opinion that it relates the
progress in the basic human needs over time. Another school of thought
defines it as growth accomplished by changes i.e. change in structure of
the economic in the country’s social structure and its political
structure.
Others have tended to make basic human
needs approach, an approach which defined economic development in terms
of progress toward reducing the incidence of poverty, unemployment and
income inequalities and for those whose living standards have not been
rising. This approach also seeks ways and means of improving their
conditions,
MONETARY POLICY:
The monetary policy of a nation is a
fact of its broad economic policies. It deals with the discretionary
control of money supply by monetary authorities in order to achieve
desired economic goals.
STANDARD OF LIVING:
This could be linked with the level of
substance, as of a nation, society, class or person with reference to
the adequacy of necessities in daily life as a result of varying per
capita income; people equally vary in their standard of living. The per
capita income in the United States of America for example cannot be
compared to that of developing countries like Nigeria.
Consequently, the standard of living
differs, and perhaps, the nature of facilities and economic activities
present in urban areas make standard of living differ from the urban
area and the rural dwellers.
EMPLOYMENT:
In the simplest form, employment refers
to the engaging, hiring or making use of the services of a person with
the view of compensating him or her with wages. As a result of the
economic recession in Nigeria employment problem has not been adequately
tackled.
MARKETING:
Whenever one engages in doing anything
to create satisfaction that the person has engaged in marketing, be it
production of goods or rendering services. The challenges that face
marketing are that of generating ideas and avenues of satisfying
consumers needs and want at a profit in a socially responsible manner.
Marketing involves any interpersonal, inter-organizational relationship
with the result of exchanging processes; it related the exchange of
ideas, goods and services.
LOAN:
This is the amount granted to individual
companies, banks or any organization by commercial banks or any other
financial institution for a specific period when the money may be paid
back with interest.
PRODUCT UNITY;
Engaging in the ration of economic value and quality involving manufacturing of goods and services.