topic of dissertation is The Role Of
Commercial Banks In Financial Small Scale Industry In Nigeria. A case study
of union bank of Nigeria plc.
The major objective of the study is to ascertain the
extent to which union bank of Nigeria plc has helped to financial small scale
Instrument of data collection is questionnaires and
research questions which formed the source of primary data, while materials
from various published articles, textbooks, journals and newspaper formed the
The method of analysis is the use of tables, percentages and chi-square .
The major finding of the research is that union bank
of Nigeria plc has helped to financial small scale industries period under
recommendation based on the finding is that in order to reduce the risk in
small scale industry lending, the central bank of Nigeria and the government
can do more than they are doing currently scheme.
The study concluded that if the desired objective of
using small scale industries as catalysts of development is to be achieved than
the role of commercial banks should be mutually supportive.
1.1 Background to the problem
1.2 Problem statement
1.3 Objectives of the study
1.4 Research questions
1.5 Research hypothesis
1.6 Scope of study
1.7 Limitations of the study
1.8 Definition of study
2.2 Meaning of small scale industry
2.3 Government policy
2.4 Support systems
2.6 Monetary policy development in favour of
small scale industries
2.7 Benefits of small scale industry
2.8 Problems facing small scale industry
2.9.1 Financing the project
2.9.2 Technical knows how
2.9.3 Personnel, matters and general administration
2.10 Improving funding small scale industries
3.0 Introduction of the study
3.1 Research design
3.2 Area of study
3.3 Population of study
3.4 Sample size determination
3.5 Instrument for data collection
3.6 Validation of the instrument
3.7 Reliability of the instrument
3.8 Method of data collection
3.9 Data analytical techniques
PRESENTATION AND ANALYSIS OF
4.1 Presentation of data
4.2 Hypothesis testing
CHAPTER FIVE FINDINS:
1.1 BACKGROUND TO PROBLEM
The successive development plans of Nigeria have
laid emphasis on the attainment of self reliance. The need for this national objective is
because much is expected from individuals from the view point of providing employment
opportunities self reliance in basic food and material production high per
capital income, foreign exchange earnings and the production of industrial raw
Okporobie (1989:10) observes that Nigeria small
scale industries continued to decline despite the so called priority given to
However, the discovery by the central bank that this policy was not enough by it self
led to the central bank request with effect from 1970/80 that all commercial
bank must reserve a proportion of the minimum credit allocation to indigenous
borrowers for small scale Nigeria enterprises.
The target prescribed in 1979 was ten percent (10%) which subsequently
raised to sixteen percent (16%).
Even though available data showed that performance
of commercial banks against this directive has been disappointing. The central
bank intends to spare no effort in
ensuring that banks fully couple without compromising the smooth functioning of
the nation banning system.
He observed also, that without the development of
small scale industries in Nigeria, the nations quest for industrialization will
certainly remain forever at stake. It is the opinion of the researcher that
future development in our industrialization must address the basic issues of
creating linkages without the economy to begin to produce real inputs to our
manufacturing activities .
Priority attention must therefore be given to these
industries for which domestic inputs could easily be produced. This will bring about agro-allied industries like food processing
and other by-products.
The objective should be to maximize the value added
in their processing and manufacturing as final goods immediately inputs.
Nzewi and Oze (1985:56) observed that empirical
evidence indicates that strong producer incentives to small scale
industrialists are necessary not also only to meet the food requirement but
also to provide growing input supplies
and demand as a foundation for sustained industrial growth.
The present economic constraint may well turn out to
be a blessing in disguise to our industrialization effect particularly for
dynamic manufacturing sector. For
instance, the market determinate exchange rate through seeing with its result
and high cost of imported inputs may serve as an impetus for industrialist to
intensify their search for local substitutes.
Ekenyong and Nyong (1992) observed
that small scale enterprises are regarded an organic part of a viable structure
for the attainment meaningful economy development in developing economic like
They are significantly more cost effective in
bringing about development than large enterprises because of the perceived
linkage and multiplier effects which small scale enterprises have on the
performance of the economy and economic growth in general.
Osayameh (1989) observes that the strength that make
small scale enterprises more amendable for assistance areas as follows.
commitment of the proprietor whose life savings usually form the start up
initial capital out lay requirement
3. Ease of entry and exit and prevalence of
just minimal legal constraints
4. Amenability to business advisory services
because of their small size which makes than more responsive to improvement
Olashore (1987) Observes that the four
main sources of enterprises financing open to small scale industry in Nigeria
i. Formal financial institutions such as
commercial banks merchant banks, insurance companies and the development bank.
ii. Informal financial landlords, credit and
savings associations “esus” friends and relations personal savings and .
iii. Other financial scheme, NERFUND NEXIM
2001, there was an introduction of small and medium industries equity
investment scheme (SMIEIS) in which N359 million was set aside to date by banks
under small medium industries equity investment scheme.
union bank small and medium scale enterprises (SMES) department, the bank has
remain ed in fore front of SMES financing nations was extended to the SMES as
at 31st March 2004.
scale industry is any industry not exceeding N750,000 including working
capital but excluding cost of land.
is also defined by center for industrial research and development of
Obafemi Awolowo university Ile Ife
as those industries whose total assets in
plant, equipment and working capital do not exceed N250,000 with not more than
1.2 STATEMENT OF THE PROBLEM
problem of credit to small scale industries may not necessarily be as a result
of financing insufficiency but rather for some other reasons among which are.
i. Insufficient preparation on the part of
small scale entrepreneurs in their request for credit assistance.
ii. Information gaps as to range of funding
institutions and scope of services available in these institution
iii. Moreover, servicing of small business
accounts is relatively experience, risky and difficult to monitor with low turn
over of account.
However, the parishioners in the sector small scale
industry do not display competence in preparing justification for their
project. It is are to see most of them
coming up with cash flow projections, projected balance sheets, among
others. They are based on personal
rudimentary in formation and speculation.
At times when they seek the advice of consultants, the outcome that are
made figures project based on assumptions which are most of their time
As a result such proposals are out rightly rejected
There are suitable when credit demands in this
sector are not in compliance in this government monetary policy and credit
guidelines which must be adhered to by banks.
researcher identifies these problem and considers it necessary to carry our
study on them.
1.3 OBJECTIVES OF THE STUDY
objectives of the study include:
ascertain the extent to which the union bank of Nigeria plc has helped to
finance small scale industries.
identify the problems encountered by small scale industrialists in obtaining
finance from union bank of Nigeria plc.
evaluate various measures introduced to boost industrial production and its
financing and how this has affected realization of the set goals.
d. To determine the causing changes in small
scale industrial financing by union bank of Nigeria plc.
make suggestion and recommendations based on the data generated by the study.
1.4 RESEARCH QUESTIONS
The critical appraisal to give answers to the
what extent has union bank of Nigeria
plc helped to finance small scale industries?
are the problems encountered by the small scale industrialists in obtaining
finance from union bank if Nigeria plc?
are the various measures introduced to boost industrial production and its financing and how this has affected the
realization of the set goals?
d. What are the causes of changes in small
scale industrial financing by union bank of Nigeria plc?
any linear relationship exist between lending to small scale industries and
economic recovery and self reliance on the economy?
1.5 RESEARCH HYPOTHESIS
is no linear relationship between lending to small scale industries and
economic recovery and self-reliance of the economy.
is no relationship between union bank of Nigeria plc lending to small scale
industries and the attitude of this customers
1.6 SCOPE OF STUDY
The scope of the study is the role of commercial
banks in financing small scale industries in Nigeria. A case study of union
bank of Nigeria plc. It does not cover
the role of commercial banks in financing medium and large scale industries.
1.8 LIMITATION OF STUDY
However, there wee constraint imposed on the
researcher this includes the following.
a. Time a
study of this nature, needs a relatively long time during which information for
accurate or at least near accurate inferences could be drawn. The period of the
study was short, hence time posed as a constraint to the researcher.
b. Cost: The researcher would have extent the survey to
areas. But limitations here included
cost of transportation to source for materials and cost of type setting the
already completed work.
(Scarcity) of statistical data:
lack of statistical data from our financial
institutions like central bank of Nigeria (CBN) ministry of financial and
economic development, commercial and merchant bank posed a constraints.
Commercial banks adhere strictly to the rule of
secret, in banking thus they refused to released information.