DEVELOPMENTAL IMPACT OF RURAL BANKING IN NIGERIA
(A CASE STUDY OF UNITED BANK FOR AFRICA (U.B.A) PLC)
ABSTRACT
This research work is aimed at bringing into light the Development impact of rural banking in Nigeria’s rural area and how it affects the economy in general. For the purpose of orderly presentation of relevant materials, the main body of this work has been divided into five chapters
The first chapter which is the introduction consider among other things problems identification/statement of problems, Rational of the study, Significance of the Study, Background of the Study and Definitions of the Terms used.
Chapter two (2) focuses on the literature review, Theoretical Review and Empirical Review which discusses on banking marketing awareness and acceptance, the social responsibilities facing banks, rural banking and agricultural development, rural banking scheme and evaluation of the rural banking scheme among others.
The third chapter deals with hypothesis of the study, research methodology, sources of data and limitation of the study.
The fourth chapter shows data presentation, analysis of data and discussion of the results.
The fifth and final chapter focuses on the summary, conclusion and recommendation.
Chapter one
1.0 Introduction 1
- Statement of the Problem 1
- Rational of the Study 2
- Significance of the Study 3
- Background of the Study 4
- Definitions of the Terms Used 8
CHAPTER TWO
2.1 Theoretical Review 13
2.1.1 Banking Marketing Awareness and Acceptance 16
2.1.2 The Social Responsibilities Facing Banks 17
2.1.3 Rural Banking and Agricultural Development 21
2.1.4 Rural Banking and Rural Infrastructural Development 22
2.1.5 Rural Banking and other Development 24
- Empirical Review 25
- The Rural Banking Scheme 25
- Evaluation of the Rural Banking Scheme 34
- Measures for Improving Banking Habit in Nigeria 39
CHAPTER THREE
- Hypothesis of the Study 42
- Research Methodology 43
- Sources of Data 45
- Limitation of the Study 45
CHAPTER FOUR
- Data Presentation 46
- Analysis of Data 49
- Discussion of Results 55
CHAPTER FIVE
- Summary 57
- Conclusion 60
- Recommendations 62
Bibliography 66
CHAPTER ONE
INTRODUCTION
1.1 PROBLEMS IDENTIFICATION/STATEMENT OF THE PROBLEM
According to Osuntogun and Adewuimi (1983). The commercial bank is a profit making organization and as such there is great fear by operators of commercial banks in establishing in the rural areas, this is because like every profit making organization they would not want to lose their business. But it has been that rural banking is in dispensable if the Nation is to develop its rural area will development of one’s rural area may not be realized it the serious of commercial banks are not at the reach of our rural dwellers.
This project work is designed to measure what extent the rural commercial bank have been able to involve the rural dwellers in economic activities in terms of awareness and the influence on their style of living through banking activities and how successful the banks are measuring up with their major aim of existence.
This research work is aimed at bringing into light the development impact of rural banking in Nigeria rural areas and how it affect the economy in general.
It is also aimed at investigating the impact of the rural banking services.
1.2 RATIONAL OF THE STUDY
The reason for the study is aimed at finding out the development impact rural banking in Nigeria has on rural areas/rural dweller.
The study is important now because rural banking in Nigeria increases the productivity of small and medium agricultural farmers and the entire economic activities of the rural areas.
The study is necessary now in the sees use that it leads to infrastructural development of the rural areas that is provision of basic amenities like electricity, good roads and pipe bore water etc.
Finally study is important because it leads the rural dweller to cultivate banking habits of depositing their money in the banks and stop their old way of burying money the ground with clay pots.
1.3 SIGNIFICANCE OF THE STUDY
The study is significant in many aspects.
Firstly would enable our rural farmers and industrialists to obtain loans from the banks to reduce the hardship involves in banks acquiring farm inputs as well as cultivating their farms and building of firm and industries.
Secondly, individuals and rural dweller will through this study cultivate banking habits and be enlighten on the activities and the benefits of banking industries.
Thirdly, the findings will serve as a guide to other bank that has no branches in the rural areas to know that impact of rural banking in our rural areas.
Finally, the study will also be useful for academic purposes, it will serve as a data base for students will carryout related studies in the future.
1.4 BACKGROUND OF THE STUDY
The United Bank for Africa (UBA) PLC is one of Nigeria top three commercial banks. it was established in 1961 by a consorting of five international banks to take over the banking business carried on in Nigeria since 1949 by the British and French Bank limited with assets of over N54.4 billion and 205 branches spread all over Nigeria the bank has recorded an impressive growth rare.
UBA is active in all aspects of commercial banking and provided international banking, transship share registration, corporate finance and computer service through specialized division and subsidiaries.
An aggressive business promotion strategy coupes with willingness to in vote has earned banks an available position in the banking industry. UBA PLC is strongly committed to its social responsibilities, and identifies with the communities in which it is represented Nigeria’s interest constitutes 60 percent of the shareholding of the bank.
Four of the founding international banks namely bouquet National de Paris, bankers international corporations of New York, Banker National dellavovo and montedei peaschi de Sieva, who all together Owu 40 percent of the shareholders are represented by the Board Directors as they continue to customers of the bank and the Nigerian economy in general.
UBA PLC has branches in New York and Grand Cayllian Island. It also Nigerians correspondent relationship with many banks in Africa and in major countries of the World.
In pursuant of it vision to be the undisputed reading and dominant full service bank in Nigeria, it recently under went a total process of re-engineering and introduced modern technology in its operations. This resulted in clear structure in terms of staff.
The bank’s (UBA)PLC professional mission is “to provide first class service to its customers, delivered by will trained and highly motivated people aided by the best technology generating supervisor returns to shareholders while positively impacting the community served.
The mission of the bank is not without due consideration for the bank management of credit through which it can successful impact the community with service of great importance to commercial banks who grant credits to their customers all over the world with sound management of credit various role of these financial institutions in the boosting of the different segment of the country need not be ignored. Commercial banks in collaboration with other financial institutions provides facilities for the process of saving and investment in the economy. They ensure that there is enough funds to service the need and aspiration of the economy at large. One of the economic functions performed by these financial institutions transferring of funds from surplus units of the economy to the deficit units of the economy for investment purposes.
Developmental Policies: This programme is also arrived at making productive activities receive adequate attention by may of allocating credits. The implementation of the programme is at the moment three (3) phase 1, 1977 – 1980, 1980 – 1983 (later extended to 1985) and 1985 – 1980.
Development: Growth of a particular person, group or a Nation Physically, morally, economic and socially etc. in addition to improve in income outlay it typically involves radical changes in population, Attitudes, Customs and Belief, finally although development is usually defined in the National context, it’s wide spread realization may necessitate fundamental 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 is relates to the progress in the basic human needs overtime. Another school of thought defined it as growth accomplished by changes i.e change in structure of the economy in country social structure and its political structure.
Another approach is focused on human need, this approach defined economic development in terms of progress towards reducing the incidence of poverty, unemployment, income inequalities and for those whose living standards have not risen. This approach also seek ways and means of improving their conditions.
Monetary Policy: The monetary policy are of a Nation is a face 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 Social Class or person with reference to the adequacy of necessities in daily life. As a result of varying per capital income, people equally very in their standard of living. The per capital income in the united state of America for example cannot be compared to that of a developing country like Nigeria.
Consequently, the standard of living differs quite significantly. And perhaps, the native of facilities, and economic activities present in urban areas make standard of living different from those of the rural dwellers. Although in practice, there may not be one definite factor to measure standard of living, it is worth mentioning that the general standard of living for the rural dwellers in Nigeria is quite low.
1.5 DEFINITIONS OF THE TERMS USED
Bank: according to the Nigeria Banking Act, 1969 (as Bank Amendment Act) 1970). A Bank is described as the business of reliving monies from outside source as deposit irrespective of the payment of interest, and the granting of money, loan and acceptance of credit or the purchase of bills and cheques or the purchase and sale of securities for account owners or the incurring of the obligation to acquire claims irrespective of the loan prior to their making or the assumption of guarantees and other warranties for others or the commissioner may on the recommendation of the central bank by order published in the federal gazette designed as banking business.
Rural Area: According to websters be words dictionary it refers to that not being characterized with cities urban cite, they are 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 an intergraded culture and social system as their way of life, development is carried our as group efforts in a community. Majority of people who live in rural areas earns their main income from agriculture.
This include live stock fishing and forestry.
Rural Bank: A rural bank can be described as a branch of existing bank established in the rural areas to provide banking services for rural populace. These service could be in the form of mobilizing of rural savings, credit allocation among productive activities of the rural populace and linkage of money market in the rural areas with capital market in the urban concerns is other words, the adequate efficient and equitable allocation of resources among different sectors of the rural economy. The scope of the activities and operations of a bank is similar to that of the commercial bank establishing it, but limited due to a variety of reason. The primary role expected by a bank should be the finance of identified rural development project of and the need to have may project within any give rural community, it be becomes obvious that is will be desirable and viable that project of the following categories should be financed by any rural banks.
Small to medium size of the agricultural projects not exceeding N50,000 capital outlay.
Agro-industrial project of small sizes eg. Willing and food processing small scale industrial project for rural areas.
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.
Government: In the simplest form, employment refers to the engaging living or making use of the services of a person with the view to compensating hi, in wages. As a result of the economic recession in Nigeria employment problem has not been adequately tacked
Marketing: Whether one engages in doing any thing legally to create satisfaction, that person has engaged in making, be it the production of goods or rendering of services. The challenges that faces marketing is that of generating ideas and awareness of satisfying consumers need and want at a profit in a socially responsible manner. Marketing involves any inter-personal or inter-organizational relationship with the result of exchecking process, its related to the exchange of ideas, goods and service. The need for marketing arises and grows as the society move from one stage of self-sufficiency to an exchange economy.
Marketing management has taken the task of regulating the level, tilling and character of customers in a way that will help the organization achieve its objectives. Wherever marketing strategy is being adopted by bank for example, it must serve the ultimate aim of enlightening the population in terms of banking habits so as to improve the standard of living and economic well being in Nigeria.
Profit and Profitability: Profit is the difference between total revenue and total cost. Maximum profit occur where there is the greatest possible difference between total revenue and total cost profit could be negative i.e a loss. The generalized notionalble that profitability is a measure of business efficiency. It is not as important as knowing how these profit are measures e.g the problem of data competition technique of standard adopted etc.
Loan: This is the amount granted to individuals companies, business and organization by commercial banks another financial institution for a specific period when the money may be paid back with interest.
Productivity: The act of engaging in the create of economic value and quality involving manufacturing of goods and services.
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