COMMERCIAL BANK – ROLE IN FINANCING SMALL SCALE INDUSTRIES IN NIGERIA

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ABSTRACT
This study is aimed at finding out the role commercial banks play over the small scale industries and the problem the small scale industries encounter.
This study, has been divided into five (s) chapters thus:.
Chapter one is the introduction, sitting out the background of the study. The researcher highlighted that the performance of small scale industries are financed by commercial banks and other financial institutions. This study is of paramount importance because it help s to discover the problems facing the small scale industries in the course of financing themselves.
Chapter two is a review of related literatures, it started by the definition of the small scale industries, the definition of the small scale industries, the financial institution involved, assistance provided by commercial banks to small scale industries, government policies for promoting small and medium scale industries etc.
Chapter three decals with the research design and methodology employed in the study. Here data were collected from secondary sources.
Chapter four, the research state the finding or result collected in the course of this research work.
Finally, Chapter five state the conclusion and recommendation of this study.

TABLE OF CONTENT
CHAPTER ONE
1. 0 introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 3
1.3 Purpose i objectives of the study 4
1.4 Significances of the study 6
1.5 Limitation of the study 6
CHAPTER TWO
2.0 Review of related literature 8
2.1 Meaning of small scale industry 8
2.2 Financial institution involves in
development of small scales 11
2.3 Assistance provided by commercial
banks to small scale industries 19
2.4 Government policies fort promoting small
and medium scale industries 23
2.5 Government roles in encouraging small industries 26
2.6 The effect of government policy on
small scale enterprises 28
2.7 Problems of small scale and medium
scale enterprises in Nigeria 30
CHAPTER THREE
3.0 Research design and methodology 33
3.1 Source of data 33
3.2 Location of data 33
3.3 Methods of data collection 34
CHAPTER FOUR
4.0 Findings 35
CHAPTER FIVE
5.0 Conclusion and recommendation 37
5.1 Conclusion 37
5.2 Recommendation 38
Bibliography 43
Appendix 47
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The concept of dependent has occupied a central place in the economic development over the year, basically as a manifestation of the various attempts by the developing world to chart new economic strategies which would reliever them of economic dependence on their former colonial master in Europe. Today the concept of dependent continues to be misunderstood in its fundamental ramifications and has remained difficult in large sections of the developing world. In Nigeria, neither the mixed economy approach, appeal to have responds to the dictates of economies dependent.
However, in pursuit of dependent in the developing world like Nigeria, the central government enacted a decree called “enterprises promotion decree”. When there was a need for small scale enterprises, owned and managed by Nigeria to be promoted. The importance of small enterprises in the promotion of economic development has always been at the forefront of the development strategies. Many developing countries have failed to adopt this strategy owing to their belief that it is a relatively slow process of industrialization. But in the recent times due to the scarcity of foreign exchange, attention has began to be focused once again on development of ingenious. Without the development of small scale industries in Nigeria, the Nations request fort industrialization will certainly remain forever at a state.
Furthermore, several financial institutions are invested in entrepreneurship development in Nigeria in ways. Some of them are set up by the gove3rnment for specific functions, there main functions are to provide findings, relief from financial consequences of uncertainty, and advisory services for business enterprises, public and private. The government plays the role of financial companies.
Some of these institution include: Nigerian Bank for commerce and industry (NBCI) Nigerian Agricultural and development Bank (NDB), peoples bank of Nigerian (PBN), the commercial sourcing for fund and enough funds cannot be mobilized from friend and relations, the next things that comes to mind is to try the banks. The commercial banks for instance, is the center of the leading market and makes the greatest number and varity of loans. The commercial banks are very conservative in lending. The commercial banks look at many things apart from the ability of entrepreneur to provide the needed collateral and may be interested by looking at the feasibility report, the experience of the entrepreneur, his personal credit records, profit potentials.
More so, Apart from the banks, financial institution like the insurance companies provide relief from financial loss and especially from fear of loss is perhaps is one of the fastest growing melustries in Nigeria. It is the important for the entrepreneur who want to be free from the uncertain loss in threat of loss to have adequate insurance.
Finally, the role of banks in the development of small scale enterprises cannot be over emphasized due to the role it plays in the country over the small scale industries.
1.2 STATEMENT OF THE PROBLEM
Some financial institution in Nigerian are involved in entrepreneurship development in many ways. Some of them are set up by the government for specific function while others are set up by private organization. They provide funding, relief from financial consequences uncertainty and advisory services for business enterprises etc. Stile on this, there is problem of development in small scale industries. Why is it that our small scale industries are not yet developed despite all the functions performed by financial institutions in Nigeria. Could it be that the credit granting for entrepreneurship developments from banks are not adequate for funding them. The answer to this question will come in the subsequent chapter of this research

THE ROLE OF THE NIGERIAN AGRICULTURE AND CO-OPERATIVE BANK IN AGRICULTURAL FINANCING
(PROBLEMS AND PROSPECTS)

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ABSTRACT
The major function of the Nigerian Agricultural, co-operative, Rural and Development Bank is provision of loans and advances to individual and corporate farmers.
However, there are series of reasons for the need for special funding towards agricultural sector. The agricultural sub-sector is saddled with peculiar risks, risks that can hardly be diversified; illiteracy and ignorance; culture; interest rate, etc
Loan defaults occur when the borrowers can not meet up the repayment of principal and interest within the maturity time stipulated by the bank. Loan defaults have continued to increase tremendously, and it forms the major discouraging factor to the NACRDB in loan or credit extension.
Furthermore, tin the course of financing agriculture the NACRDB is faced with series of problems. Such problems i9clude unsystematic risk, time lag, poor infrastructural facilities, loan diversion, slow rate of return, collateral, government policies, political instability etc.
In other to identify these problems and the measures to solve such problems, the researcher made use of the secondary sources of data as well as partly, the primary source of data.

TABLE OF CONTENT
CHAPTER ONE
Introduction 1
1.1 Statement of problem 2
1.2 Rationale of study 2
1.3 Definition of term 3
CHAPTER TWO
Review of related literature 5
2.1 the concept of agricultural financing 5
2.2 Evolution of the NACB 6
2.3 Overview of the NACRDB 7
2.4 The need for Agricultural financing 9
2.5 Objective of NACRDB 11
2.6 Role of NACRDB 12
2.7 Lending Operations 14
2.8 Problems of Agricultural financing in Nigeria 15
2.9 Measures to prevent the problems of
Agricultural financing in Nigeria. 20
CHAPTER THREE
3.1 Statement of Hypothesis 21
3.2 Research methodology 22
3.3 Sources of Data 23
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS 24
4.1 Data presentation 24
4.2 Data Analysis 31
CHAPTER FIVE
Summary, Conclusion and Recommendation 39
5.1 Summary 39
5.2 Conclusion 41
5.3 Recommendation 42
Bibliography 43

CHAPTER ONE

INTRODUCTION
1.1 STATEMENT OF THE PROBLEM
The role of the Nigeria Agricultural and co-operative Bank can not overemphasized. According to ugwuanyi (2002), there have been series of efforts. By the NACB in providing short, medium and long term finance to the Agricultural sector of the economy. This is aimed at making farmers to increase their problem, as well as adopting the mechanized system of farming. Anyanwu (1993) stated that it is also meant to encourage or create employment opportunity for the unemployed in the nation.
However, inspite of all the effort being made, the objective of increase in productivity can not actually be said to have been attained. Many people feel reluctant to go into agriculture, instead they seek for other job opportunities. On the side of the NACB, it feels reluctant in extending credit to some categories of farmers.
What actually are the reason for these set back? Could it be as a result of the rate of interest on loan amount? Could it be as a result of loan default? Could it be as a result of the amount being requested for? Could it be as a result of the nature of collateral involved?
Therefore, the researcher intends to investigate on the reason for all these set backs.

1.2 RATIONALE OF STUDY
In respect to the rationale of study, the researcher intends to justify her reason for laying emphasis on this particular topic.
However, what motivated the researcher to write on this topic is as a result of the prevailing problems facing the NACB in Agricultural financing in the society.
Therefore, this study or research work will contribute immensely to improve the in dept knowledge of those in Agricultural sector as

AN EVALUATION OF THE EFFECTIVENESS OF NEW FINANCIAL PRODUCTS IN NIGERIAN COMMERCIAL BANKS

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PREFACE

The basic objective underlying this study was the evaluation of the study of the ability of the new financial products by commercial banks in fund generalization or mobilization.
This study has been structured into five chapters to make for easy reading and comprehension.
Chapter one dealt with the background of the prevailing circumstance in the economy that necessitated the introduction of program intended to correct the imbalance in the economy. It also gives an insight into the measure, both monetary and fiscal policies established to build as strong and viable economic base for the country’s economy.
From this, other four chapters derived that base from the chapter one I order to confirm the findings, recommendations and conclusions.
Though the banks have benefited from their innovativeness in product, development, certain problems were encountered by some of this banks which include poor communication system (ie) publicity, weak data bases, fluctuations in interest rate arising from market forces.
In view of the findings above, recommendations have been made to help consolidate the banks effort in new product development.
However, it would be not worthy to mention here that the trend in new product development has been a welcome and rewarding development in the financial sector.

CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problems
1.3 Objective of the study
1.4 Research Questions
1.5 Significant of the study
1.6 Hypothesis
1.7 Scope, limitations and determination of the study
1.8 Definition of terms

CHAPTER TWO
2.1 Review of related literature
2.2 Historical background of banks financial products
2.3 Innovations in the Nigerian financial system
2.3.1 Weekend Banking services
2.3.2 Union bank farners guide Agricultural Lending
2.3.3 Union bank express and VIGO money transfer
2.3.4 First Bank western union money transfer system
2.3.5 First Bank value card
2.3.6 UBA money gram
2.3.7 UBA Easy card
2.3.8 UBA save for school
2.3.9 First education savings scheme (FESS)
2.4 The degree of responsiveness of depositors of these products
2.4.1 Ascertain of the extent these financial products have contributed in profit generation.
2.4.2 Factors influencing the use of these financial products
2.4.3 Analysis of prospects of existing instruments and possibilities of introducing new one in the market.
References.

CHAPTER THREE
3.0 Research Design and Methodology
3.1 Sources of Data
3.2 Method of presentation of data
3.3 Sample used
3.4 Techniques of Data Analysis
References
CHAPTER FOUR
4.0 Data Presentation of financial products
4.1 Design and features of financial products
4.2 Benefits to Banks
4.3 Testing Hypothesis
References

CHAPTER FIVE
5.0 Summary, Recommendations and Conclusions
5.1 Findings
5.2 Recommendations
5.3 Conclusion
Bibliography
Questionnaires
CHAPTER ONE

INTRODUCTION
This chapter deals with the background of the study statement of problem, objective of study, research questions, significance of the study, hypothesis, scope, limitation of the study and definition of terms.

1.1 BACKGROUND OF THE STUDY
The era of oil boom in 1970’s in Nigeria economy lead to the nations over reliance on oil as its main source of revenue and there by ignoring other sectors of the economy hence a mono-product economy. Because of this, most of the industries established during this period depended on imported components and raw materials for their operations, and the upsurge in oil revenue during the period in question and structural distortions, it engendered assumed crisis proportions in 1986 because of the severe decline in crude oil price of that year.
A number of measures were taken by the various governments to correct the situation, but unfortunately these measures failed because the country was on mono-product economy where there are heavy dependence on oil exports and other sectors of the economy were neglected. It would also be recalled that monetary policies within this period were designed for short term crises control management, but by 1986 till date, the situation has been getting out of control which necessitated a long term crises management of the structural adjustment programme (SAP). The policy was to facilitate attainment of a lost objectives and to correct various distortions in the economy, (SAP) sought within a two year-period to correct the distortation and imbalance inherent in the economy by de-emphasing the unhealthy reliance of the country economy on oil as its main source of revenue.
The banks were chosen as main avenue through which the objectives of SAP and second tier foreign exchange market (SFEM) operation could be met, the effect of this was an unprecedented growth in the Nigeria financial sector. SAP bough to eliminate all the complex administrative both necks and this encourages reliance on market force in all sectors of the national economy.
The financial sector being very strategic for progress and development was given the latitude and encouragement to grow. This was aimed at inducing competition so that it’s full potentials particularly in areas of credit expansion and general overall good of the economy. Prior to this period, banking institution was characterized by the arm chair banking and true to their conservative tradition inherited the clearing banks of London, made modest effort, offered limited traditional product rate of growth and in order to this, deregulation has changed permanently the face of the banking industry, and has been characterized by a number of developments which sparked off stiff competition among banks which were the principal actors in the foreign exchange market operation made pretentious profit in their transactions and theirs rose significantly as a result of the boost in the naira hoping of financial institution when their foreign balance were converted to naira.
Because of the heavy turnover in the transactions, the outside investors were motivated into investing in the industry and there was motivated into investing in the industry and there was corresponding proliferation of application for banking license, this subsequently led to the registration of many new banks in the economy which was a welcome development. With this new development of multiple registrations of more banks, all those old grant banks that monopolized the business have to be alert and were ready to scramble for resources that were previously taken for granted. This lead to constant movements of staff, management and boards, in and out, new banks opening almost everyday, frequently destabilizing struggles in board rooms, the potential guidance and frequent change in regulation by the central Bank of Nigeria.
The general deregulation permitted banks to do a lot more business and particularly the distraction between Merchant and commercial Banking became very thin. Other subsequent issues are the guidelines like the increase in the statutory deposit of banks (N25 billion recapitalization) at the CBN, rough cash and liquid ratios, abolition of foreign guarantees as collateral for naira denominated loan, stabilization securities, increase in capital adequacy ratio and the prevention guidelines went further to aggravation and the cash squeeze thereby tightening the already stiff competition.
In addition to the competition between Banks and individual, the industry as a whole has been competing with non-Banks financial institutions have now become similar to those provided by commercial Banks. As a result of the competitive environment, Banks have been scrambling for deposits, which formed the main raw materials for their operations.
Banks traditionally perform the function of intermediary between savers and investors, the mobilize depositors from the surplus sector which is made up of those with many investment projects requiring more funds than they have. They also act as catalyst in capital formation which is regarded as the major policy governing the rate of economic growth and self reliance. In addition they occupy a prime and sensitive position in accelerating the development of other units in the system.
The resultant effect of licensing more Bank, monetary measures and deregulation in that the Banks are forced out to look for other avenue for deposit hence the craving to introduce new financial products to win more client and increased deposit base to enable them survive the rest of time. The growth in the number of financial products being offered by banks has been of the most striking development in the industry over the years and which has been associated with deregulation of the system in the wake of SAP.
The number of such products has grown to a far reaching competitive level and many more products are still to come, the ones in circulation now includes, weekend services , farmers guide to agricultural lending vigor, money transfer, western union money transfer, value card, smart card, UBA save for school, UBA money gram, Diamond paycard. All these products have been introduced as a result of the increased competition within the environment to enable the commercial Banks survive the stiff situation.

1.2 STATEMENT OF PROBLEM
The environment in which the commercial Banks operate has been the direct result of the financial sector explosion in the number of commercial Banks and the deregulation of the financial sector of the Nigerian economy. There is keen competition among Banks and non-Bank financial institution, it is now the survival of the fittest. There is more scrambles for deposit now than before,

THE CONTRIBUTIONS OF UNITED BANK FOR AFRICA TO THE DEVELOPMENT OF SMALL SCALE ENTERPRISES IN KADUNA STATE

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ABSTRACT

This study focuses on the contribution of Untied Bank for Africa to the Development of Small Scale Enterprises. It aims at evaluating the contribution of United Banks in financing small scale businesses, identifying challenges of accessing bank loans as well as possible factors hindering implementation of credit policies by banks. To achieve this, the survey research design was adopted with oral interviews and questionnaires to elicit responses. The simple percentages and chi – square (c²) test statistics were used in analyzing the data and determining the tenability of the hypotheses formulated. Unaffordable terms of capital, challenges in accessing bank loans and advances and factors hindering implementation of credit policies were found to be more challenging, the researcher recommends that banks should make available capital an affordable terms ensure regular routine check on businesses, educate entrepreneurs through managerial workshops and government should enforce implementation of credit to policy to boost the development of small businesses.

TABLE OF CONTENTS

Title Page  –         –         –         –         –         –         –         –         –         –         i

Declaration         –         –         –         –         –         –         –         –         –         ii

Approval Page    –         –         –         –         –         –         –         –         –         iii

Dedication –         –         –         –         –         –         –         –         –         –         iv

Acknowledgment         –         –         –         –         –         –         –         –         v

Abstract     –         –         –         –         –         –         –         –         –         –         vii

Table of Contents        –         –         –         –         –         –         –         –          viii

CHAPTER ONE: INTRODUCTION

1.1     Background of the study       –         –         –         –         –         –         1

1.2     Statement of the Problem    –         –         –         –         –         –         2

1.3     Objectives of the Study         –         –         –         –         –         –         3

1.4     Significance of the Study      –         –         –         –         –         –         3

1.5     Research Questions     –         –         –         –         –         –         –         4

1.5.1  Statement of Hypotheses     –         –         –         –         –         –         5

1.6     Scope of the Study       –         –         –         –         –         –         –         5

1.7     Limitation of the Study         –         –         –         –         –         –         6

CHAPTER TWO: LITERATURE REVIEW

2.1     Introduction        –         –         –         –         –         –         –         –         7

2.2     Definition of Small Scale Enterprises    –         –         –         –         7

2.3     Benefits of Small Businesses        –         –         –         –         –         10

2.4     Problems and Challenges of Small Scale Businesses        –         11

2.5     Financing Small Scale Enterprises         –         –         –         –         14

2.6     Definition of Bank       –         –         –         –         –         –         –         19

2.7     Roles of Banks in the Development of Small Scale Business    21

2.8     Summary of the Review        –         –         –         –         –         –         22

CHAPTER THREE: RESEARCH METHODOLOGY

3.1     Introduction        –         –         –         –         –         –         –         –         24

3.2     Research Design          –         –         –         –         –         –         –         24

3.3     Area of the Study         –         –         –         –         –         –         –         24

3.4     Population of the Study        –         –         –         –         –         –         25

3.5     Sample Size and Sampling Technique   –         –         –         –         25

3.6     Instrument of Data Collection       –         –         –         –         –         25

3.7     Validation of Instrument      –         –         –         –         –         –         26

3.8     Reliability of Instrument      –         –         –         –         –         –         26

3.9     Method of Data Collection   –         –         –         –         –         –         27

3.10   Method of Data Analysis      –         –         –         –         –         –         27

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1     Introduction        –         –         –         –         –         –         –         –         29

4.2     Characteristics of the Respondents        –         –         –         –         29

4.3     Data Presentation and Analysis   –         –         –         –         –         30

4.4     Testing of Hypothesis –         –         –         –         –         –         –         33

4.5     Summary of Findings  –         –         –         –         –         –         –         36

4.6     Discussion of Findings          –         –         –         –         –         –         36

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION

5.1     Summary   –         –         –         –         –         –         –         –         –         39

5.2     Conclusion –         –         –         –         –         –         –         –         –         41

5.3     Recommendations       –         –         –         –         –         –         –         42

5.4     Suggestion for Further Study        –         –         –         –         –         43

Bibliography       –         –         –         –         –         –         –         –         44

Appendix I –         –         –         –         –         –         –         –         –         46

Appendix II         –         –         –         –         –         –         –         –         47

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

In both developed and developing countries, the small scale industry is seen as the vehicle for rapid industrialization, sustainable economic growth and development, poverty alleviation as well as the seed bed of innovation and employment generation. It goes without saying therefore, that small scale enterprises have the potential of becoming the engine of the economic growth in any country (http://www.snbd.com, July 8 2010).

Because of this paramount importance of small scale businesses, there has been a pressing need for the involvement of banks in financing its development in Nigeria and Kaduna in particular. This is due to the fact that banks loans constitute the most important source of institutional financing for both start-up and growing enterprises.

It is the realization of this fact that made the government to establish various schemes and programmers in the past to enhance credit availability to small scale enterprise in Nigeria. In recent time now however, the Nigeria bankers committee in 1999, approved the scheme requiring all banks in Nigeria to set aside 10 percent of their profit before Tax (PBT) for equity development in small scale and medium scale industry.

Despite these measures, many small scale businesses with economic potentials for growth often fail and close down due to lack of funds, insufficient working capital, lack of managerial experience and skilled labor, poor accounting records as well as lack of infrastructural facilities (central Bank of Nigeria: the billon, October/December 2004:58-b5)

Thus, how banks have contributed to improving the aforementioned challenges and the expectations, regarding the development of small scale enterprise in Kaduna are the issues discusses in research work.

1.2     Statement of the Problem

Although the small scale enterprise is regarded as the bedrock of industrialization of an economy, attempts made by many entrepreneurs to start and operate them have met with high percentage of failures, lack of fund and insufficient working capital have identified as some of the cause of such failures. The study therefore seeks to answer such questions as; have banks been able to make available capital on affordable terms to small scale enterprise? What measures have been put in place to ensure that such funds are effectively used by enterprises? Does small scale enterprise actually have easy access to