ABSTRACT
An investigation of the influence
of microfinance banks on the performance of small and medium scale enterprise
in Nigeria, a case study of Oyo State. The purpose of the study is to find out
problem of financing small and medium scale enterprise in Nigeria. Four
research questions and four null hypotheses were raised. The sample size was 32.
Questionnaire was used to collect the data. Frequency tables, percentages, and
z-test were used to analyses the four hypotheses. The result revealed that
small and medium scale industry face a lot of financial problems and these
problems is mainly as a result difficulty in raising capital. These problems
have hampered its survival. In view of these findings the researcher made some
recommendations to these problems.
TABLE OF CONTENTS
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF RESEARCH PROBLEM
1.3 RESEARCH
QUESTIONS
1.4 OBJECTIVE OF THE STUDY
1.5
SIGNIFICANCE OF THE STUDY
1.6
STATEMENT OF HYPOTHESIS
1.7
SCOPE OF THE STUDY
1.8
DEFINITION OF TERMS
CHAPTER
TWO
REVIEW
OF LITERATURE
2.1 OVERVIEW OF SMALL AND MEDIUM SCALE
ENTERPRISES.
2.2 THE GROWTH OF SMALL AND MEDIUM ENTERPRISES
AND THE CONTRIBUTIVE SCHEMES IN NIGERIA.
2.2.1 THE NIGERIA BANK FOR COMMERCE AND INDUSTRY
(NBCI).
2.2.2 THE
CENTRAL BANK OF NIGERIA SPECIAL CREDIT PROGRAMME FOR SMALL AND MEDIUM SCALE
ENTERPRISES (SMES).
2.2.3 WORLD BANK FACILITIES FOR SMALL AND MEDIUM
SCALE ENTERPRISES:
2.3 THE NIGERIAN FINANCIAL SYSTEM
2.4 BANK LOANS TO SMALL AND MEDIUM-SIZED
ENTERPRISES
2.5 THE FINANCIAL CRISIS AND SMES
2.6 THEORETICAL FRAMEWORK
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.0
INTRODUCTION
3.1
STUDY AREA
3.2
RESEARCH DESIGN
3.3
POPULATION OF THE STUDY
3.4
POPULATION SIZE AND TECHNIQUE
3.5
DATA COLLECTION METHOD
3.6
DATA ANALYSIS
3.7
LIMITATION
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND
INTERPRETATION
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATIONS
REFERENCE
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
It is an undisputable
fact that the contribution of microfinance to entrepreneurship activities is
increasing being recognized as a primary engine of economic growth. (The
Economist, May 18th 1996). By combining existing resources with
innovative ideas, entrepreneurs add value through the commercialization of new
products, the creation of new jobs and the building of new firms. The Global
Entrepreneurship Monitor (GEM) indicates that nations with higher levels of
entrepreneurial activity enjoy strong economic growth. In short, entrepreneurs
are the link between new ideas and economic development. This is proper using
the experience of the industrialized countries of North America and West
Europe. Legislative actions has been taken by countries like United States of
America, the Netherlands and
Japan
to see to the fact that entrepreneurial activities can contribute to economic
development. This may explain why various governments around the world promoted
it since entrepreneurial skills and strategies are used to tackle different
social problem and addressing poverty as well as a means of employing the
disadvantaged.
Speaking at the conference with a theme
“Improving Access to Microfinance”, Soludo (2008) revealed that in order to
sustain increases participation of skilled entrepreneurs in the credit and
other financial service delivery to the micro, small and medium enterprises in
the microfinance subsector, Central Bank of Nigeria (CBN) is forging ahead in
its determination to develop a pool of articulate and well focused
entrepreneurs through setting up one Entrepreneurship Development Centre (EDC)
in each of the six geo-political zones in the country. The three pilot
entrepreneurship development centres, he said,. Will commence January, 2008 are
in Kano (North West), Ota (Southwest) and Onitsha (Southeast). Also speaking at
the international microfinance conference and annual microfinance conference
and annual microfinance and entrepreneurships awards held at the Sheraton Hotel
and Towers, Abuja, Soludo (2008) stated that access microfinance by the
economically active poor and low income earners in Nigeria is a collective
responsibility for the achievement of the Millennium Development Goals (MDGs);
He added that it provides a strong focus on macro-economic stabilization,
especially in the pursuance of massive trades and investment liberalization
program to encourage entrepreneurial capacity to develop business and for the
business to success (Nwoye, 1997).
Despite the missing links in Africa’s
development process, researchers and scholars have increasingly recognized the
crucial role that entrepreneurship plays in economic development of nations,
especially through the development of microfinance sub-sector. (Rashed, H.S,
2000, Dozie, 2005 Aglion and Howilt 1997). For instance, Dozie argued that this
vital factor of production which forms the basis of the Schumpeter’s dynamism
is the bedrock to a nation’s industrialization and development. According to
them, this is achieves through the innovation and risk taking ability of the
entrepreneurs. It is therefore, the entrepreneur who generates the critical
momentum an economy requires for economic growth by breaking new grounds in
human endeavour as a result of the vital characteristics they possess. However, on this note, this study intend to
address the entrepreneurship in Nigerian economy has the potential of becoming
the path to success and compete favourably at the global market economy, when
the technical and commercial skills of the entrepreneur are effectively
develops utilized.
Peter and Clerk (1997) affirm that
entrepreneurial development is a disposition to accept new ideas and try new
methods; a readiness to express opinions, a true sense that make men and women
more interested in the resent and future than in the past, a better sense of
punctuality, a greater concern for planning, organization and efficiency, a
tendency to seek the world as calculated a faith in science and technology and
finding a belief in distributive justice.
The
study is an attempt to show how successful entrepreneurship development through microfinance institutions will
result in creation of jobs, develop greater skills that can be more readily
adopted by local residents (see Green et al, 1990; Kovshling and Allen 2004).
Entrepreneurial development programmes offer sustainability and flexibility to
meet broader community development needs (Dabson Ricky and Scheveke 1994,
Loyons and Hamlin 2001, Lichtentein Iyons and Kutzandua 2004).
1.2 STATEMENT OF RESEARCH PROBLEM
In
view of the forgoing, the Federal Government of Nigeria (FGN) has been adopting
monetary, fiscal, industrial and developmental policy measures at the macro
level to facilitate and support entrepreneurial activities and at the same time
specific financing g arrangements are being made in respect of funding
programmes at the micro level to boost entrepreneurship activities in Nigeria.
The community banking system is one of such
programmes introduce by decree 46 of 1992 (as amended) to finance and support
the growth of entrepreneurship in Nigeria. The micro units in agricultural
transport, commerce and industry, textile, dying tanning, vulcanizing,
blacksmithing, health, architectural, entertainment and other needs, this
microfinance banking system is evidently fraught with problems as regards to
its ability to finance projects in rural (and even semi-urban) communities.
This is evident in the reform process of the Nigerian banking system, at which
the community banks by the reform are to become Microfinance Banks (MFBs) with
a minimum of 20 million capital base by December 31st 2007.
1.3 RESEARCH QUESTIONS
1. What is the nature and roles of Small and
Medium Enterprises?
2. What is the nature of the financing
problem of Small and Medium Enterprises?
3. What is the role of microfinance banks in
financing Small and Medium Enterprises in oyo?
4. What constitute the financing options of
microfinance bank to Small and Medium Enterprises in Nigeria?
1.4 OBJECTIVE OF THE STUDY
1
To appraise the nature and roles of
Small and Medium Enterprises in Nigeria
2
To determine the role of microfinance
banks in financing Small and Medium Enterprises in Oyo
3
To appraise the role of microfinance bank
in financing Small and Medium Enterprises in Oyo.
1.5 SIGNIFICANCE OF THE STUDY
The study shall highlight the
significance of Small and Medium Enterprises to the economy
The study shall analyze the roles
of microfinance banks in financing Small and Medium Enterprises in Nigeria.
The study shall provide financing
options offered by microfinance bank plc to Small and Medium Enterprises in Oyo.
The study shall serve as a
veritable source of information to managers and consultants
1.6 STATEMENT OF HYPOTHESIS
H0 Small
and Medium Enterprises is not significant to the economy
H1 Small and Medium Enterprises is
significant to the economy
H0 The financial challenge in Small and
Medium Enterprises is high
H1 The financial challenge in Small and
Medium Enterprises is low
H0 The impact of microfinance bank in
financing Small and Medium Enterprises is low
H1 The
impact of microfinance bank in financing Small and Medium Enterprises is high
1.7
SCOPE
OF THE STUDY
The research shall appraise influence
of microfinance bank on the performance of Small and Medium Enterprises in Oyo
state.
It shall elucidate the nature and
significance of Small and Medium Enterprises as well as analyze the financing
challenges of Small and Medium Enterprises in Oyo.
1.8
DEFINITION
OF TERMS
Small
and medium industries:
In Nigeria, the
small and medium industries Enterprises investment scheme (SMIEIS) defines Small
and Medium Enterprises as any enterprise with a maximum asset base of N200
million excluding land and working capital and with a number of staff employed
not less than 10 or more than 300.The federal ministry of commerce defines Small
and Medium Enterprises as firms with a total investment (excluding cost of land
but including capital) of up to N750,000, and paid employment of up to fifty
person, employee relationship, labour intensive operation, simple technology,
fusion of ownership and management and limited access to capital.
A
Microfinance bankis
any company licensed by the Central Bank of Nigeria
(CBN) to carry on business of providing microfinance services such as
savings, loans, domestic funds transfer, and other financial services that are
needed by the economically active poor, micro, small and medium enterprises.