CHAPTER ONE
1.0
INTRODUCTION
1.2 BACKGROUND
OF THE STUDY
What
is Nigeria Bank of companies? They are industries specialized in the provision
of equity capital and loan for medium and long term loan investment to
businesses, engaged in industries and commerce only.
On the other hand, the Nigeria bank of
companies was established to accomplish such specialized roles in the
development of the economy marked the emergence of specialized banking in . These
are the
industrial Development Bank (NIDB) and the Nigeria bank for commerce (NBCI) and
the federal mortgage bank of Nigeria (FMBN) they are established to take care of the
agricultural and housing needs of the economy as these were not adequately
catered for by the conventional banks.
The development bank also
provides financial capital for industries either by way of loan grants of
equity share. Initiation and proportion of industrial project especially those
that are of a small scale business. And also the people and community banks are
also important in sources of finance to small scale business ventures.
The importance of small-scale business
enterprises in the survival of Nigerian economy cannot be over emphasized. They
have moved from subsistence for pre-indigenization period to a position of
importance in the country industrialization process. In view of the importance
of small scale industries in the development of any nation which is desired to
have rapid and balance industrials development and which cannot affoed to
ignore its small scale industrial sectors support. In this regard, the
acquisition and utilization of financial resources are very important to every
business venture specific attention on the small-scale businesses is base on
the expected impact and potential contribution as well as their accelerated
effect in achieving macro objectives pertaining to full employment, income,
distribution and the development of local technology.
Adequately, financial condition is
necessary for the survival of small-scale businesses, whether the financial
resources come from personal savings industrial sponsors, borrowed from bank or
the public. The right financial mix is important for the success of this
business venture. Banks as one of the major source of financial assistance
to business venture by the way of loans
to supplement the shortfall inequity capital and management support to assist
project to ensure survival. In many business, loan have become indispensable
where sizeable amount of working capital is usually tied down in receiving
incentives, bank loan usually supplement such shortage in working capital.
there is no doubt that factors of
production including capital are in short supply. Given the fact of this
relative scarcity in capital coupled with the indispensability in any form in
business organizations. A number of banks have been established with the
objective of increasing the supply of capital to these business ventures. In ,
commercial banks have been set up side by side with development banks as
additional sources of capital to business ventures especially small-scale
businesses.
1.2 STATEMENT
OF RESEARCH PROBLEM
In
spite of the role of industrialization in general to the enhancement of the
standard of living of people. The relevance and important role of small-scale
business organization, in numbers of problem continue to impede the growth and
development of small scale industries in . Some of these problems
responsible for the slow pace of industrial development in are as
follows.
i.
Inadequate technical
know how?
ii.
Inadequate capital and
funds and maintenance of infrastructure necessary for industrial growth
iii.
Lack of consistent,
clear and purposeful industrial policy. It’s within the context of these
problems that we shall be looking at the prospect of achieving government
aspiration about designing policies to stimulate the growth of small scale
venture in .
Almost all the
previous researchers in industrial development in . It has been arrange argued
that all other problems resolve around this very importance issues of lack of
adequate fund for investment. It placed the problem of inadequate funds as the
upper most impeding problem to the growth of industrial development in . It is
a sort of vicious circle because the people are poor, it becomes a very
difficult task to raise substantial capital through private sources for
commencement and expansion of industrial venture.
Inadequate fund makes it impossible to
hire the service of technical expert and purchase of modern equipment. This
limits the scope of operation and robbed the business of the advantage in the
economy of large-scale operation, thus, teaching how to achieve little return
on investment.
This in turn leads to stagnation of
business that is no growth expansion. The extent to which capital shortage has
inferred with industrial growth in the country which might have been exaggerated
by previous authors. However, the importance which this government attached to
find solution, to tie identified problems and the adequate supply of capital to
business organization especially small scale ones for industrial growth and
development in
which will be stressed in this project.
1.3 AIMS AND
OBJECTIVES OF THE STUDY
1. To identify and discuss various problems
faced by small scale enterprises, which has been and may continue to be the
major factors of banks in sensitiveness to finance is the needs of small scale
industries.
2. To analyze the government effort aimed at
financing the industrial sector in this economy between 1985 and what year.
3. To see whether government through monetary
policy rules encouraging and directing banks to finance this smalls scale
enterprises through its monetary policy circular and the effectiveness of this
policy.
1.4 RESEARCH
HYPOTHESIS
Information
was collected from both primary and secondary sources. Analysis was based on
sources of finance for small scale business and the financial account of
financial institution. Questionnaire were drawn from where of which gave an
opportunity to major sources and users of funds of small – scale enterprises.
And interview was drawn from some of commercial banks for fiancé of the small
scale business opinions were sample and these was hypothetical/tested for an
inference which was drawn.
For the purpose of this studies the
following hypothesis has been formulated; main hypothesis, this states, that
small scale business was finance by financial institution or its was financed
by the personal savings, individual sponsor, or borrowed from relatives and
retained earnings.
1.6 SIGNIFICANCE
OF THE STUDY
Despite
the fact that the study enjoys substantial advantages on every small firms, it
should be observed that this level of industrialization, economies development
and resources supports the suitability of small scale enterpsies for optimum
result in most types of activities and have persistently ensure the continues
existence and viability of so many business. Many developing countries (
inclusive) have realized that. It is an illusion to think that importance
substitution strategy through large-scale industries will be a quick and rapid
industrialization and economic development. The experience of countries like , / Thailand
etc had shown that promotion and development of small scale enterprises through
a relatively slow process of industrialization is a sure strategy for economic
growth and development.
1.6 SCOPE AND
LIMITATION OF THE STUDY
The
Commercial bank like other financial institutions are to provide finance for
small-scale business, they are among the banks expected to accelerate the high
rate of economic growth.
The study will focus on union bank and
small scale enterprises as partners in progress in achieving sustainable rate
of economic growth and development. The researcher will also look into some financial
account of both small scale enterprises and the financial statement of some
financial institution especially union bank. Also the project will be limited
to banks and federal government roles in wasting the activities of small scale
enterprises. The importance of development and problems facing the small-scale
business.
1.7 DEFINITION
OF THE TERMS
The
definition of terms used in this project under the chapter one are as follows.
FINANCE:
Relating to money or management of money; financial transaction/ financial
assistance, organiz farmer, should be encouraged with financial incentives. It
can also be defined as money used to run a business an activities or a project.
SMALLS SCALE:
the central bank of
defined small scale business as any business with annual turnover ranging from
N10,000.00 to N50,000.00. small scale industries are generally low in the
number of persons employed the amount of investment and the annual business
turnover.
FINANCIAL INSTITUTION:
This can be defined as a business organization in which customers borrows
money. It can also be defined as the financial market for financial service
i.e. commodity that is being traded is fund.
1.8 PLAN AND
ORGANIZATION OF THE STUDY
The
research will be divided into five chapters, chapter one deals with the
background of the study, research problem, aims and objectives of the study,
scope and limitationi of the study, significant of the study and research
hypothesis. Chapter two deals with literature review which will focus more on
Nigeria even through foreign literature that are relevant may be used to
explain if it is found useful chapter three is based on the research
methodology method of data collections, sample population and sample techniques
while chapter four is based on the historical background of the union Bank plc.
data presentation and analysis, the
hypothesis, finally, chapter five is base on summary, conclusion,
recommendation and reference