THE ROLE COMMERCIAL BANK IN FINANCING SMALL AND MEDIUM SCALE INDUSTRY IN NIGERIA(A CASE STUDY OF ENTERPRISE BANK PLC, ENUGU)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In Nigeria today, small and medium scale industries (SMIs) have been considered very essential for economic growth and development. Since they are seen as being more active, innovative and have higher labour absorptive capacities, the commercial banks and other financial institution plays or perform a vital roles in making sure that the nation’s economic growth is sustained.

However we should remember that in Nigeria (which is recognized as a developing as developing nation), the central government then enacted or promulgated a decree called “enterprises promotion decree” when there was a need for small and medium scale industries or enterprises to be owned and managed by Nigerians. Thanks heaven for this innovative idea because many developing nations have not adopted this idea because they think that a slow down or it is a relatively a slow down industrialization process. It should be well noted that without the development of small and medium scale industries (SMIs), the nations quest for industrialization will certainly remain at a dangling or swindling state.

In addition, a lot of financial institutions have really invested in small and medium scale industries development in Nigeria. Some of this institutions that the Nigeria government set up to boast entrepreneurship includes the Nigerian bank for commerce and industry (NDIC), Nigerian agricultural and development bank (NDB) (now known as the bank of agriculture or bank of industry), peoples bank of Nigeria (PBN). In sourcing for funds to boast the SMIS, friends, families, relations or the general public would not be able to provide the much needed funds and due to this, the commercial bank came to salvage the problem and have been very active. For instance the commercial banks is regarded as the center of the lending market and makes the greatest variety of loans. Since they are very conservative in lending, the commercial banks look at may things apart from the ability of the entrepreneur to provide the needed collateral that are largely interested at the feasibility report, the experience of the entrepreneur, his profit potentials and his personal credit records.

The insurance company which is one of the fastest growing industries in Nigeria helps to curb down financial losses to those interested entrepreneur who do seek for an insurance cover for their businesses.

In drawing my final note on the introduction, it should be largely noted that the roles of banks in financing, promoting and developing of the small and medium scale industries (SMIs) cannot be hidden due to the roles it plays and the aiming desire to promote these industries in Nigeria.

1.2 STATEMENT OF PROBLEMS

There is no doubt that a lot of commercial banks involved largely in SMIs promotion and financing but recent discoveries emerge that some of these SMIs have not provided the much need funds or resources to ameliorate or alleviate these various uncertainties. Is it that there are non-availability of market information and inadequate market access or there are low technological shortage of finance, access to raw materials, lack of managerial skill constraints? How be it, the answer to the questions or instances raised above will be adequately dealt with or answered in the subsequent chapter of this research work.

1.3 OBJECTIVES OF THE STUDY

The objectives of this study is to identify the extent to which bankshave been successful in meeting the financial requirement of the small and medium scale industries (SMIs).

These specific objectives or purpose includes.

1. Understand what small and medium scale industries is all about

2. To identify specific functions perform by the government in developing small and medium scale industries.

3. To identify some of the financial institutions involved in the development of small and medium scale industries Nigeria.

4. To identify some of the assistance(s) provided by commercial bank in the area of small and medium scale industries.

5. To identify some of the government policy or policies for promoting small and medium scale industries.

6. To identify and note some of the government roles in encountering small and medium scale industries.

7. To identify the effect of government policies on the small and medium scale industries.

8. To identify the problems of small and medium scale industries.

About from the research questions that were developed, solutions or suggestions on how to address the problems of small and medium scale industries in Nigeria were outlined or were given in details.

1.4 SIGNIFICANCE OF THE STUDY

This research work will no doubt be of great help and significant importance to the teaming populace and beneficiaries. The private and public owners of business will draw great benefits from this work. Also, individuals who are already into small and medium scale business and those who are eager or who wants to venture into the business of the small and medium scale will equally benefit from this research work. Any financial institution will draw satisfaction if they come across this work.