The Impact Of Commercial Bank On Small Business Financing In Kaduna South Local Government, Kaduna State
The impact of commercial bank on small business financing as a channel to the development a nations’ economy cannot be over emphasized. This has been demonstrated in economy of nations like Japan, Indonesia, South Korea, Malaysia among others. Bearing this fact in mind and having a careful look at the problems facing this important sector of the economy in Nigeria, paramount among is the issue of inadequate and often been described as the life blood of any business ventures “Finance”. The overall impact of funds on the rapid growth and development of small – scale business has consistently been a cause of concern to the industrialist. A critical assessment of this sector clearly revealed how the issue of inadequacies has constituted a major predicament to the successful growth of smallscale business in Kaduna South Local Government. The essence of this research work is to examine the impact of commercial bank in small business financing in Kaduna south local government. It is belief that this research work will be of immense benefit to the Kaduna south local government Industrialist most especially the small –business entrepreneurs.
Table of Contents
- Title Page
- Approval Page
- Table of Contents
- 1.0 Background of the Study
- 1.2 Statement of Problem
- 1.3 Objectives of the Study
- 1.4 Research Question
- 1.5 Significance of the Study
- 1.6 Scope and Limitations of the Study
Review of Related Literature
- 2.0 Introduction
- 2.1 Theoretical Framework of Small Scale
- 2.2 Conceptual Framework of Commercial Bank
- 2.3 Functions of Commercial Banking
- 2.4 Definition of Small Scale Business
- 2.5 Small and Medium Scale Policy in Nigeria
- 2.6 Review of Related Study
- 3.0 Introduction
- 3.1 Research Design
- 3.2 Area of the Study
- 3.3 Population of the Study
- 3.4 Sample and Sampling Size
- 3.5 Data Collection Instrument
- 3.6 Administration of Research
- 3.7 Procedures for Presentation and Analysis of Data
Data Presentation and Analysis
- 4.0 Introduction
- 4.1 Data Presentation
- 4.2 Test of Hypothesis
Summary, Conclusions and Recommendations
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendations
1.1 Background to the Study
In developing countries like Nigeria small scale businesses serves as the foundation upon which industrial development is based. This is because small – scale enterprises promote stable industrial base and ensure a balanced distribution of industrial development (NwankoG.O 1991).
However, a close look at the performance of small – scale businesses in Nigeria portrays a situation of neglect, apathy and general underdevelopment. This situation had seriously hampered the rapid growth of this important sub sector of the economy, pathetic situation could be attributed to a number of problems hindering the development of small – scale businesses such as managerial problems, marketing problems, lack of high caliber of employees and lack of quantitative data among others. The abovementioned factors have hindered the development of smallscale business. The acute shortage of required capital to meet the business operational requirements has cultivated has cultivated the fluctuating performance and its declining role in the development of nations economy. The difficulties of smallscale businesses in obtaining required credit facilities and varieties of credit issues has further complication the financial problem facing these industries.
The problem of obtaining the right financial facilities from the formal money markets at the right quality and good satisfying terms is also a serious factor.
These enterprises have a very important impact on the life of everybody in the society. Small independence businesses are every where and in every line of work, they can also be seen in every community. This business is as old as man so virtually everything is does in life involve an element of business.
The role of Small scale enterprises in our economic history however has been one of distribution and contribution. Although its relative important had decline with the growth of the big business Small scale business is still making major contribution to the country economic. Business Nigeria today is made up of both large and small business.
Today Small scale enterprises have to enjoy more prestige than ever before because of it vital contribution to he nation economy. So vital is small business put few it any apart of our economy could work without its steady stream of production and services in every major industry there are successful Small scale enterprises operate manufacturing plants, retail stores, whole sales, drugs computers, construction firms and hundreds of other types of business.
Government agencies are charged with the responsibilities among others to carry out duties and deliver utilities as may be regulated from time to time on behalf of the government for the purpose of uplifting the standard of living Government agencies such as Commercial Bank (COMMERCIAL BANK) is charged with responsibilities like provision of medium and long term finances by way of equity finding loan and lease financing, guarantees, investment in corporate Bonds business development service, cofinancing, working capital finance and promotion of Small scale enterprises and industrial project, cosponsoring financial institutions and Small scale enterprises.
This book of Industry was formerly originated from Nigeria Industrial development bank limited was established in 1964 following the reconstitution of the Investment Company of Nigeria Limited (ICON) NIDB was set up primarily to accelerate Nigerian industrialization
Uzuaga W. (1981), the bank was to conceive shortly after Nigerian attains independence in 1964. The idea was to set up development financial institution to service as a dedicated window for channeling fund from within and outside the country to the young nation states Industrial sector.
The bank (NIOB) was recently merged with Nigeria bank for commerce and industry (NBCI) and national Economic Reconstruction Fund (NERFUND) in the present Obasanjo administration is renamed as Bank of Industries.
1.2 Statement of Problem
The most obvious problems of Commercial Banks is how to provide efficient financial resources technical assistance security on loan given out to customer (SSE) evaluation of project that are financed which may take more time than stated at the beginning. Also the project time table, which depends on nature and complexity of the project, it may take one to two years some times longer from when project was identified to when it was commissioned
On the part of Small scale enterprises (SSE) how effective are they utilizing the services renders to them by the Commercial banks. Also are they able to cope with the policies adopted by the Commercial banks in obtaining loan and other services rendered such as interest rate on capital collateral facilities and the made of government.
1.3 Objective of the Study
The aim and objective of the study is:
- To analyse various the impact of Commercial banks in financing Small business
- To Examine government role in financing small business in Kaduna South local government
- To analyse the various way by which small business has contributed to the growth of Nigeria economy
- To investigate the problem faced by small business in obtaining loan from commercial bank
1.4 Research Question
- What are the impacts of Commercial banks in financing Small business?
- What are roles of government in financing small business in Kaduna South local government?
- What are the various way by which small business has contributed to the growth of Nigeria economy?
- What are the problems faced by small business in obtaining loan from commercial bank?
1.5 Significance of the Study
The significance of the study is to serve as reference material to other students who may write or make research on similar topic and serve as recommendation to solve problems pertaining to the financing of Small business enterprises. It also to serves as recommendation to Commercial Banks in discharging its functions the customer as well as the mode of rendering services to the customers (SSE).
This research also serve as a requisite for the award of National Diploma in Banking and Finance Kaduna polytechnic. And it also go to be beneficial to Kaduna South Local Government staff who will use the recommended made at the end of this research work.
1.6 Scope and Limitation of the Study
This study will cover the area of activities and role played by the Commercial banks in Financing Small business enterprises in Kaduna South Local Government Area
It is not an easy assignment for a student to conduct a research work without encountering two or more problems one of such problems faced by the researcher was lack of adequate information, which the research could obtain for necessary research work as some of the organizations officials formed to be very busy and require for some signatory from the department before giving out information to be used. Moreso finance pose as a great challenge in carrying out this research work. On the other hand the academic workload couple with this research was very tedious considering the date fix for the completion and submission of this work
Summary of Finding, Conclusions and Recommendations
5.1 Summary of Finding
This research work has been able to look into the activities of commercial bank in financing small business enterprises and their contribution to Nigeria economy at large. It has also critically analyzed the policy of government toward financing of small business enterprises.
The researcher has been able to find out through the analysis of various data made available:
- Also commercial bank has been able to give loans and advance to some productive components of the economy this has not been properly carried out considering the minimal impact of such investment.
- The bank has also abided by the laid down regulations of all the bodies that regulate it’s activities pertaining the particular bank under review and commercial banking sub-sector as a whole.
Based on the findings of this researcher work the following conclusions were reached.
- Commercial banks, it’s contribution to the growth of small business can be seen to be rising years after years despite the over regulations by the government on banking activities.
- The bank also witnessed a low patronage of its services especially by the aspect which was caused by the harsh economic condition of which the propensity to consume was higher than the propensity to save.
- The commercial banks has been ordering assistance to the general public by giving charitable gifts to various course which include educational, social services and health organization.
In view of the problem instead in chapter one of this project, the researcher will like to make the following recommendation to the banks and then to the government.
To Commercial Banks
- It is necessary for commercial bank to keep abreast with the latest innovation in banking. There is need for structural changes in banking environment such structural changes must aim at making the banks more responsive to their immediate environment.
- More can be done by Nigeria commercial banks to the small scale development more rapidly then what they have been performing for instance, the areas of export financing, loans syndication or Agric and rural development the expertise and financial support to the commercial banks will be a welcome development.
- Commercial banks should try as much as possible with the banking regulations of the country to grant loans and advances to small scale business men who are able to meet the condition of the commercial banks for their loans and advances. This is turn will increase the scope of the organization activities since majority of Nigeria businessmen who only need small or medium finance to continue operations.
- It is also necessary for commercial banks to lead their leading policies which attempt to concentrate on short – term loan and advance for commercial trade purpose, such short – term finance can be idle but not in situation where the need fro long term industrial investment is in high demand.
- The effectiveness of commercial banks in the economy depend in the availability of infrastructural facilities. The larger community shares the performance of the bank, for instance the uneven spread of intramural facilities militates against some commercial bank aiding some small industries.
The commercial banks should embark on aggressive campaign to educate the citizen of the country about its activities. It carried out successfully, it will increase the number of organization and individuals, who will patronize the bank, thus increase the profitability of the small-scale development.
Worthily to mention is that application of rigidly sector alone with heavy leakages in the fiscal and exchange rate policies on doubt distorts small scale reform and stables investment in banks. Therefore, the government should look for a means to adjust these policies.
The government should study the financial environment for the country very well and engage in expertise in financial policies for the country devoid of quick and constant (amendment). The central bank of Nigeria should note that it has two constituencies. The financial sector is the direct domain of the bank without adequate understanding among all financial institution, no amount of power or personalities can embody the sound financial system of the economy badly needs. Each financial institution must identify its role in the new regulatory framework, which is highly flexible. All institution should abide by the rules and regulations and constantly keep at he back of their minds that both central bank of Nigeria and other banks all have a duty to make the Nigeria economy work to all benefits.
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