CHAPTER ONE
INTRODUCTION
Entrepreneurship is the foundation for small scale
enterprises. Small scale enterprises are the key for economic growth and
development. They constitute the bedrock of many economies by providing the
impetus for employment creation and value added activities.
In Nigeria, small scale enterprises play crucial roles in economic
growth and development process. For instance, they are responsible for the
establishment of a robust industrial sector by stimulating indigenous
entrepreneurship and technology. They represent an essential link between
primary production and large scale industrialization. Besides, they have
enormous opportunities for growth due to their nature. But the worst hit is
that most of them exist in rural areas. As such, they face a myraid of problems
that limit their positive contribution to the economy, Summarily as Financial
constraint, Poor infrastructure, poor management etc. But their major challenge
is financial constraint.
To solve their problem of financial constraint, government over
the years has put in place a number of economic schemes, programmes and
policies. One of them is the rural banking programme (RBP) which was introduced
in 1977. Under the progamme, banks were mandated to open a number
of rural branches and bring banking services nearer to the rural dwellers. It
was hoped that banking habits would be imbibed by the people and savings would
also be mobilized. But this scheme was not successful because, it turned out to
be costly and unprofitable for commercial banks.
Apart from the rural banking progamme , some development finance
institutions were established by government to support and promote SSEs such as
Nigeria Agricultural and Cooperative Bank(NACB), the People’s Bank of Nigeria,
the Community Banks, Bank of industry (BOI), the Nigeria Export Import
Bank (NEXIM) and the Nigeria Agricultural Cooperative and Rural
Development Bank(NACRDB). In addition to these includes: The Agricultural
Credit Guarantee Scheme (ACGS), Agricultural Credit Support Scheme (ACSS) and
Small and Medium Enterprises Equity Investment Scheme (SMEEIS). Also some
specialized poverty alleviation agencies were equally set up by government to
ameliorate the problem and promote SSEs, such as the Small and Medium
Enterprises Development Agency of Nigeria (SMEDAN), National Directorate of
Employment (NDE) and National Poverty Eradicate Programme (NAPEP). All
these institutions did not meet the expectations owing to lack of adequate
government commitment and poor management.
Consequently, in December 2005, the microfinance policy,
regulatory and supervisory framework for Nigeria was launched. The aim was to
provide an appropriate menu of financial services by diverse institutions to
meet the need of the poor and low income groups. The policy provides for
participation of the deposit money banks, non-governmental organizations, newly
licensed microfinance banks in microfinance provision.
Despite these attempts, the small scale entrepreneurs are yet to
achieve their optimal potential in the economic equation of the nation.
However, the trust of this study is to examine the impact of MFBs in provision
of short -term loans to SSBs. Besides, the rate at which MFBs finance
SSBs, the types of credit facilities available to SSBs, the maturity structure
of such credit facilities, the repayment schedule of such credit
facilities, the collateral policies of such credit facilities and the general
efficiency level of MFBS in financing SSBs, using Chidera MFB as a case study.
1.1 BACK GROUND OF THE STUDY
In economics, it is usually said that our wants are unlimited but
the resources to satisfy them are limited. Even in business, expectations are
often high but finance is always scarce or limited to meet them. This shows
that paucity of fund is a hard-nut-to crack for every organisation be it profit
or non-profit making organisation.
Nigeria’s future rests on its ability to train and fund local
entrepreneurs that can nature home-grown firms and encourage innovation, risk
taking and local investment. But the under development nature of the SSE
sector of the Nigerian economy needs urgent step to put it in good order
with the micro finance funding of the SSEs, just as instructed by the
CBN. However, one question which still yearns for an answer is how the
microfinance banks are performing this duty of financing the SSBs in Nigeria.
Hopefully, this will be established and proved beyond every reasonable doubt
with clear facts and figures as we progress in this work.
Department | Banking and Finance |
Project ID Code | BFN0010 |
Chapters | 5 Chapters |
No of Pages | 72 pages |
Methodology | Null |
Reference | YES |
Format | Microsoft Word |
Price | ₦4500, $15 |
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Contact Us On | +2349067372103 |
Contact Us On | +2349094562208 |
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