The topic of dissertation is An
appraisal Of Commercial Banks In Financial Small Scale Industry In
Nigeria. A case study of union bank of Nigeria plc.
The major objective of the study is to ascertain the extent to
which union bank of Nigeria plc has helped to financial small scale industries.
Instrument of data collection is questionnaires and research
questions which formed the source of primary data, while materials from various
published articles, textbooks, journals and newspaper formed the secondary data.
The method of analysis is the use of tables, percentages and
The major finding of the research is that union bank of Nigeria
plc has helped to financial small scale industries period under review.
The recommendation based on the finding is that in order to reduce
the risk in small scale industry lending, the central bank of Nigeria and the
government can do more than they are doing currently scheme.
The study concluded that if the desired objective of using small
scale industries as catalysts of development is to be achieved than the role of
commercial banks should be mutually supportive.
1.1 BACGROUND TO THE PROBLEM
1.2 PROBLE STATEMENT
1.3 OBJECTIVES OF THE STUDY
1.4 RESEARCH QUESTINS
1.5 RESEARCH HYPOTHESISI
1.6 SCOPE OF STUISY
1.7 LIMITATIONS OF THE STUDY
1.8 DEFDINITION OF STUDY
2.2 MEANING OF SMALL SCALE INDUSTRY
2.3 GOVERNMENT POLICY
2.4 SUPPORT SYSTEMS
2.6 MONETRY POLICY DEVELOPMENT IN FAVOUR OF SMAL
2.7 BEBEFITS OF SMALL SCALE INDUSTRY
2.8 PROBLEMS FACING SMALL SCALE INDUSTRY
2.9.1 FINANCING THE PROJECT
2.9.2 TECHNICAL KNOWS HOW
2.9.3 PERSONNEL ,MATTERS AND GENERAL ADMINISTRATION
2.10 IMPROVING FUNDING SMALL SCALE INDUSTRIES
3.0 INTRODUCTION OF THE STUDY
3.1 RESEARCH DESIGN
3.2 AREA OF STUDY
3.3 POPULATIO OF STUDY
3.4 SAMPLE SIZE DETERMINATION
3.5 INSTRUMENT FOR DATA COLLECTION
3.6 VALIDATION OF THE INSTRUMENT
3.7 RELIABILITY OF THE INSTRUMENT
3.8 METHOD OF DATA COLLECTION
3.9 DATA ANALYTICAL RECHNIQUES
PRESENTATION AND ANALYSIS OF DATA
4.1 PRESENTATION OF DATA
4.2 HYPOTHESIS TESTING
CHAPTER FIVE FINDINS:
CONCLUSIONS AND RECOMMENDATIONS
1.1 BACKGROUND TO PROBLEM
The successive development plans of Nigeria have laid emphasis on
the attainment of self reliance. The need for this national objective is
because much is expected from individuals from the view point of providing
employment opportunities self reliance in basic food and material production
high per capital income, foreign exchange earnings and the production of
industrial raw materials.
Okporobie (1989:10) observes that Nigeria small scale industries
continued to decline despite the so called priority given to the sector
However, the discovery by the central bank that this policy
was not enough by it self led to the central bank request with effect from 1970/80
that all commercial bank must reserve a proportion of the minimum credit
allocation to indigenous borrowers for small scale Nigeria enterprises.
The target prescribed in 1979 was ten percent (10%) which subsequently raised
to sixteen percent (16%).
Even though available data showed that performance of commercial
banks against this directive has been disappointing. The central bank intends
to spare no effort in ensuring that banks fully couple without
compromising the smooth functioning of the nation banning system.
He observed also, that without the development of small scale
industries in Nigeria, the nations quest for industrialization will certainly
remain forever at stake. It is the opinion of the researcher that future
development in our industrialization must address the basic issues of creating
linkages without the economy to begin to produce real inputs to our
manufacturing activities .
Priority attention must therefore be given to these industries for
which domestic inputs could easily be produced. This will bring
about agro-allied industries like food processing and other by-products.
The objective should be to maximize the value added in their
processing and manufacturing as final goods immediately inputs.
Nzewi and Oze (1985:56) observed that empirical evidence indicates
that strong producer incentives to small scale industrialists are necessary not
also only to meet the food requirement but also to provide growing input
supplies and demand as a foundation for sustained industrial growth.
The present economic constraint may well turn out to be a blessing
in disguise to our industrialization effect particularly for dynamic
manufacturing sector. For instance, the market determinate exchange rate
through seeing with its result and high cost of imported inputs may serve as an
impetus for industrialist to intensify their search for local substitutes.
Ekenyong and Nyong (1992) observed that small scale enterprises
are regarded an organic part of a viable structure for the attainment
meaningful economy development in developing economic like Nigeria.
They are significantly more cost effective in bringing about
development than large enterprises because of the perceived linkage and
multiplier effects which small scale enterprises have on the performance of the
economy and economic growth in general.
Osayameh (1989) observes that the strength that make small scale
enterprises more amendable for assistance areas as follows.
1. Personal commitment of the proprietor
whose life savings usually form the start up capital.
2. Low initial capital out lay requirement
3. Ease of entry and exit and prevalence
of just minimal legal constraints
4. Amenability to business advisory
services because of their small size which makes than more responsive to
Olashore (1987) Observes that the four main sources of enterprises
financing open to small scale industry in Nigeria are.
i. Formal financial institutions
such as commercial banks merchant banks, insurance companies and the
ii. Informal financial landlords,
credit and savings associations “esus” friends and relations personal savings
iii. Other financial scheme, NERFUND NEXIM
in 2001, there was an introduction of small and medium industries
equity investment scheme (SMIEIS) in which N359 million was set aside to date
by banks under small medium industries equity investment scheme.
Through union bank small and medium scale enterprises (SMES)
department, the bank has remain ed in fore front of SMES financing nations was
extended to the SMES as at 31st March 2004.
Small scale industry is any industry not exceeding N750,000
including working capital but excluding cost of land.
It is also defined by center for industrial research and
development of Obafemi Awolowo university Ile Ife as those
industries whose total assets in plant, equipment and working capital do not
exceed N250,000 with not more than 50 employees.
1.2 STATEMENT OF THE
The problem of credit to small scale industries may not
necessarily be as a result of financing insufficiency but rather for some other
reasons among which are.
i. Insufficient preparation on the
part of small scale entrepreneurs in their request for credit assistance.
ii. Information gaps as to range of
funding institutions and scope of services available in these institution
iii. Moreover, servicing of small business
accounts is relatively experience, risky and difficult to monitor with low turn
over of account.
However, the parishioners in the sector small scale industry do
not display competence in preparing justification for their project. It
is are to see most of them coming up with cash flow projections, projected
balance sheets, among others. They are based on personal rudimentary in
formation and speculation. At times when they seek the advice of
consultants, the outcome that are made figures project based on assumptions
which are most of their time unrealistic.
As a result such proposals are out rightly rejected by banks.
There are suitable when credit demands in this sector are not in
compliance in this government monetary policy and credit guidelines which must
be adhered to by banks.
The researcher identifies these problem and considers it necessary
to carry our study on them.
1.3 OBJECTIVES OF THE
The objectives of the study include:
a. To ascertain the extent to which the union
bank of Nigeria plc has helped to finance small scale industries.
b. To identify the problems encountered by
small scale industrialists in obtaining finance from union bank of Nigeria plc.
c. To evaluate various measures
introduced to boost industrial production and its financing and how this has
affected realization of the set goals.
d. to determine the causing changes in
small scale industrial financing by union bank of Nigeria plc.
e. To make suggestion and recommendations
based on the data generated by the study.
1.4 RESEARCH QUESTIONS
The critical appraisal to give answers to the following questions.
a. To what extent has union bank of
Nigeria plc helped to finance small scale industries?
b. What are the problems encountered by
the small scale industrialists in obtaining finance from union bank if Nigeria
c. what are the various measures
introduced to boost industrial production and its financing and how this
has affected the realization of the set goals?
d. What are the causes of changes in small
scale industrial financing by union bank of Nigeria plc?
e. Does any linear relationship exist
between lending to small scale industries and economic recovery and self
reliance on the economy?
1.5 RESEARCH HYPOTHESIS
a. There is no linear relationship between
lending to small scale industries and economic recovery and self-reliance of
b. there is no relationship between union
bank of Nigeria plc lending to small scale industries and the attitude of this
1.6 SCOPE OF STUDY
The scope of the study is an appraisal of commercial banks in
financing small scale industries in Nigeria. A case study of union bank of
Nigeria plc. It does not cover the role of commercial banks in financing
medium and large scale industries.
1.8 SIGNIFICANCE OF THE
This study will highlight problems associated with the role of
commercial banks in financing small scale industry in Nigeria.
It will give information on the possible areas for in
Furthermore, the study will help commercial banks to assess and
appraisal their role in financing small scale industry in Nigeria.
Moreover, suggestions and recommendations made in this paper will
help policy makers formulate new economic policies maintain or modify the
It will equally serve as a guideline to researchers who may wish
too decide with this study in the future.
It will also help small scale entrepreneurs to make sufficient
preparation in their request for credit assistance.
It will guide the entrepreneurs in making credits demands that are
compliance with government monetary policy.
The last but not the least it will help the entrepreneurs to
displayed competence in preparing justification for their project. It is rear
to see most of them coming up with cash projections, projected balance sheets.
1.9 DEFINITION OF TERMS
Small scale industry :
Any industry with capital not exceeding N750,000 including
capital but excluding cost of land.
It is also defined by center for industrial research and
development of Obafemi Awolowo University Ile Ife as those industries whose
total assess in plant equipment and working capital do not exceed N250,000 with
not more than 50 employees.
a financial institution that acquires deposit from savings surplus
unit and give out loans to savings deficit units.
INDUSTRIAL DEVELOPMENT CENTER:
Provide management, technical, consultancy and extension services
for the small scale.
A decree that stipulates that most business become, at least 60
percent owned by Nigerians.
Is a business owned and conducted by one person presumably
assisted by one or more persons for intakes wife and children.
SS/CS small scale industry credit scheme.
TERMS AND CONDITIONS APPLY
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