IMPACT OF COMMERCIAL BANK LENDING ON SMALL SCALE INDUSTRIES IN NIGERIA
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IMPACT OF COMMERCIAL BANK LENDING ON SMALL SCALE INDUSTRIES IN NIGERIA
ABSTRACT
A small-scale industry is a monetary unit’s sale volume. The purpose of this research is to assess the extent to which Nigerian small-scale enterprises have been able to get loans and risk financing from Nigerian commercial banks as a major source of finance for the economy.
This study is interested in determining and initiating the major cause of commercial banks’ unwillingness to lend to small scale enterprises, as well as identifying potential solutions to commercial banks’ lending problems with reference to the prospect.
In order to expand the industry and its activities, the banking system must be implemented to facilitate the granting of credit facilities.
Furthermore, the structural Adjustment Programme (SAP) was implemented in order to produce small-scale industries (S S T ‘S) that were supposed to demonstrate dependency.
Finally, the commercial bank should establish programmes on acceptable ways of utilising loans, such as seminars, symposia, and workshops, and the commercial bank should issue small-scale enterprises medium-term loans rather than short-term loans.
INTRODUCTION TO CHAPTER ONE
1.1 BACKGROUND TO THE STUDY
There is no doubt that Nigeria is rich in natural resources. To name a few, these resources include skel, crude oil, natural gas, iron ore, palm oil, groundnut yam, cassava, and so on. These resources were the principal export earning before the era of independence, accounting for 80% of our total revenue at the time.
The precolorual era may be considered the era of substance economy. Each hamlet was then renowned for one specific raft or the other,
and some families were known as either artists or blacksmiths on their craft as their source of livelihood, and they were working on a subsistence level. fermi (1984)
As a result of rising population and demand for these services, efforts were made by these craftsmen to boost specialisation and efficiency. It is worth noting that there was little or capital intensive.
Because of a lack of capital-intensive manufacturing possibilities for addressing precolonial diseases, the federal government did not allow unfettered movement towards the upliftment of the people.
industries. The federal government’s economy during precolonial rule. The cowry monetary system was all that existed. As a result, the good fortune for an efficient and successful monetised economy had no discernible impact on economic activity. To promote the sector, a banking system was established, which facilitated credit facilitation, such as loans and advances. (Nwosu 1984)
The government had no significant impact on the formation of small-scale industries in the post-independence economy. To protect the country’s small-scale industries (SSTS), the federal government implements the structural adjustment plan (SAP), which was designed to demonstrate dependability.
It enables the SSTS to grow without unfair competition from foreign items by discouraging the importation of raw materials that can be produced locally.
The establishment of the national economic reconstruction fund (NERFUND) and the small and medium enterprises (SIGE) fund are two of the measures put in place to boost the growth of small scale industries (SST’s).
The CBN is in charge. Despite the government’s efforts, SSEs continue to struggle to free themselves from financial constraints. Small scale industries (SSI’s) vary by country and individual.
The Central Bank of Nigeria (CBN) issues guidelines to commercial and merchant banks for this purpose; thus, small scale firms shall include cottage industries and be classified as enterprises whose costs, excluding the cost of lending, but including working capital, do not exceed N10,000. CBN (1994)
1.2 STATEMENT OF THE PROBLEM
It is apparent that the establishment of small-scale companies yields significant economic and other benefits in any economy, and Nigeria should not be an exception.
The country’s current economic predicament is such that one must wonder about the small-scale industries. There are several commercial banks in Nigeria today that must be fully monetary in native for the economy’s sustainability.
Currently, small-scale industries are heavily reliant on commercial.
Banks provide funding for efficient expansion. Recognising the need to address the finance problem of small-scale enterprises, the government has enacted a slew of regulations aimed at ensuring enough funding for small-scale businesses.
The study is looking for solutions to financial shortfalls and other related difficulties in small-scale companies, with a focus on commercial banks.
1.3 AIM OF THE STUDY
1. To investigate commercial banks’ involvement in the financing of small-scale companies.
2. To investigate the term structure of commercial bank loans and advances to small-scale companies.
3. To determine the significance of small-scale industry funding to commercial banks.
4. To determine the source of variation in commercial bank financing for small-scale industrial projects.
1.4 SIGNIFICANCE OF THE STUDY
With this study, the managers of various small scale industries need to be aware of the source of their financing problems and loans so that they can address them effectively on the part of policymakers, that is, the government agencies responsible for formulating policies and strategies for the development of small scale industries.
1. 6 DEFINITIONS OF TERMS
The concept of small-scale enterprises has aided the industrial and economic progress of the world’s developing nations. As a result, the intended increase in the key sale industries might be viewed as a stepping stone for economic growth.
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