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It is necessary to review what essentially comprises small scale industries in order to have an effective discussion of the problem at hand:- Commercial banks’ financing of small-scale companies.

There is frequently no single criticism for classifying a company unit as small scale. For example, the Central Bank of Nigeria defines small scale enterprises as any enterprise with an annual revenue of less than (N 500,000) five hundred thousand Naira.

Additionally, the National Directorate of Employment (NDE) defines it as initiatives with a capital investment of less than five thousand Naira (N500) and a staff strength of three (3) people. In its policy recommendation to the federal government in June 1982,

the Centre for Management Development (CMD) defined small scale industry as “a small scale industry in a factory or production type of operations, employing up to fifty (50) full time workers.” Investment in plant and machinery, excluding land and buildings, shall not exceed N500,000. Power, plant, and machinery are used in its operations.

In a nutshell, small-scale industries are classed based on the following criteria: initial capital outlay, ownership structure, management style, profit level, market share, number of employees, and overall assert size, among others.

The goal of this project work would involve, among other things, the extent to which small scale enterprises in Nigeria have been able to receive loans and advances from Nigeria commercial banks as a major source of funding for the economy.

Union Bank PLC, Okpara Avenue, Enugu, was used as a case study for the project.


Over the years, the concept of self-reliance has occupied a place in the literature of economic development, primarily as a manifestation of the developing world’s various attempts to state new economic strategies that would free them from economic dependence on their former colonial masters in Europe.

Today, many years later, the concept of self-sufficiency remains misunderstood in its core connotations and remains illusive in broad parts of the developing world.

In Nigeria, in particular, neither the mixed economy nor the capitalist approaches to growth appear to have responded to the demands of economic self-sufficiency.

As a result, in order to foster self-sufficiency in the developing world, notably in Nigeria, the central government passed the ‘firms Promotion Decree’ when there was a need to support small scale firms owned and controlled by Nigerians.

Small-scale firms’ value in promoting economic development has long been at the forefront of development policies.

However, many developing countries have failed to implement this plan because they believe that industrialization is a gradual process. However, because of the paucity of foreign cash, attention has recently shifted back to indigenous development based on local resources.

Without the development of small-scale industries in Nigeria, the country’s goal for industrialization will inevitably fail. In the researcher’s modest opinion, future improvements in our industrialization must address the fundamental issue of developing linkages within the economy in order to begin producing real inputs to our manufacturing activities.

Priority must thus be given to industries that may easily be supplied with domestic inputs. This immediately recalls the Agro-Allied businesses, such as food processing and other byproducts, whose goal should be to maximise the value added in their processing and production as finished items or direct inputs.

Empirical research suggests that significant incentives should be provided to small-scale industrialists in order for them to meet food requirements while also promoting long-term industrial expansion.

For example, a market-based exchange rate defined by SFEM and the resulting high cost of imported inputs may serve as a stimulus for industrialists to strengthen their search for domestic equivalents.

In 1971, the government of the then-East Central State statutory enacted an edict establishing the fund for small scale industry credit scheme (FUSI), a sub-system of the Ministry of Commerce and Industry, to give credits to prospective investors to enable them to establish their businesses in order to move the country towards industrialization.

Loans sanctioned by Nigerian Bank for Commerce and Industry (NBCI) for small scale projects in Enugu State as of March 9th, 1992 totaled N13,345.40.

Similarly, in the circular on small and medium enterprises loan scheme issued by the Central Bank of Nigeria in February 1989, it was revealed that the World Bank had granted the federal government a loan of US $270 million for the development of small and medium scale enterprises in the private sector.

However, the very poor pace of expansion of the industrial sector, the sector’s inability to sufficiently fulfil and satisfy the needs of the economy, and the industrial sector’s and the nation’s overdependence on foreign commodities, represent a necessary cause for concern.

From the background of this research study, the means of assisting small-scale enterprises in acquiring much-needed capital for growth and development, particularly from the banking industry.


Small-scale industry, like any other business, cannot function extensively without finances are available for maintenance and the purchase of necessary equipment and inputs.

Typically, three sorts of credit are required: Short-term credit: This type of credit is utilised for yearly operations until the industry’s products or revenues are sold: The sum involved is typically little, but the impact of this sort of lending is most acutely felt by small-scale enterprises who have little or no savings to draw from.

Medium-Term Loan: This sort of loan has a maturity time that is longer than one year but not longer than three to five years. This is typically essential for the purchase of low-cost equipment with a short lifespan.

Long-term loan: This sort of credit is required for the purchase of large industrial machinery, as well as improvements to industrial equipment buildings and land. Small scale industrial loans can thus be a potent tool in bringing about a revolution in industrial practises and company efficiency, especially if sufficient quantities are available and used efficiently.

It is widely known that one of the main priorities of the country’s successive governments has been the growth of small scale enterprises and attainment of self-sufficiency in industrial production, as well as the provision of raw materials for other sectors.

Furthermore, the country’s import bill is constantly increasing, and unemployment is a worry. As a result, it is vital for everyone to work together to develop a relevant policy that would inspire a positive takeoff of our small-scale manufacturing sector; such principles are what this work attempts to convey at the end.

Because finance is only one of the elements of production, the study recognises small scale industrial financing by Union Bank Enugu, Nigeria PLc as part of the broader subject of industrial development.


The study’s objectives include

a. To assess the extent to which Nigerian small-scale industries have been able to secure loans and advances from Nigerian commercial banks as important sources of finance in the economy.

b. To investigate how commercial banks in Nigeria support the government in encouraging small businesses.

c. Understanding the stage of small-scale industrial development and what should be done to alleviate the sector’s issues.

d. Determine the amount to which commercial banks have aided in the financing of small-scale companies, as well as the obstacles to such financing.

a. To identify the difficulties that small-scale industrialists face in obtaining funds from commercial banks.

f. To assess the impact of various methods used to promote industrial production and funding on the industrialization of the defined targets.

g. To identify the source of variation in commercial banks’ small-scale industrial funding.


The study concentrated on the evaluation of small-scale enterprises that received loans from Union Bank PLC, Enugu. The study also looks at a few small businesses in Enugu.


i. Does commercial bank funding of small-scale enterprises increase small-scale industry production capacity?

ii. To what extent do the banking industry direct their investment towards small businesses?

iii. Increase capacity utilisation of our small businesses, lowering demand for foreign items.

iv. Must be on a small scale Commercial banks alone should finance businesses.

v. What can be a barrier to commercial banks financing small-scale industries?


Ho: The Union Bank of Nigeria PLC, Enugu Lending to small size industries is influenced by consumer attitudes and other factors.

H1: Enugu-based Union Bank of Nigeria PLC The attitude of their consumers and other influencers have no effect on lending to small scale enterprises.

Ho: A commercial bank’s role is to boost the productivity of small-scale industries.

H1: Commercial banks have little to do with enhanced small-scale industry productivity.


Ho: Stands for the null hypothesis.

H1: Represents an alternative hypothesis.


The growth of small-scale industries and self-sufficiency in industrial and food production, as well as the provision of raw materials for other sectors, are among the Nigerian government’s priorities in consecutive development plans.

In light of these circumstances, an examination of the financial issues confronting small-scale enterprises is critical. An assessment of the effectiveness of Union Bank of Nigeria PLC Enugu in financing small scale enterprises will help us understand why industrial output has declined in recent years.

This research will be really beneficial;

1. Increase the capacity of small-scale agricultural and allied enterprises.

2. Emphasise the importance of reallocating our resources to more productive segments of the economy.


Small Scale Industries: For monetary purposes, the Central Bank of Nigeria defines this as having an annual turnover of less than five hundred thousand Naira (N500.000).

LOAN: A sum of money borrowed with interest.

LONG TERM CREDIT: Credit with a term of more than three years. It is used to fund long-term projects.

MEDIUM TERM CREDIT: Credit with a term of more than one year but less than three years.

SHORT TERM CREDIT: This has a limited lifespan. It lasts for months and should be matured for payback in less than a year.

ROLE: A character’s role in a play, a person’s task or obligation in a project.

BANK: A financial institution that stores money and valuables and pays out money on the customer’s request (by check or cash).

EFFICIENT: Producing a satisfactory outcome

COMMERCIAL BANKS:- This is a financial intermediary that receives money from general public clients for safekeeping on their various accounts and makes it available when needed. It provides consumers with interest-bearing loans as well as the necessary collateral.

MORATORIUM: Temporary agreed-upon prohibition on an activity

GRAPPLING: Firmly grasp, grip.

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