SOURCE OF FINANCE FOR MEDIUM SCALE INDUSTRY IN NIGERIA
SOURCE OF FINANCE FOR MEDIUM SCALE INDUSTRY IN NIGERIA
INTRODUCTION TO CHAPTER ONE OF SOURCE OF FINANCE FOR MEDIUM SCALE INDUSTRY IN NIGERIA
The first and most essential issue that comes to mind while starting and establishing any business is finance (money).
This is due to the investor's ability to employ the necessary input labour, equipment and machinery power, utilities, suppliers, and even management if appropriate funds are available.
However, it is the project's preoccupation to trace the roots of what is finance in order to dig its meaning as it relates to the scope of this work.
Without denying the above principles, finance can be defined as the core human operations of production and marketing that incorporate financial decision-making.
As a result, the purpose of this article is to address briefly the topic of industrial finance in the past in order to determine the source of Nigeria's current structural problem.
1.2 STATEMENT OF THE PROBLEM
Pre-independence Nigerian entrepreneurs faced few funding challenges because labor-intensive agricultural operations dominated the economy at the time. However, the terrible scenario steered the Nigerian economy into activities that provided little or no chance for economic expansion.
With independence and the realisation that such economic relationships would not sustain political independence in the setting of modern power relationships, manufacturing industries were identified as a critical aspect.
In this direction, the manufacturing and agricultural sub-sectors have emerged as formidable industries in the private sector. Based on this, and the government's apparent belief that medium-sized businesses are essential components of a competitive economy, the need for some change becomes evident.
Every government effort and policy is aimed at fostering a favourable investment environment. As a result, indigenisation was implemented to allow Nigerians to control the commodities peaks of the economy. This was beloved would give the desired sector the attention it deserved.
However, the realisation that industrialization is a precondition for economic liberation may have drawn so much attention to the sector that it has elicited unprecedented replies from potential entrepreneurs that the problem has arisen.
A lack of capital formation has become glaringly visible within the Nigerian economy. As previously said, circumstance and knowledge have revealed that industry finance practises in Nigeria are constrained.
Nigerian businesses, on the other hand, are constantly involved in the financial market in order to conduct their operations.
They accumulate liquid assets by drowning on bank loans, they provide credit to suppliers, and they occasionally approach the capital market to raise additional equity and long-term loan capital. However, when it comes to selecting financial instruments, their access to the capital market appears to be limited.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this research project:
(1) To investigate the methods by which firms are financed in Nigeria;
(2) To explain the constraints that companies experience while using the capital market; and
(3) To assess the impact of those constraints on a company's capital structure.
This study will be primarily based on a single source of data, namely the published accounts of Aluminium Manufacturing Company of Nigeria Limited for the three-year period 1980-1982.
Despite the fact that the study appears to be based on statistics, the writer believes it will be of significant historical relevance.
Furthermore, while the author openly admits that certain sections of the work are exclusive to the years 1980-1982, many other aspects are likely to be relevant for at least another year.
1.4 THE SIGNIFICANCE OF THE STUDY
The study will be useful in the following areas:
(1) In co-operative societies, an official of the society serves as a benchmark for internal evaluation and control performance.
(2) In the future, in order to remedy the daily explanation that people endure at the hands of profit-making middlemen in the capital-list system.
(3) The research academics who may like to pursue the matter further on the connected topic.
(4) To students and scholars doing cooperative studies in the higher education system
1.5 SCOPE AND limitations OF THE STUDY
The project paper was undertaken with the following relevance in mind:
It would have been fascinating for this study to have been expanded to cover many companies, however due to the importance of time, the researcher was unable to cover more than one organisation.
As a result, the study focuses on Alumaco Company.
Finance, more than anything else, had the most influence on the research.
The quantity of finances available for the project dictates the data to be included in the job (including the expense of transportation to their various sources or offices to and back).
Time frame for analysis:
Due to the aforementioned reasons, the writer has limited the study's examination to the years 1980-1982. At the very least, this can only provide a general assessment of the current position of this specific organisation in relation to data.
1.6 DEFINITION OF TERMS
A thorough research on this aspect of this study will reveal that much has been written on company finance, such that the historical review on the subject could not be exhausted,
but for the purpose of this research study, efforts have been made to collect as much as possible to enable the researcher to examine his case analytically in its entirety on the sources of funds.
As a result, funding sources are the different ways in which businesses raise the capital required for their operations.
As a result, the financial management is responsible for weighing the pros and disadvantages of each of these financing options in terms of ownership or control of corporate income flows and inherent risk.