THE CONTRIBUTIONS OF united BANK FOR AFRICA TO THE DEVELOPMENT OF SMALL SCALE ENTERPRISES
THE CONTRIBUTIONS OF UNITED BANK FOR AFRICA TO THE DEVELOPMENT OF SMALL SCALE ENTERPRISES
This research focuses on the United Bank for Africa's assistance to the development of small scale enterprises. It intends to assess United Banks' contribution to the financing of small enterprises, identify barriers to getting bank loans, and identify potential causes impeding banks' execution of credit programmes.
To accomplish this, a survey study methodology comprising oral interviews and questionnaires was used to collect replies. The data was analysed using simple percentages and chi-square (c2) test statistics to determine the tenability of the hypotheses proposed.
Unaffordable terms of capital, difficulties in accessing bank loans and advances, and factors impeding credit policy implementation were identified as more difficult.
The researcher recommends that banks make available capital on affordable terms, ensure regular routine checks on businesses, educate entrepreneurs through managerial workshops, and the government should enforce credit policy implementation to boost the development of small businesses.
1.1 Background Of The Study
Small-scale industry is viewed as a vehicle for quick industrialization, sustainable economic growth and development, poverty reduction,
as well as a breeding ground for innovation and job creation in both developed and developing countries. It follows that small scale firms have the potential to become the engine of economic growth in any country (http://www.snbd.com, July 8 2010).
Because of the critical relevance of small scale enterprises, there has been an urgent need for banks to participate in financing their development in Nigeria, particularly in Kaduna. This is because bank loans are the most important source of institutional finance for both new and developing businesses.
Because of this realisation, the government has established numerous plans and programming in the past to increase credit availability to small size enterprises in Nigeria.
However, in 1999, the Nigeria bankers committee established a policy requiring all banks in Nigeria to set aside 10% of their profit before tax (PBT) for equity development in small and medium-sized businesses.
Despite these measures, many small-scale businesses with economic potential fail and close down due to a lack of funds, insufficient working capital,
a lack of managerial experience and skilled labour, poor accounting records, and a lack of infrastructure (central Bank of Nigeria: the billon, October/December 2004:58-b5).
Thus, the concerns discussed in the research work are how banks have contributed to improving the aforementioned challenges and expectations surrounding the development of small scale enterprises in Kaduna.
1.2 statement of the Problem
Although small scale enterprise is regarded as the bedrock of an economy's industrialization, many entrepreneurs' attempts to start and operate them have met with a high percentage of failures, with lack of funds and insufficient working capital identified as some of the causes of such failures.
As a result, the study tries to address questions such as, “Have banks been able to make capital available to small scale enterprises on affordable terms?” What safeguards have been put in place to guarantee that such payments are used efficiently by businesses?
Is it true that small and medium-sized businesses have easy access to credit? These and other concerns are the impetus for this study project.
1.3 Objectives of The Study
The following are the goals of this research project:
i. To assess the role of banks in financing small-scale enterprises in Kaduna.
ii. To identify the obstacles that small firms experience in obtaining financing.
iii. To identify potential elements influencing the implementation of credit policies on loans and advances to small-scale entrepreneurs.
1.4 Significance of the Research
The significance of this study is that it demonstrates the importance of banks in financing small scale firms, hence improving business growth and expansion and achieving corporate goals and objectives.
It is also beneficial for the federal and state governments in the creation of policies and programmes, as they may be looking forward to taking the required actions to prevent the collapse or failure of small scale enterprises in Nigeria,
and particularly in Kaduna. Again, it will provide entrepreneurs with a better understanding of how enterprises should be financed, allowing them to fund additional study in this area.
1.5 Research Questions
The following questions will serve as a guide to evaluate the development role played by the United Bank for African (UBA) plc for the purposes of this research.
i. Is finance made available to small-scale businesses on reasonable terms?
ii. Do small-scale businesses face difficulties in obtaining bank loans?
iii. What factors impede the execution of credit policies governing loans and advances to small-scale entrepreneurs?
1.5.1 hypothesis Statement
H0: Small businesses do not have access to capital on reasonable terms.
H1: Small businesses are given access to capital on reasonable terms.
H0: Small businesses face no difficulties in obtaining bank loans and advances.
H1: Small businesses face difficulties in obtaining bank loans and advances.
H0: There are no impediments to the execution of credit policies on loans and advances to small enterprises.
H1: There are several factors impeding the implementation of credit policies on loans and advances to small firms.
1.6 Scope of The Study
This research effort is limited to covering the growth of financing small scale commercial enterprises in Kaduna utilising the United Bank for Africa Plc as a case study, with the goal of emphasising relevant challenges and suggesting solutions.
1.7 Limitations of The Study
The expense of getting information was a constraint in this study because the researcher had to surf the internet, seek academic journals and books pertaining to the subject matter of the research effort.
Furthermore, due to time constraints, other competitive course activities with this topic do not allow for extensive research work.