AN EVALUATION OF THE IMPACT OF COMMERCIAL BANK LENDING ON SMALL SCALE INDUSTRIES IN NIGERIA

Abstract

This study was on an evaluation of the impact of commercial bank lending on small scale industries in Nigeria. Three objectives were raised which included; To examine the participation of commercial banks in financing small scale industries, to examine the term structure of loans and advance of commercial banks to small scale industry, to identify the importance for small-scale industries financing to the commercial banks and to identify the cause of variability of small scale industrial financing by the commercial bank. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from first bank. Hypothesis was tested using Chi-Square statistical tool (SPSS).

Chapter one

Introduction

1.1Background of the study

It is certain that Nigeria is endowed with a lot of natural resources. These resources to mention but a few are skel, crude oil, natural gas, Iron ore, palm oil, ground nut yam, cassava etc. these resources found the major export earning before the era of independence an generate 80% of our then total revenue the precolorual era could be regarded as era of substance economy. Each community then was noted for one particular raft or the other some families were known as either artists or blacksmiths on their craft as their source of livelihood ad they were operating as subsistence level fermi (1984)

As a result of increased population and increased demand for these service, there were efforts to increase specialization an efficiency by these craftsmen it worth knowing that there was little or capital intensive Because of this lack of capital intensive, production possibilities curing the precolonial, the federal government did not free movement towards the upliftment of the

industries. The economy under the precolonial, the federal government. What merely existed was the cowry monetary system. Hence, the luck for efficient and effective monesed economy did not exert a concrete influence on economic activities. To foster the industry, there was the introduction of banking system which facilitated granting for credit facilitates e.g. loan and advance (Nwosu 1984)

In post independence economy, the government made no remarkable impact on small-scale industries establishment. The federal government in order to protect the small-scale industries (SSTS) In the country introduces the structural adjustment programme (SAP), which was design to exhibit reliance. It allows the SSTS to g row without unhealthy competition with the foreign goods, as it discouraged the importation of raw material that can be preceded locally.

The measures introduced to boast the growth small scale industries (SST’S) include the establishment of national economic reconstruction fund (NERFUND) and the small and medium enterprises (SIGE) fund which is

manned by the CBN. Inspite of these effort by the government, the SSE’s are still struggling to liberate themselves from financial arises the small scale industries (SSI’) tends to differ among countries and individual

The central bank of Nigeria (CBN) create guidance to commercial and merchant bank for this purpose therefore, small scale enterprises shall include cottage industries and defined as enterprises who cost excluded cost of lend but including working capital does not exceeds N10, CBN (1994)

1.2       STATEMENT OF THE PROBLEM

It is obvious that much is gained economically and otherwise form the establishment of small-scale industries in any economy, Nigeria as a case point should not be an exception. This present economic situation in the country in such that one need to wonders above the small-scale industries. These are many commercial bank today in Nigeria shall be complete monetary in native for the survival of the economy.

Presently, the small-scale industries are very much dependants on commercial

banks funding for effective growth. The government in recognition of the need to eradicate the funding problem of small-scale industries has stipulated a lot of rules gathered towards adequate funding of the small-scale industries.

The research is interested in finding solutions to the financial inadequacies and other related problems of the small-scale industries with particular references to commercial banks.

1.3              OBJECTIVES OF THE STUDY

1. To examine the participation of commercial banks in financing small scale industries.
2. To examine the term structure of loans and advance of commercial banks to small scale industries
3. To identify the importance for small-scale industries financing to the commercial banks.
4. To identify the cause of variability of small scale industrial financing by the commercial bank.

RESSEARCH HYPOTHESES

The research study formulated the following hypotheses;

H0: there is no importance for small-scale industries financing to the commercial banks.

H1: there is importance for small-scale industries financing to the commercial banks.

H0: there is no cause of variability of small scale industrial financing by the commercial bank

H2: there is cause of variability of small scale industrial financing by the commercial bank

SIGNIFICANCE OF THE STUDY

The managers of various small scale industries need to be aware of the source of their financing problem and loans they can tackle them effectively on the part of policy makers, that is the government agencies responsible for formulating polices and strategies for the development of small scale industries with this study.

1. 6      DEFINITION OF TERMS

The definition of small-scale industries has facilted the industrial and economic growth of the develop nations of the world. Consequently the desired growth in the main sale industries could be regarded as stepping stone for the growth of the economy.

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