ABSTRACT: This study titled financing small-scale industries in Nigeria is aimed all determining the way by which development bank help to finance small-scale industries and solve some of their problems which include inability to procure necessary equipment. Lack of technical and managerial expertise, inadequate raw materials etc. Consequently, we were able to find out the banks that contribute immensely to the financing of small-scale industries in Nigeria. In conclusion, the recommendations arrived at will encourage commercial banks to finance the projects a small scale industry through the disbursement of funds.
TABLE OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF STUDY
1.2 STATEMENT OF PROBLEM
1.3 PURPOSE OF THE STUDY
1.4 DEFINITION OF THE TERM
CHAPTER TWO
2.1 NATURE AND CHARACTERISTIC OF NIGERIA SMALL-SCALE ENTERPRISES
2.2 THE ROLE OF SMALL-SCALE INDUSTRIES
2.3 ADVANTAGES OF SMALL-SCALE INDUSTRIES IN NIGERIA
2.4 MAJOR DISADVANTAGES OF SMALL-SCALE ENTERPRISES
2.5 REVIEW OF MAIN SOURCES OF FINANCING AND PROMOTING SSES
2.6 THE ROLE OF GOVERNEMTN IN FINANCING AND PROMOTING SSES
2.7 OPTION FOR IMPROVED ACCESS TO CREDIT FOR SSES
CHAPTER THREE
3.1 SUMMARY
3.2 CONCLUSION
3.3 RECOMMENDATION
REFERENCE
CHAPTER ONE
INTRODUCTION
Industrial development involves development of a technical
arrangement that moves an economy from the traditional method of production to a more complex system of mass manufacturing of variety of goods of services involving technology and management techniques.
Industrialization tends to propel growth and quicken the achievement of structural transformation and diversification of economy. It enable a country to utilize it’s factor endowments and depends less on external sector for its growth and sustenance. They provide employment for a substantial proportion of the industrial establishment. Therefore, due to the above mentioned role played by industrial sector, that is small-scale industries in the economy it requires some financial support from government for the smooth running of the industries.
But small-scale industry is a sub-sector of industrial development that is of great importance as mentioned above, but it has not received the type of attention it deserves that is why the government and the feral ministry of industries lay down the parameter under which a industrialist may take advantage of the various incentive created by the government for ht growth of the small-scale industries. Such incentives are in the form of loan, provision of machinery and equipment, and raw materials.
The process of taking advantage of the various incentive scheme are so cumbersome and its subject to bureaucratic radicalism and only few small scale industries are able to utilize them.
The importance of small-scale industries to the survival of a nation can no longer be saved.
They have moved from the substance level to pre-indigenization period of importance in the country’s industrial process. Therefore the authorities should not relent on the effort of making small scale industries to be inactive due to lack of fund.
The Nigerian Bank was established to provide among other financial services to the indigenous business community, especially small scale industries. Following the recommendation of the financial system review committee of 1976, government made bank the apex financial institution for small scale businesses. The bank obtains fund from the federal government to assist small business and the loans granted are relating on soft terms.
During the 1970’s and 1980, bank promoted of soft loans and advisory services of operational and liquidity problem attributed to reduced government funding and poor loans repayment by medium scale entrepreneur. Bank loans and advances fluctuated from N87.7million, N223.million, N305.3million, N984.0million and 1994 respectively.
Similarly, its deposit liabilities fluctuated from N252.0million in 1990 to N423.3million in 1991, N318.7million in 1992 and N32.0million in both 1993 ad 1994.
Following this, the government utilized the opportunity to equip the bank with power to act as a catalyst in development by operating like an all purpose universal bank to engage in all types of investment banking and under writing operation.
The study titled “Financing small-scale industries” attempts
to determine the ways by which the development banks contributes to the financing of the problems which they encounter are as follows:
1. Most small-scale industries lack finance as start up or working capital for their business but could not mobilize such fund easily from commercial banks.
2. Procurement of machinery and equipment post problems on small-scale industries and requires development bank to assist them to solve such problems
3. Small-scale industries lacked technical and managerial expertise as a result had not been functioning optimally.
4. Most small-scale industries because of their small nature are unable to compete with the big ones for the necessary raw materials for their production and are unable to produce massively to take advantage of economic of scale.
The purpose of the study are as follows:
1. To determine how the development banks have helped to provide finance to small-scale industries as start up or working capital for their business.
2. To determine how Nigerian banks help to procure machines and equipment for small-scale industries either through leasing or hire purchase to encourage massive production.
3. To determine how development bank has helped to provide technical and managerial expertise including undertaking of feasibility on consultancy arrangement.
4. To find our how the development banks will be able to provide adequate raw material for the small-scale industries to encourage massive production so that they will be able to compete with the large scale industries.
The definition of terms includes the following:
Credit:
It means ability to command capital of another in retain for a promise to repay at a specific time in the future.
Financing
Financing simply implies obtaining means of payment needed by an organization for the short, medium and long terms.
Loans
This is the transfer of finance from one economic entry to another.
Small-scale
Small-scale industry is a manufacturing of service company whose capital investment does not exceed N250,000 in machinery and equipment only.
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