PARTICIPATION OF BANKS IN THE INDUSTRIAL DEVELOPMENT OF NIGERIA
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PARTICIPATION OF BANKS IN THE INDUSTRIAL DEVELOPMENT OF NIGERIA
INTRODUCTION TO CHAPTER ONE OF BANKS’ PARTICIPATION IN NIGERIA’S INDUSTRIAL DEVELOPMENT
1.1 BACKGROUND OF THE STUDY
A country’s wealth development and advancement is determined by its level of industrialization; a country becomes famous among other countries throughout the world when it has achieved a notable level of industrialisation.
In light of the foregoing, we have decided to embark on a study project titled “Banks’ Participation in Nigeria’s Industrial Development.” This is an endeavour and endeavour to compel every Nigerian to ask himself certain silent questions such as.
1.2 STATEMENT OF THE PROBLEM
How far has our country come in terms of industrial development?
What are the prerequisites for our country’s industrial development?
Why have certain financial institutions not completely participated in the exercise?
If we are able to answer these questions, identify the problems I faced during the process, and provide answers to these problems both collectively and individually, there is optimism that we will be able to do so within a short period of time. Our country, Nigeria, would be able to develop ten times faster than in the past.
Nigeria, as a developing country, is distinguished by a large proportion of subsistence products and a restricted use of technology. As a result, manufacturing sectors are relatively low, whereas agriculture-based businesses are dominant.
Industrialization should apply to all areas of an economy, suggesting the use of science and technology to raise workers; in other words, all sectors of the economy (mines, agriculture, manufacturing, industries, and commercial services) should develop.
1.3 OBJECTIVE OF THE STUDY
Industrialization refers to the growth of industries through the application of science and technology in order to offer employment for the rising population and raise the standard of living by raising per capita net income and improving payment balance. Industrialization aims to reduce environmental effect while increasing export.
For our country to achieve any level of industrialisation, it must overcome a number of obstacles and problems caused by a series of military incursions and civil wars. It should be remembered that there is no limit to how far a country can progress if and only if its reserves are fully utilised.
The existing level of wealth and material welt determines whether or not our country is developed. Any country’s development is measured by its per capita income. To calculate capital income, divide net national income by the whole population.
Nigeria has a high pace of population growth, but there is still area accessible for agricultural expansion. Its per capita income is due to prolonged underutilization of resources rather than significant utilisation. Although Nigeria is increasingly investing in industrial projects, the country’s industrial development is still in its early stages.
Nigeria is still developing, both in terms of income and capital, and its resources have not yet been fully utilised. It is thus most patient to remark at this point that in order for a nation’s resources to be effectively utilised, the assistance of science and technology must be sought.
To be successful in any endeavour in life, three things are required: time, interest, and money. Behind every successful firm is a strong interest on the part of the investor, which is essential for carrying out any worthwhile initiative. For the sake of our article, we will examine the banks’ values in assisting industrial development.
1.4 THE SIGNIFICANCE OF THE STUDY
To begin, we need understand that there are several sorts and classes of banks formed to promote specific sectors of the economy, such as commercial banks, merchant banks, and others.
Nigerians engage in subsistence economic activities such as agriculture, poultry weaving, mining, and so on. These are primarily small and medium-sized businesses, and the central bank of Nigeria (CBN) provides credit rules on how to lend to industrialists; however, these criteria are not usually followed by these banks for a variety of reasons.
Modern business and government development are serious efforts to encourage industrialization in the country. It only began roughly three decades ago. The 1972 indegenization decree was required to direct financial institutions, via the Central Bank of Nigeria credit guidelines,
to lend a set percentage of their total loans and advances to indigenous borrowers, as well as to borrowers in small and medium-sized businesses. Banks cite the following reasons for insufficient financing to small and medium-sized businesses:
1. Their risk-averse mentality constrains their lending policies.
2. Many small businesses have ill-conceived projects with estimates that are frequently exorbitantly priced. Other reasons include managerial deficiencies, insufficient manpower, and a lack of communication in the detective infrastructure. These are flaws on both the side of the banks and the side of the businessmen.
The issue arises when there are requirements for small scale industrial to complete before being granted loans, and they are not met.
(a) The majority of small-business owners lack the essential financial knowledge to put up bankable proposals.
(a) They do not prepare cash flow projections, nor do they understand how to deal with banks or interpret predicted balance sheets, etc.
There is also the issue of a communication gap between small businesses and banks. Based on his expertise, the proprietor may have a clear concept of their wants but may not know how to express it on writing.
Another issue is that the borrower promises to comply with the bank’s terms, but once the loan is approved, the investor diverts it to another endeavour, putting the loan repayment in jeopardy. One of the identified issues
Credit facilities, particularly those obtained from commercial banks for industrialists, are short-term in nature and have high interest rates, allowing the individual enough time to recoup the funds invested,
for example, invectives on farm implements such as tractors and harvesters. Recouping the money invested on these implements will take some time because they are capital investments that require a long period of repayment.
To address these issues and encourage banks to fully participate in industrial development, every Nigerian should do the following.
(a) To be truthful in determining the worth of their project and the appropriate use of the funds collected.
(a) Banks should make medium and long-term loans to industrialists with relatively low interest rates. They should also launch and fund industrial projects on their own.
1.5 LIMITATIONS ON SCOPE AND DELIVERY
This project aims to examine how banks participate and the role they play in Nigeria’s industrial growth because money is one of the elements in the implementation of industrial projects. It also aims to analyse industrialization and provide industrialization assistance. 2.3 INDUSTRIAL DEVELOPMENT STAGE IN NIGERIA.
It also investigates why some banks do not fully participate in the exercise the sectors)of the economy that banks support the most.
Finally, it suggests solutions and recommendations for problems.
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