ROLE OF COMMERCIAL BANK IN FINANCING SMALL AND MEDIUM SCALE INDUSTRY IN NIGERIA
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ROLE OF COMMERCIAL BANK IN FINANCING SMALL AND MEDIUM SCALE INDUSTRY IN NIGERIA
ABSTRACT
The primary goal of the research is to determine the role of commercial banks in financing small and medium-sized businesses in Nigeria through Enterprises Bank plc, Enugu. The primary data was collected using questionnaires and research questions, while secondary data was gathered using materials from various published publications, textbooks, journals, and newspapers.
The analysis method involves the use of tables and percentages. The study’s main finding is that Enterprise Bank Plc aided in the financing of small and medium-sized businesses over the time period under consideration. Based on the findings, the central bank of Nigeria and the government can do more than they are now doing to reduce risk in small and medium-sized industry financing.
The study indicated that in order to achieve the ultimate goal of leveraging small scale companies as growth catalysts, commercial banks’ roles should be mutually beneficial.
CHAPTER ONE:
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Small and medium-sized industries (SMIs) are now seen as critical for economic growth and development in Nigeria. Commercial banks and other financial institutions play or perform critical roles in ensuring that the nation’s economic growth is sustained because they are perceived to be more active, inventive, and have higher labour absorptive capacities.
However, in Nigeria (which is classified as a developing country), the central government enacted or promulgated a decree known as the “enterprises promotion decree” when there was a need for small and medium-sized industries or enterprises to be owned and managed by Nigerians.
Thank God for this original idea, for many developing countries have not adopted it because they believe that industrialisation is slowing or will slow down. It should be highlighted that without the development of small and medium-sized enterprises (SMIs), the nation’s drive for industrialization will undoubtedly stay dormant or waning.
Furthermore, many financial institutions have made significant investments in the development of small and medium-sized companies in Nigeria. The Nigerian government established several organisations to promote entrepreneurship, including the Nigerian Bank for Commerce and Industry (NDIC),
the Nigerian Agricultural and Development Bank (NDB) (today known as the bank of agriculture or the bank of industry), and the Peoples Bank of Nigeria (PBN). Friends, family, relations, or the general public would not be able to supply the much needed finances in sourcing funds to flaunt the SMIS, and as a result, the commercial bank arrived to salvage the problem and have been very active.
For example, commercial banks are considered as the lending market’s nerve centre and make the biggest number of loans. Because commercial banks are very conservative in lending, they look at many things other than the entrepreneur’s ability to provide the necessary collateral.
They are primarily interested in the feasibility report, the entrepreneur’s experience, his profit potentials, and his personal credit records.
The insurance company, which is one of Nigeria’s fastest expanding industries, assists in mitigating financial losses for those interested entrepreneurs who need insurance coverage for their businesses.
In closing, it should be mentioned that the functions of banks in financing, promoting, and expanding small and medium-sized industries (SMIs) cannot be overlooked due to the roles they play and the desire to promote these businesses in Nigeria.
1.2 STATEMENT OF PROBLEMS
There is no doubt that many commercial banks are heavily involved in the development and financing of SME, but recent discoveries indicate that some of these SME have not provided the much-needed cash or resources to mitigate or alleviate these numerous concerns.
Is it because of a lack of market information and poor market access, or because of a lack of finance, access to raw materials, and managerial skill constraints? In any case, the answers to the concerns or incidents presented above will be effectively addressed or responded in the following chapter of this research work.
1.3 OBJECTIVES OF THE STUDY
The purpose of this research is to determine the extent to which banks have been successful in fulfilling the financial needs of small and medium-sized businesses (SMIs).
These precise goals or objectives include.
1. Understand what small and medium-sized businesses are all about.
2. To define specific government duties in the development of small and medium-sized companies.
3. To identify some of the financial institutions in Nigeria that are involved in the development of small and medium-sized companies.
4. To identify some of the assistance(s) offered by commercial banks to small and medium-sized businesses.
5. Identify some government initiatives or programmes that promote small and medium-sized businesses.
6. To identify and note some of the government roles in dealing with small and medium-sized businesses.
7. Determine the impact of government policies on small and medium-sized businesses.
8. Identifying issues in small and medium-sized businesses.
Solutions or proposals on how to address the difficulties of small and medium size industries in Nigeria were outlined or presented in depth based on the study questions that were established.
1.4 SIGNIFICANCE OF THE STUDY
This research will undoubtedly be of tremendous assistance and significance to the teaming populace and beneficiaries. This work will benefit both private and public business owners greatly. Individuals who are already in the small and medium scale business as well as those who are willing or want to move into the small and medium scale business can profit equally from this research work. Any financial institution that comes across this work will be pleased.
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