THE ROLE OF COMMERCIAL BANKS IN FINANCIAL SMALL SCALE BUSINESS ENTERPRISES IN NIGERIA ECONOMY
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THE ROLE OF COMMERCIAL BANKS IN FINANCIAL SMALL SCALE BUSINESS ENTERPRISES IN NIGERIA ECONOMY
ABSTRACT
The purpose of this research is to examine the role of commercial banks in financing small-scale business companies in the Nigerian economy. Some obstacles encountered by small-scale firms were identified,
including difficulties in acquiring funds from commercial banks and determining the extent to which commercial banks have also assisted in financing small-scale enterprises. As a result, it also outlined the study’s objectives, importance, and limitations.
In light of this, an extensive literature research of textbooks, journals, and valuable write-ups was conducted. This was done not only to gain a broader grasp of the situation at hand, but also to gain a conceptual comprehension of the subject.
Furthermore, data were sourced in order to analyse the data gathered while the sample and sampling procedure were developed.
The following conclusion was reached: our banks should take a more development-oriented approach to financing small-scale enterprises.
Following that, my recommendations were. Small-scale commercial companies in the Nigerian economy should be supplied with technical and managerial help, rural banking, savings schemes, and insurance schemes.
CHAPTER ONE: THE ROLE OF COMMERCIAL BANKS IN FINANCIAL SMALL SCALE BUSINESS ENTERPRISES IN NIGERIA
1.1 BACKGROUND OF THE STUDY
There has not been a lot of work done on the role of commercial banks in financing small-scale firms in the Nigerian economy, but the few that have been done have provided an in-depth up-to-date analysis of its operation.
In the Nigerian economy, attention has been drawn to the fact that small-scale enterprises have received very little attention, despite the fact that they employ approximately triple the number of people employed in large-scale enterprises while also playing critical roles in our developing economy.
As a result, it is critical to evaluate the issue impeding the growth of small-scale business companies in the Nigerian economy. Since the federal government shifted its policy with a stronger emphasis on small-scale business in achieving self-reliance, there have been several thoughts and comments on the role banks should play in financing and counselling small-scale firms.
Unfortunately, some opinions have tended to watch the bank’s long-term relationship with the small-scale business sector, and some misconceptions have arisen; perhaps it is time to clear some of the misconceptions. In Nigeria, some small-scale business businesses account for more than 70% of all registered companies;
they are seen as critical to the country’s economic development for a variety of reasons. This enterprise creates large-scale employment opportunities, making the concept of equal table distribution of national revenue more plausible.
The comparatively low cost of this in a labour abundant economy like Nigeria, especially in the current economic downturn, they are even more relevant in the mobilisation of capital and human resources that would otherwise be idle, makes them even more relevant.
1.2 STATEMENT OF THE PROBLEM
Despite the fact that the D.B.N. has designed various forms of assistance to promote the development of small-scale enterprises, there are indications that small-scale enterprises are still discriminated against by financial institutions due to the high risk associated with financing them.
They preferred funding. Large scale funding is far more dangerous than small scale financing. Despite the fact that the central bank has mandated that banks invest 10% of their after-tax profits in small businesses, there are complaints that the interest rate charged on the loan is excessive.
Many small-scale investors who want to borrow money from commercial banks are unable or difficult to obtain. It is also important to establish the extent to which commercial banks have assisted in funding small-scale firms.
It will investigate how Nigerian commercial banks support the government in promoting small-scale firms as a component of the economy.
To identify the difficulties encountered by small businesses in acquiring funding from commercial banks.
1.3 OBJECTIVE OF THE STUDY
Nigeria’s import bill and employment are constantly rising, posing a threat to the country. It is
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