ABSTRACT
An important feature of the Nigerian economy is
imbalance in the spatial distribution of natural resources, basic
infrastructure and economic institution. In order to foster development, some
less development attempts to have started making conscious attempts to
encourage deferent part of their territories to tap adequate resources which
nature provide. Throughout it history, shall scale enterprise has been one of
the major wheels of economic development in almost all economic of the world
from the simple money changing transaction of the Jews in Italy to the middle
age goldsmith in England who were regarded as real revolution and up to the
present day, complex arrangements of financing of small and medium scale
enterprise and the importance of it in any economy cannot be overemphasized.
Its history has been the story of development and problems, occasionally; it
has developed from its early role of accepting or financing of small and medium
scale business, which is better handled by banks and rural areas. Small and
medium scale business that takes care of all the financial needs of its
customers. It is the theme of this project to analyze the policy, formulation
and execution strategies of the small and medium scale business especially in
the rural areas with the view to evaluate the problems and recommendation of
the problems. However, prospects are therefore small and medium scale
enterprise in Nigeria
so as to know what the future hold for them.
TABLE
OF CONTENT
Cover page - - - - - - - - - i
Title page- - - - - - - - - - - ii
Declaration - - - - - - - - - iii
Approval pages - - - - - - - - - iv
Dedication - - - - - - - - - v
Acknowledgement- - - - - - - - - vi
Abstraction- - - - - - - - - - vii
Table of content - - - - - - - -
viii
CHAPTER
ONE
1.1 Introduction
- - - - - - - - 1
1.2 Background
of the study - - - - - - 3
1.3 Statement
of problem - - - - - - 5
1.4 Objective
of the study - - - - - - 9
1.5 Research
hypothesis - - - - - - - 10
1.6 Scope
and limitations of the studies - - - - 11
1.7 Definition
of term - - - - - - - 12
CHAPTER
TWO : Literature review
2.1 Introduction - - - - - - - - 13
2.2 Institution
established for the finance of scale - - 13
2.3 What institute
a small scale industry - - - 16
2.4 Small
scale industry and problems of financing - - 18
2.5 Factors
responsible for business failure - - - 27
2.6 Interest
charges - - - - - - - 28
2.7 Out
come of finance - - - - - - - 29
CHAPTER
THREE
3.0 Summary
- - - - - - - - - 31
3.1 Recommendation- - - - - - - - 32
3.2 Conclusion - - - - - - - - 33
References - - - - - - - - - 34
CHAPTER ONE
1.1
INTRODUCTION
Industrialization
in Nigeria can be traced as far back as the mid sixty (mid 60’s) although
co-ordination and meaningful programmers in this direction become manifested
with the released of the second national
development plans, subsequent development plan has long focused largely on industrial growth and
development plan. These accounted for
introduction of the small scale industries credit scheme (s-s-1.cs) all over
the federation in 1996 each state from the defined Benue-Plateau states, came
the birth of the present Plateau state government which sponsor small-scale industries
credit scheme.
The
federal and state government realized the important of small-scale industries
in the growth and development of stable and dynamic economy accounted for their
government assistance in both cash and lend. They made funds and expertise
available to small scale medium industries to enable them under take project that could contribute to
the economic development of the country.
In
general term, the small-scale industries
credit scheme was established to provide
loan in a cash and kind to the establishment and modernization of
small-scale industries that offer
promising being of economically viable by producing, needed commodities, making
use of local raw materials and expanding
employment opportunities, small- scale
industries being the “back-bone”
of any economy principal source of innovation and new ideals or method, they
make up of economic units in every
economy, their development and growth is of great significant to overall health
of the natural economy by financing (inform of
loans) these small-scale industries especially those in the rural areas,
it is hoped that growth and
development of small-scale industries which is an important
pre-requisite for the substance of well
balance industries would achieved and there
by ensured the realization of Nigeria’s industrial goals, since the bulk
source of the Nigeria raw materials are from the rural areas.
Historically
small-scale industrial programmes. In developed economy and united state of America (U.SA ) Germany
and Japan developing country
like Nigeria,
generally speaking, small, scale industries served as.
1.2 BACK
GROUND OF THE Study
Union
Bank of Nigeria plc, commercial banking operate in Nigeria in 1894 as the bank
of British West Africa limited (Liver pool) with an authorized share capital of
$100000 (one hundred thousand Dollars), making it the second bank to be
established in Nigeria after first bank.
The
bank recorded remarkable growth over the years with the opening of a branch in Calabar
in 1907 and they take over in 1912 of the bank of Nigeria thus, regarding, it position as second bank of apart from first
bank in the country at that time. The bank was nominated to act as agent in Nigeria to the West Africa currently board (set
up in 1912) to perform, the role of a commercial banking like first bank in Nigeria.
However,
it retained this role until 1959 when the central bank of Nigeria was
established. The central bank of Nigeria was established inline with
the discoloration process of the 1950’s, the bank’s name was changed to bank of
West African Limited in 1957. The standard bank of England
in compliance with the company’s decree of Nigeria limited in 1969. the
federal government of Nigeria purchased 36, 1% of the bank equity while the
Nigeria investors took up 12.9% in line with the indigenization process,
commenced by the Nigerian government in 1972, government share holding had increased
to 44.76% and that of other local investors to 17.24% as a result of the
dilution of union bank of Nigeria plc and its share were listed on the floor of
the Nigeria stock exchange in the same year.
In
compliance with the requirements of sections 31 of the Companies Allied Matters
Act 1990. The name of the bank was further changed to union bank provide its customer
a full range of commercial banking services including current saving and deposit accounts, loans and over-drafts, provision of international
banking services, least export
credits, financial advisory services and soon
with the establishment of merchant bank in 1990, the bank has also be able to
provide its numerous customers a full
range or merchant banking services. The union bank of Nigeria plc provides services
to its customers in different dimensions in the country.
1.3 STATEMENT
OF THE PROBLEM
In
spite of numerous efforts by the government to increase new form of industrial
activities in the national economy and the unique position occupied in the
small and medium industries in the overall national development, very
competition disadvantages with the big industries in Kaduna state and Nigeria
as a whole, one among the major impediments, that hindered the growth of this
sector of the economy, is lack of capital and credit facilities. (Money) is the
sin-quo without which it is impossible to mobiles other factors of production
for small and medium scale credit for the establishment and expansion of the
business for the following reasons.
i.
They are considered generally high credit risk,
commercial bank and other business institution are element to grant loan to the small and medium scale
business and often weak and inefficient enterprise with inadequate accounting
systems and little collateral or security to offer. Thus the requirement t for
long- term capital and equipment financing demanded by the commercial banks are
not met.
ii.
There are inadequate credit institutions in the
country where the small and medium scale industries could go to range the
capital needed for their operations. However, the ignorance of where and
how to obtain the funds needed to start up the business, this is partly
due to low level of educations on the part of most small and medium industrialist in Nigeria
especially those in rural area where funds are not available, lack of
managerial competence constitute another problem. Majority of the entrepreneurs
in this country are usually facing the problem of how to administer their own
business. Another major problem is, inadequate personnel to assist in running
the affairs of the company.
iii.
There is also planning absence, most Nigerian
small and medium enterprise fail because of lack of proper planning for the purpose of achieving a
desired objective of profit maximization where the adequate planning is not
there, inadequate infrastructural facilities such as electricity, good roads,
water supply, schools and hospitals to enhance the establishment of small and medium scale enterprise in rural
areas are lacking this, seriously
affecting the development of small and
medium scale enterprises in Kaduna state and Nigeria as
a whole.
iv.
Finally, there are difficulties in the economic
environment, which constitute sever obstacle on the part of success of small
and medium scale enterprises.
There
are other factor upon the operation of a business other than availability of
capital and managerial ability of the business himself. These include, the problems of security, the proper
equipment in reasonable time and in good working conditions, the human resource, infrastructures,
supplies, adequate market, land etc
various development bank where establishment by the federal government purposely to reduced these obstacles to the best
minimum and encouraged quick industrial growth, in 1977 commercial bank were
directed by the federal government
through the central bank to embarked on rural banking aiming at providing
adequate credit facilities to rural dwellers 1977, small and medium scale
industries credit scheme was established under the ministry of trade and
industries to provide credit facilities to industries particularly those in the
rural areas yet theses various attempts did not yield the results.
1.4 OBJECTIVE
OF THE STUDY.
This
research is interned to investigate the various forms of financing of small and
medium scale industries within particular reference to Kaduna state. It is necessary to have a study that will examine the factors that
inhibit easy access to loan able funds
by small and medium scale
industries in Kaduna state.
In
spite of the present emphasis given to the promotion of small and medium scale
business unemployment has continued to be on the increase. Goods and services
also continued to be in short supply the general standard of the people of kaduna state has declined.
It is therefore, necessary that the problems of small and medium scale business
had been properly looked into; the major problem of small and medium scale
industries is that of finance.
The
significance of this study includes:-
(a) Providing
a useful guide for prospective to have self- employment as a career
(b) Serving
as a loop for further, researchers in the areas of small and medium scale
management.
(c) Lead
to effective decision making by small scale operators.
(d) Provide
and understanding of the importance of banks to organization as vital tools for
economic development of the country. The knowledge about all the above issues
to be raised will create enthusiasms for people in this direction.
1.5 Research
hypothesis
These financing were used in testing the
hypothesis
1. Capital
approved for the small and medium scale industries.
2. The
high rate of interest changed on loans granted in the small and medium scale
industries has been responsible for inabilities of the small and medium scale
industrialist to honor. The installment repayment of their loans.
3. The
low level of education among the rura dwellers has contributed immensely to the
problems of financing small and medium industries in Kaduna state.
Therefore,
the nu-hypothesis of lack of capital is the main cause of small and medium
scale business, failure in Kaduna
state, the alternative hypothesis is rejected. Also in second (2) Sit of
hypothesis, null- hypothesis is accepted, low level of general education is a
strong factors business is rejected.
1.6 Scope and limitation of the studies
1. The first
limitation of the study was the time. Time allowed to carry out this research
work was almost too short to compare with the fact that the researcher has to
compound his ideas.
2. Another
limitation was the released of earlier documents considered to be confidential
which could have been very useful to this study despite the difficulties, it is
my hope that this study.
Despot
the difficulties, it is my hope that this study would help future research,
government official as well as interested person conducting future studies on
this subject.
1.7 Definition of terms.
In
the cause of this study, some operational definition were used which are to be
seen strictly and mainly in the light of this study.
CAPITAL: - This
refers to the total sum invested in the business including all funds invested
both owned and borrowed plus accepted credit.
LOAN BENEFICIARIES: -
these are those entrepreneur that been granted loan to undertake small and
medium scale project.
PROJECT: -
this is the venture which a loan beneficiary is engaging in.
DEVELOPMENT INSTITUTION: - this
refers to bodies of government financing to enhance agricultural development.
INTEREST:-this
refers to the charge on the capital borrowed to the loan beneficiaries.
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