COMMUNITY BANKING AS A STRATEGY FOR RURAL DEVELOPMENT IN NIGERIA. A CASE STUDY OF ENUGU STATE
CHAPTER ONE
1.0                                          INTRODUCTION
In recent times much has been said as regards the neglect of the rural area in Nigeria in terms of the development and transformation facilities and services such as electricity. Pipe born water, good roads, hospital etc. as well as the provision of banking facilities, to help improve the standard of life and opportunities open to the rural dwellers.
It has been argued that over years, paper development strategies and policies for the rural areas have not been pursued. This has led to a haphazard, not well defined and problem by – problem policy or rural development in Nigeria. The urban areas have been developed at the expense of the rural areas. Some people have equated development of urban areas to the development or rural areas; hence the pre-occupation was with the modernization of the urban centers. This type of the development effort was based on the notion that once the urban areas were modernized, the effect would, as a matter of cause tricks down to the rural areas. Therefore in pursuit of it, no distinction was made between the development of urban and rural areas.
Given the lopsided nature of Nigeria development effort with its urban bias, many scholars, policy makers and government have contended that there is no way we can simultaneous develop and modernize urban and rural areas and that infact one of the obstacles to developments is the existence of undeveloped rural economy.
Consequently, Mobogunji (1980) asserts that after many years of inadequate emphasis, during which pride of place was given to industrializations, it is now becoming generally recognized that rural development represents perhaps the only logical way of stimulating overall development.
This has led to the pursuit of different policies and strategies for the transformation and development of the rural areas. One of such policies is the rural Banking Scheme embarked upon in July 1977. The banking industry especial the commercial banking sub-sector was given this challenge of extending banking services to the rural areas in particular and the Nigeria economy in general. The banking sector has been visualized as having the potentials for promoting economic development of any nation.
Therefore Agu (1986) has pointed out that the mobilization of financial resources is the first step to resource mobilization for development purpose. But the mobilization of financial resources requires an institutional arrangement which encourage and mobilizes saving into productive investment. In this way, the establishment of bank branches in the rural areas and the manner in which they conduct their business activities and perform their development role are particularly important since according to Lipsay (1983) if they do not function monthly, the link between private saving and investment may be broken and the problem of finding fund for investment greatly intensified.
Unfortunately, the above warning by Lipsay was not headed to by commercial banks in Nigeria. As such, inspite of the efforts made by the various government in the rural areas, the people could not fit into the conventional banking system. In order to secure even the modes of loans, they were required to fill several forms, obey certain rules and provide some form or guarantee or collateral. All in, rural people generally were made to feel lost in the modern environment of banking in the country. As a result developments at the grassroots level has been stalled. This was the rational for government continued search for a solution to monitize the rural economy.
The only institutions that can be used as the magic wand are those financial houses, which are completely rural based, and not outposts of profit maximizing financial institutions, those institutions, which understand the rural people, are very willing to assist in solving their problems without necessarily attaching a lot of importance to profit maximization.
In view of the above, the Federal Government introduced community banking as a strategy to facilitate rural development, as there is a general belief that commercial banks are not fared well in the realization of government objectives as rural development.
Community Banks was conceptualized as a solution to the problem posed by the dearth of credit at a period when the directorate of Food, Road and Rural Infrastructure (DFRRI) was making some attempts at rural regeneration. The question then was, how could the credit need be resolved at the rural level when formal conventional leading institution for reasons of procedure and cost could not effectively manage the situation? Given the usual attitude of Nigerians to government institutions and property, it was through their credit institution based on private initiatives and adopted to the rural culture, institutions and security stood a better chance of success. The community-banking scheme was thus born in the cradle of traditional peer pressure sanction and community ownership.
At present, community-banking institutions is the only entrenched in the wheel of development to monetise the rural and sub-urban economy vis-visa rural development?
1.1                                      STATEMENT OF THE PROBLEM
The state of the Nigerian rural and sub-urban areas has in recent years been a source of concern and anxiety to both the government and many interest groups. Although the different interest groups express their opinions in different ways, they share common feeling that the rural and sub-urban area of the country has been marginalized and thus perform below prudential expectations. Manufor (1996) explained that the neglect of the past created serious rural-urban economic differentials, which naturally gave rise to rural-urban migration. The fall in economic opportunities and the decline in the national economy have today created a situation whereby the rural disadvantaged have ended up as the urban-disadvantaged.
Concomitantly, Nigeria as a developing country, desire very much, meaningful and rapid development of the rural through the establishment and mobilization of rural funds. It would be noted that one of the major dynamic economic and social progresses of any nation development is crucial to the economic, political and social growth of Nigeria.
According to Babangida (1990), the shift of emphasis to grassroots development is a matter of necessity at the present stage of our development. It is well know that at least 75 percent of the country’s resources endowment abounds in the rural areas.
According to Adekanya (1990), these problems, having informed the establishment of community banks should serve as a useful guide for the clearer conceptualization of the nature, the structure and functions of the community banks in order to guarantee more effective and efficient services to the local people.
It is on the basis of these accepted facts that these studies will stir to evaluate the rolls of community banks. Again, it behaves this study to access to what extent community banks have helped in inculcating banking habits among rural dwellers.
1.2                                      PURPOSE OF THE STUDY
Any policy made with foresight has apprehensive objective that it tends to pursue. It is the purpose of this study therefore to:
1.      Accretion the objectives and functions of community banks.
2.      Determine how much of disciplined banking habit they have uncalculated among the masses of low-income workers especially those of the rural area.
3.      The study will also look at the specific roles community banks play in the development of the rural communities in which they are located.
4.      It will also determine if customers are satisfied with the services they received from community banks presently.
5.      It also behaves this study to find out the problems and prospects of community banks.
1.3                                      SIGNIFICANCE OF THE STUDY
This study will help in apprising the roles of community banks in Nigeria rural development taking into cognizance the expected roles and functions that led to their establishment. The study will enable us to know how community banks have helped in inculcating banking habits among rural populace.
Information obtained from this study will service as a very useful guide to community leaders seeking to set up community banks in their area.
Community banking is still a relatively new system in Nigeria; very few literatures exist on this very importance area. Hence, this study will add to the existing stock of information available on this subject.
Finally, it hoped that the recommendation and suggestions would help both Community Bank Staff, Community Development Association and owners of the National Broad of Community Bank is that they realize the laudable objectives for which they were established.
1.4                                      RESEARCH HYPOTHESIS
Null Hypothesis         Ho:          Community banking has resulted   in the modification to capital    structure for rural  development in Nigeria.
Alternate Hypothesis Hi:  Community banking has not   resulted in the modification of capital structure for rural development in Nigeria.
Null Hypothesis         Ho:        Community Banking has   contributed to the   economic/social development of rural  areas  in Nigeria.
Alternate Hypothesis Hi: Community Bank has not  contributed to the  economic/social development  of rural areas  in Nigeria.
1.5                                      SCOPE OF THE STUDY
The scope of this research study will be limited to ten community banks in Enugu State. Most community banks in Nigeria have the same method of operations; it is believed that the needs of the researcher would still be met from the study of the samples.
Perhaps, one should hasten to observe that a research of this nature should have covered very many community banks throughout Enugu State  to be very conclusive but owing to the above constraints. This research covers only the community which are:
Ogigo Community Bank
Nsukka Township Community Bank
Ehalumoma Community Bank
Ogui Urban Community Bank
Abakpa Community Bank
Aku – Diewa Community Bank
Orie orba Community Bank
Umuozzi Community Bank
Emene Community Bank
United Uwani Community Bank
1.6                                      DEFINITION OF THE TERMS:
COMMUNITY BANKING
            This is the only institution that can be used as the magic wand and also financial houses, which are computably rural, based. Their aims are not only on profits maximizing.
            Community bank understands the problems without necessary and are also willing to assist in solving their problems without necessary attaching a lot or importance to profit maximization.
A STRATEGY FOR RURAL DEVELOPMENT IN NIGERIA:
            Development is a process associated with a continuous improvement in the capacity of the people and their society to control and manipulate their physical environment as well as themselves for their own benefit and those of other humanity. Development is a phenomenon in which the individual and society interact with their own betterment and that of humanity.
            Rural development is a process by which the people in a small community first through discussion define their goals and objectives, the plan and act together to satisfy them. Rural development is a broad based re-organization and mobilization of the rural mass for this daily task of their lives and with changes.