THE IMPACT OF COMMERCIAL BANK ON SMALL BUSINESS FINANCING IN KADUNA SOUTH LOCAL GOVERNMENT, KADUNA STATE

CHAPTER ONE

INTRODUCTION

1.0             BACKGROUND TO THE STUDY

In developing countries like Nigeria small-scale businesses serves as the foundation upon which industrial development is based. This is because small – scale enterprises promote stable industrial base and ensure a balanced distribution of industrial development (NwankoG.O 1991).

However, a close look at the performance of small – scale businesses in Nigeria portrays a situation of neglect, apathy and general underdevelopment. This situation had seriously hampered the rapid growth of this important sub sector of the economy, pathetic situation could be attributed to a number of problems hindering the development of small – scale businesses such as managerial problems, marketing problems, lack of high caliber of employees and lack of quantitative data among others. The above-mentioned factors have hindered the development of small-scale business. The acute shortage of required capital to meet the business operational requirements has cultivated has cultivated the fluctuating performance and its declining role in the development of nations economy. The difficulties of small-scale businesses in obtaining required credit facilities and varieties of credit issues has further complication the financial problem facing these industries.

The problem of obtaining the right financial facilities from the formal money markets at the right quality and good satisfying terms is also a serious factor.

These enterprises have a very important impact on the life of everybody in the society. Small independence businesses are every where and in every line of work, they can also be seen in every community. This business is as old as man so virtually everything is does in life involve an element of business.

The role of Small scale enterprises in our economic history however has been one of distribution and contribution. Although its relative important had decline with the growth of the big business Small scale business is still making major contribution to the country economic. Business Nigeria today is made up of both large and small business.

Today Small scale enterprises have to enjoy more prestige than ever before because of it vital contribution to he nation economy. So vital is small business put few it any apart of our economy  could work without its steady stream of production and services in every major industry there are successful Small scale enterprises operate manufacturing plants, retail stores, whole sales, drugs computers, construction firms and hundreds of other types of business.

Government agencies are charged with the responsibilities among others to carry out duties and deliver utilities as may be regulated from time to time on behalf of the government for the purpose of uplifting the standard of living Government agencies such as Commercial Bank (COMMERCIAL BANK) is charged with responsibilities like provision of medium and long term finances by way of equity finding loan and lease financing, guarantees, investment in corporate Bonds business development service, co-financing, working capital finance and promotion of Small scale enterprises and industrial project, co-sponsoring financial institutions and Small scale enterprises.

This book of Industry was formerly originated from Nigeria Industrial development bank limited was established in 1964 following the reconstitution of the Investment Company of Nigeria Limited (ICON)  NIDB  was set up primarily to accelerate Nigerian industrialization

Uzuaga W. (1981), the bank was to conceive shortly after Nigerian attains independence in 1964. The idea was to set up development financial institution to service as a dedicated window for channeling fund from within and outside the country to the young nation states Industrial sector.

The bank (NIOB) was recently merged with Nigeria bank for commerce and industry (NBCI) and national Economic Reconstruction Fund (NERFUND) in the present Obasanjo administration is renamed as Bank of Industries.

1.2     STATEMENT OF PROBLEM

The most obvious problems of Commercial Banks is how to provide efficient financial resources technical assistance security on loan given out to customer (SSE) evaluation of project that are financed which may take more time than stated at the beginning. Also the project time table, which depends on nature and complexity of the project, it may take one to two years some times longer from when project was identified to when it was commissioned

On the part of Small scale enterprises (SSE) how effective are they utilizing the services renders to them by the Commercial banks. Also are they able to cope with the policies adopted by the Commercial banks  in obtaining loan and other services rendered such as interest rate on capital collateral facilities and the made of government.

1.3     OBJECTIVE OF THE STUDY

The aim and objective of the study is:

i.                   To analyse various the impact of Commercial banks in financing Small business

ii.                 To Examine government role in financing small business in Kaduna South local government

iii.              To analyse the various way by which small business has contributed to the growth of Nigeria economy

iv.              To investigate the problem faced by small business in obtaining loan from commercial bank

1.4               RESEARCH QUESTION

1.     What are the impacts of Commercial banks in financing Small business?

2.     What are roles of government in financing small business in Kaduna South local government?

3.     What are the various way by which small business has contributed to the growth of Nigeria economy?

4.     What are the problems faced by small business in obtaining loan from commercial bank?

1.5                 SIGNIFICANCE OF THE STUDY

The significance of the study is to serve as reference material to other students who may write or make research on similar topic and serve as recommendation to solve problems pertaining to the financing of Small business enterprises. It also to serves as recommendation to Commercial Banks in discharging its functions the customer as well as the mode of rendering services to the customers (SSE).

This research also serve as a requisite for the award of National Diploma in Banking and Finance Kaduna polytechnic. And it also go to be beneficial to Kaduna South Local Government staff who will use the recommended made at the end of this research work.

1.6               SCOPE  AND LIMITATION OF THE STUDY

This study will cover the area of activities and role played by the Commercial banks in Financing Small business enterprises in Kaduna South Local Government Area

It is not an easy assignment for a student to conduct a research work without encountering two or more problems one of such problems faced by the researcher was lack of adequate information, which the research could obtain for necessary research work as some of the organizations officials formed to be very busy and require for some signatory from the department before giving out information to be used. Moreso finance pose as a great challenge in carrying out this research work. On the other hand the academic workload couple with this research was very tedious considering the date fix for the completion and submission of this work