ABSTRACT
Only recently has the government begun to acknowledge openly that the importance of small and medium scale enterprises in the national economy cannot be under estimated. This sis responsible for the giving increasing policy attention in recent years to those categories of enterprises particularly in the third world countries.
In the course of writing this project, emphasis was placed on the financial institution, with the case study of Nigeria Bank for commerce and industry.
The project has been divided into five (5) chapters for understanding purpose. 1 took time to discuss the meaning, nature and problems faced by small and medium scale enterprises which range from restricted access to institutional credit, poor management, high rate of business failure, low productivity, under capitalization and shortage of skill. This project gives more light into the background and evolution of small and medium scale enterprises in Nigeria and the various
institutions and government that are responsible for the financing of small and medium scale enterprises in Nigeria were examined including their mode of operations. Such institutions include small scale including credit scheme, Nigeria Bank fort commerce and industry small and medium scale enterprises loan, industrial development centers, National Economy Reconstruction Fund, Nigerian Export and Import bank and People Community banks. It was discovered that through these institution, small and medium scale enterprises play some roles like creation employment mobilization and utilization of domestic savings mitigate rural-urban migration.
TABLE OF CONTENT
TILE PAGE i
DEDICATION ii
DECLARATION iii
CERTIFICATION iv
ACKNOWLEDGEMENT v
ABSTRACT vi
TABLE OF CONTENT vii-viii
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 PURPOSE OF THE STUDY
1.3 STATEMENT OF THE STUDY
1.4 DELIMITATION OF THE STUDY
1.5 LIMITATION OF THE STUDY
1.6 DEFINITIONS OF TERMS
CHAPTER TWO
2.0 REVIEW OF RELATED LITERATURE
2.1 BACKGROUND AND EVALUATION OF SMALL AND
MEDIUM SCALE INDUSTRIES IN NIGERIA
- INSTITUTIONS AND GOVERNMENT FINANCING OF
SMALL AND MEDIUM SCALE INDUSTRIES TN NIGERIA
- GOVERNMENT POLICES ON SMALL AND MEDIUM SMALL
INDUSTRIES IN NIGERIA - THE ROLES OF NIGERIA BANK FOR COMMERCE AND
INDUSTRY IN FINANCING OF SMALL ANT) MEDIUM SCALE
INDUSTRIES IN NIGERIA - PROBLEMS OF SMALL AND MEDIUM SCALE INDUSTRIES
IN NIGERIA
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 STEPS IN THE CONDUCT OF THE STUDY
3.2 DATA COLLECTION METHOD
3.3 METHOD OF DATA ANALYSIS
CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS
4.1 DATA PRESENTATION
4.2 DATA ANALYSIS
4.3 RESULT OF FINDINGS
4.4 TESTING OF THE HYPOTHESIS
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY
5.2 CONCLUSION
5.3 RECOMMENDATION
REFERENCE/BIBLIOGRAPHY
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The activities of small and medium scale industries (SMSI) in fostering economic forefront of development strategies. In the light of this, government and financial institutions have been playing appreciative roles in promoting the survival and growth of SMSI in recognition of their flexible and adaptive nature as well as their regenerative power in prompting economic development government in believing that a dynamic and growing small and medium manufacturing sub-sector can contribute significantly to the implementation of a wide range development objectives has thus emaciated various veritable engine of growth and development.
The basic objectives of government policies as contained in the monetary and fiscal policy measures are to improve the financing and other supportive services to SMSI by expanding and improving their access to credit and infrastructural facilities, reducing their production cost, boosting their profitability, enhancing their costs, survival and growth capacities as well as expanding their contributions to non-oil exports by making their products competitive in the export markets.
All these are done through the new lending schemes and credit institutions
This project therefore will go a long way in opening the eyes of individuals in the society towards making them productive and self reliance.
At the end of this •project, everyone will be motivated top make Nigeria a land of bright and full employment opportunities for all citizens.
1.2 PURPOSE OF THE STUDY
The purpose of this project (study) is to critically examine the small and medium scale industry to know about various sources of financing that open, to them to analyze the part played by financial institution, with special references to the Nigeria bank for commerce and industry (NBCI) so that at the end of the project, every citizens of this nation will be enlightened that they could establish their own company not until when the get a very huge amount of money to float a company.
This will indirectly stop or reduce the number of people searching for while collar job. This will automatically bring to the lowest level the unemployment in the country.
1.3 STATEMENT OF THE PROBLEM
Some of the major problem of small and medium scale industries in Nigeria comes from their nature and characteristics. These problems have some limited access to capital and other service for which government policies are specifically meant to solve. They are summarized as follow
- RESTRICTED ACCESS TO INSTITUTIONAL CREDIT
Many small and medium scale industries in Nigeria are unable to meet the lending requirement of the commercial and merchant bank wiling to improper record keeping by the SMSI and or inadequable ita1 base.
These banks regard most SMSI as high risk ventures and therefore it away from them.
- POOR MANAGEMENT
This has been the major factors that have crippled many small and medium scale industries in Nigeria. This usually results from poor control systems, improper keeping of financial records, lack of technical and economic counseling and imperfect market.
- HIGH RATE OF BUSINESS FAILURE
Inadequate working capital which restricts the productive capacities of some case small and medium scale industries SMSI. Leads in some case to their failure.
Financial institution especially the Nigeria bank for commerce and industry (NBCI). Consider them as high risk venture which are very u1nerable to sudden policy changes.
- LOW PRODUCTION
Productivity is generally low in small units, since produced influence costs and profits. Because of low productivity, they find it difficult to survive with stiff competition.
- UNDER CAPITALIZATION
May small and medium scale industries (SMSI) are undercapitalized; they suffer from inadequate working capital and thus, have difficulties in finding their business operation especially the purchase of raw materials. At times, payments are help up by customer’s aid that constitutes the cause of a large part of small industries financial difficulties. It places not only a heavy credit burden on SMSI but also creates uncertainty to their working capital restricts their productive activities.
E. AVERSIONS TO DISCLOSURE OF INFORMATION
Many small and medium scale industries (SMSI) have a great aversion to disclosing the details of their operation such as, supply sources, production processes, production costs, profit merging and difficulties encountered,
The disclosure about their operations is regarded by some SMSI as incursion on privacy, while some are reluctant to let anyone advise them on how to run their operations often restrict their access to credit.
Another problem is the activities of multinationals who have lot of money to spend to finance large scale industries and making it impossible for small scale industries to complete favorably.
Also, there is the problem of inability to establish agency (SMIDAN) in the country. Moreover, there was shortage of skills; inadequate financial resources constrain many SMSI to use semi skilled or unskilled labour of course. At infects productivity, restrains, expansion and limits competitiveness.
1.4 SIGNIFICANCE OF THE STUDY
This project intends to establish facts on how institutions and government finance small and medium scale industries in Nigeria economy, and how individuals can source for loans and advances to float their business.
In so doing, it will expand the knowledge of an individual or citizens and those willing to setup a business of their own.
This will reduce unemployment rate in our country (Nigeria).
- SCOPE OF THE STUDY
The delimitation of this study will be within the areas of government involvement in financing small and medium scale industries (SMSI) and the schemes operated by some financial institutions for this same purpose of financing. Some of these schemes include the small scale industries schemes (SSLCS), NEXIM, NERFUND, SMIADA etc.
This piece of research will also cover some of the policies adopted in the country of SMSI, the efficiencies and consequences of these policies, and the later part of the paper will evaluate or appraise the existing SMSIS credit schemes in Nigeria. In getting these done, constitution will be made to some small and medium scale industries, personal interview will be conducted and extracts from journals and text books are also useful materials in writing this project.
1.6 LIMITATION OF THE STUDY
Research of this sort cannot be without limitation.
The constraint or limitation can there fore be briefly explained as
- TIME:
This study lasts only for about three months within which one is expected to collect, write analyzed data collected and submit the typed copies.
The time limitation actually did not permit exhaustive injury into study.
- FINANCE
Due to the economic standing of the country and particularly of this search the population sample is restricted i.e. the researcher was not able make frequent trips to a number of companies to scout for information.
- NON AVAILABILITY OF ADEQUATE DATA
This is another important constraint for instance, staff of some of the selected industries were either relevant to grant interview or their inability to read and write (illiteracy).
- EXPERT INVOLVEMENT
The experience of the researcher is one of the most importance parameters in writing the project.
Experience they say is the best teacher some of the researchers are inexperienced in this field, they can be administrators. These people are trained as to exact meaning of all questions. This will help in getting the correct response needed by the Researcher.
- Lastly, the above mentioned factors are limitations which are imposed by the nature of the research situation itself. They are therefore
beyond the control of the Researcher.
1.7 DEFINITIONS OF TERMS
The terms small, medium and large are relative and differ from industry to industry, country to country and there is no unique universally accepted definition of these terms. It is also important to recognize that definitions changes over a period of time and depends to a large scale on period of time. What used to be tang scale in 1950s may now be regarded as small scale today.
In Nigeria, different government agencies apply various definitions which are as follows:
Central Bank in its credit guide lines to Banks states that in the case of commercial banks, small scale industries are with annual turnover not exceeding five hundred thousand (#500,000).
In the case of merchant banks, they are industries with capital investment not exceeding Two million Naira (#2,000,000).
With regards to the National Economic Reconstruction Fund (NERFUND). Small and medium scale industries are defined as those with fixed assets other than land not less than Two million Naira (#2,000,000) but not exceeding Ten million Naira (#10,000,000).
Lastly, the center for industrial research and development (CIRD) at OBAFEMI AWOLOWO UNIVERSITY, ILE-IFE, defines small and medium scale industries as those industries with total assets in capital equipment, plant and working capital not exceeding Two hundred and fifty thousand Naira (250,000) and employing not more than fifty full time workers.
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