THE ROLE OF BANK IN SMALL AND MEDIUM BUSINESS ENTERPRISE IN NIGERIA

THE ROLE OF BANK IN SMALL AND MEDIUM BUSINESS ENTERPRISE IN NIGERIA

Abstract

This research study examines the role of commercial banks in SME financing in Uyo, Akwaibom province. The main aim of this study is to examine how SMEs can develop through banking sector interventions. A descriptive study design was selected. The study population is all SMEs in Akwaibom province and the Union Bank of Africa (UBA). A questionnaire was used as a means to collect primary data. Purposive sampling technique was used to select the sample; correlation analysis was employed using chi-square. Findings revealed that there is a positive correlation between loans grants by banks and the growth and development of SMEs in Akwa Ibom State also, that SMEs cannot be concentrated in Akwa Ibom State if they are not effectively financed due to the relationship that exists between the banks and SMEs. It was recommended that guidelines/schemes by commercial banks to finance SMEs needs to be flexible to accommodate the small and medium scale entrepreneurs.

CHAPTER ONE

INTRODUCTION

1.0 Background to the Study

The post-independence Nigerian government adopted the entrepreneurship government which constrained it to assume the role of entrepreneur and the urge to offset the economic neglect of the colonial government and that resulted in engaging in ambitious industrialization programmes. When the Nigerian industrial Development Bank Limited (NIDB) was established in 1964 for the purpose of speeding up the industrialization process, its mandate was to promote industrial projects which were large enough to make applicable contribution to the national economy. However, the collapse of the oil boom in the early 1980’s exposed the inherent weaknesses of this importation of inputs resulted in large idle capacities, thereby creeping many gross domestic product (GDP) declined in the face of the strong national aspiration for the restructuring of the economy and reduction of the dependence on petroleum. Since then, SMEs have become the focus of the country’s industrial policy. In order to pursue self-reliance in developing countries, especially Nigeria, the central government issued decrees known as Enterprise Promotion Orders when small and medium enterprises were required to promote economic development. Since then, it has been at the forefront of our development strategy.