The Role Of Commercial BANK IN THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

The Role Of Commercial Bank In The Performance Of Small And Medium Scale Enterprises In Nigeria

Chapter One

Preface

Background Of Study

The development of any country on how far its income generating sectors can increase its capacity and its benefactions to the induce affair can only be answered through the artificial sector which seems to be the most dynamic sector from the economist point of view because of its capability to increase capacity nearly to an horizonless position and also because of its labors generally a total creation of value. thus most countries concentrate on the growth and development of their diligence to enhance fast profitable development( Udeh, 2004).

Although, development of large scale diligence, large manufacturing outfits and big empires may be contributing immensely to the industrialization and growth of the frugality, small and medium scale enterprises play he most consummate part in substance, the public development is a function of small scale diligence performance. in the once many decades, small and medium scale enterprises( SMES) have played important places in the development economics and proved to be one of the most visible sectors with profitable growth eventuality( Shenton, 2001)

The successes recorded by these countries were because of serious consideration of the unborn prices from sustained investment in this sectors. Due to their sizes and compass of operations these enterprises requires fairly small capital investment to start, there by offering a fairly high labour to capital portion. They also demand low technology and operation skill, which are readily available within the society.

The extent to which the openings offered by SMEs are exploited and their donation maximized enabling terrain created through the vittles ofpre-requist infrastructural installations. These include good road networks, telecommunication, acceptable and effective power force anchoragesetc. and the preface and pursuit of programs similar as concessionary backing that encourage and strengthen the growth of SMEs. Small scale diligence have such a pivotal part to play in the development of an frugality that they can not be ignored.

In fact small and medium scale enterprises development should form one of the country’s development objects. They can serve as sources of inputs for the chains there by replacing being foreign source. They’re also training grounds for original skill and entrepreneurs, could come channels for marshaling original, savings and icing a more indifferent distribution of force from the pastoral to civic areas( Udeh, 2004).

Across the word, SMEs, are pivotal for profitable growth, poverty relief, wealth acration and the creation of further pluralistic societies.

also and as anticipated, all the below vision and significance of SMEs can not be completely realize and achieved without the fiscal institution. The anticipation of the banking assiduity in the development and performance of small and medium scale sectors to enable entrepreneur in the sector acquires tested and ultramodern knowledge necessary and not only that, but for exploration purpose.

The success of SMEs sectors will, thus, depends on the co-operation andinter-relationship between the two sectors of the frugality.

Without mistrustfulness, it’s generally honored development this act as catalysts in any development country’s hunt to join the league of advanced and bucolic nations. The capability of small scale enterprises to initiate a nation to the vanguard of industrialization is proved by the fact that it was the major instrument of development of the Asian barracuda ( Singapore, south Korea, Taiwan, China, Malaysia, the Philippines and Indonesia) and their capability to hawness the capabilities of their small and medium scale enterprises, put them on the right footing in their pursuit of a tone reliant assiduity and a developed frugality.

moment, SMEs, represent about 90 percent of the artificial sector in terms of number of enterprises( FOS, 1998), still, they contribute a stingy 2 percent of GDP. This is nullity when compared to countries like Indonesia, Thailand and India where SMEs contribute nearly 40 percent of GDP, whilst SMEs are an important part country, of the business decor in any country; they’re faced with significant contenders that compromise their capability to serve and to contribute optimally to the frugality.

Statement of the Problem

The Nigeria frugality has been progressing as anticipated, the severance rate is so high that it’s believed that 3 out of 5 graduates are likely to be unemployed in the first 5 times of their scale, affectation is running as prices double nearly daily, poverty rate reached a habitual state where countries in the world and general weal is dilapidating, mortality rate is adding across the time principally due, to poor structure and social amenities. To slove these problems, there’s a need to probe which sector has the loftiest eventuality to contribute appreciatively to the frugality, and most importantly to the grassroots.

Although, proposition may back enormous benefactions of small and medium scale enterprises to profitable development, there’s need to probe if that’s the case in Nigeria. It’s egregious that if the available SMEs, in Nigeria weren’t faced with certain problems of structure, backing, raw material sourcing, foreign jilting amongst other.

It’s still, in the light of the below problems that this exploration study is initiated to probe the problems, the extent of their interference to growth of the sector and their possible result.

Exploration Questions

At the completion of this exploration work the following question must have been answered.

To what extent does the small and medium scale enterprise in Nigeria contribute to public affair and profitable development in general?

To what extent has the SME’s, being suitable to palliate the severance problem in Nigeria?

Does SMEs in Nigeria really consume further of domestic inputs as against imported raw material?

What part does marketable bank performance in perfecting the performance of SMEs towards profitable development?

Ideal Of The Study

In the light of the important places performance of the small and medium scale enterprises in the country’s profitable development coupled with the places played by the marketable banks in working the multitudinous problems believed to have overwhelmed the SMEs in Nigeria.

The primary focus of this study is aimed at understanding the frugality, other objects include

To dissect the donation of the small scale diligence to the profitable development of Nigeria with reference to employment generation, gross domestic product( GDP), application of original raw accoutrements and development of original technology. The study further examined the relationship between domestic input and capacity application.

To bandy the performance of the small scale enterprises to the entire artificial sector.

To examine the relative effectiveness of marketable banks on SMEs performance

To identify factors( including fiscal, marketable, specialized, directorial and regulation) that promotes or stunts the effective performance of the small scale diligence

To probe whether a relation exits between profitable development and the SMEs.

To make recommendation where government programs could draw from and on which possible soothsaying on unborn inquiries can be grounded upon.

Exploration Thesis

The suppositions for this study will be thesis one

Ho SMEs contribute nothing to the profitable growth and development of Nigeria.

Hi SMEs contribute to the profitable growth and development of Nigeria.

Suppositions Two

Ho there’s no relative effectiveness of marketable banks on SMEs performance

Hi there’s a relative effectiveness of marketable banks on SMEs performance

Significance of the Study

The study of small and medium scale enterprises as asub-sector of the artificial sector at large, is veritably essential and important considering the part being play by the marketable banks and because of the enormous advantages that the frugality can gain from the donation of this sector.

Also, this study is signified on the ground that it’ll foster the confidence of the investors to concentrate their attention towards the development of the sector.

In addition it’ll be an eye nature to both the shareholders and operation of association, the important of this sector towards the important.

Specifically, the significance of studying the performance of the assiduity making small and medium scale enterprises the introductory focus in Nigeria is as a result of the growing mindfulness of the country’s government on the significance of this sector and the current shot to ameliorate it’s donation and enhance it’s performance.

Incipiently, the exploration study is signified in that it’ll contribute to the frontier of knowledge especially in exploration and development( R&D) and it’ll be of a reference point to those experimenters who may be asking to carry out a analogous exploration on the content

Compass Of The Study

The study focuses on the small and medium scale diligence in the Nigeria frugality, which is used to measure the artificial sector at large. It centers on the elaboration and operation of the small and medium scale diligence performance and the pivotal part played by marketable development.

The study will generally cover the roll of marketable banks on the performance of small and medium scale enterprises.

Limitation of the Study

The goods of profitable tailback and social structure on the performance of the small and medium scale diligence are linked so as not to accentuate their real donation to frugality in both profitable and artificial development terms.

Since utmost small scale diligence, are possessed by private individualities, they generally feel reticent or refuse to make their data public hence it may be delicate to get a well rounded conclusion.

This exploration study is also projected to be limited by time and cost constraint.

Functional Description Of Terms

Small scale enterprises or diligence

Any enterprises with a minimal means base of N200 million banning the land and working capital and with the number of staff employed not lower than 10 or further than 300( SMIE 15, 2003).

Marketable Banks

Banks are fiscal enterprises or division of larger enterprises that accepted deposit subject to withdrawer on demand and invest part of these deposits in interest bearing loans and investments. They’re profit timber, banks organized on a common stock base, that’s the purpose of their establishments to make gains for their possessors the shareholders

Trafficker Banks

trafficker banks on like marketable banks are whole banks possessed by individualities are grouped of individualities their guests are substantially commercial bodies and deposits commercial bodies totalities of N 50,000 and over, they accept medium and long term deposits and give medium long term loan and advances.

Performance

Isn’t a single fashion, rather it’s the term used for a variety of fashion by which administrators, peers,sub-ordinates, and the individual hand themselves rate, rank or describe the workers work effectiveness. It’s a process in which heads regularly volute and report on the performance attainments, capacities, capabilities, for unborn development and other rates of their development and other rates of their associationsub-ordinate.

Organization of the Study

This work will be divided into five chapters. Chapter one will contains the preface to the study, objects, exploration questions, exploration suppositions, significance and limitation of the study. Chapter two will take the literature review and abstract frame work. Chapter three will present the exploration methodology; chapter four will be concerned with our analysis of data. Chapter five will evoke the summary of findings, recommendation and conclusion.