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THE ROLE OF BANK OF INDUSTRY IN THE DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES (SMES)

THE ROLE OF
BANK OF INDUSTRY IN THE DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES (SMES) IN
KADUNA

 

 

ABSTRACT

This research work is conducted on the role
of bank of industry in the development of small and medium enterprises (SMEs).
The aims and objectives of the study is to analyze the various role played by
bank of industry in developing small and medium enterprises as well as the
activities of government policies, such as provision of infrastructural
facilities provision of local finance facilities, funding of industries and
institutions like SSICS, CIRD and FIIRO. The researcher uses the questionnaire
and interview method to collect the data from the respondents. The analysis and
crossed tabulation of data gathered were done using the mean statistical method
with the 1-5 Likert rating scale for proper accuracy in arriving at a
dependable decision rule. Lastly the researcher concluded that, the bank of
industry was able to maintain its customer because they do welcome whatever
kind of financial assistance, therefore, he finally recommended that, the
government should also endeavour to appoint the workers to teach the
entrepreneur who does not have the advantage of attending seminar or workshops
especially the illiterate ones and keep supervising them in right way
.

 

TABLE OF CONTENTS

Title
page    –        –        –        –        –        –        –        –        –        i

Declaration  –        –        –        –        –        –        –        –        –        ii

Approval
page       –        –        –        –        –        –        –        –        iii

Dedication   –        –        –        –        –        –        –        –        –        iv

Acknowledgement –        –        –        –        –        –        –        –        v

Abstract       –        –        –        –        –        –        –        –        –        vi

Table
of contents   –        –        –        –        –        –        –        –        vii

CHAPTER ONE: Introduction

1.0            
Background of the study –        –        –        –        –        –        1

1.1            
Statement of the
problem          –        –        –        –        –        –        3

1.2            
Objectives of the study    –        –        –        –        –        –        4

1.3            
Significance of the
study –        –        –        –        –        –        5

1.4            
Research questions          –        –        –        –        –        –        –        8

1.5            
Scope of the study –        –        –        –        –        –        –        8

1.6            
Limitation of the study   –        –        –        –        –        –        8

1.7            
Definition of terms          –        –        –        –        –        –        –        9

CHAPTER TWO: Literature
Review

2.0     Introduction –        –        –        –        –        –        –        –        11

2.1     Conceptual Framework of small and
medium  enterprises –        12

2.2     Definition   
of small and medium enterprises        –        –        –        14

2.3     Reasons for small and medium  enterprises   –        –        –        20

2.4     Reward for entrepreneurs –        –        –        –        –        –        21

2.5     Bank of Industry   –        –                  –        –        –        –        27

2.6     Government
and small and medium  enterprises     –        –        29

2.7     Summary
of Review        –        –        –        –        –        –        36

CHAPTER
THREE:
Research Methodology

3.0            
Introduction –        –        –        –        –        –        –        –        38

3.1            
Research design     –        –        –        –        –        –        –        38

3.2            
Area of study         –        –        –        –        –        –        –        39

3.3            
Population of the study   –        –        –        –        –        –        39

3.4            
Sample size and
sampling technique   –        –        –        –        39

3.5            
Instruments for data
collection  –        –        –        –        –        40

3.6            
Validation of the
instrument     –        –        –        –        –        40

3.7            
Reliability of the
instrument     –        –        –        –        –        41

3.8            
Methods of data
collection        –        –        –        –        –        41

3.9            
Method of data analysis   –        –        –        –        –        –        42

CHAPTER FOUR: Data
presentation and analysis

4.0            
Introduction –        –        –        –        –        –        –        –        44

4.1            
Characteristics of the
respondents       –        –        –        –        45

4.2            
Presentation of data
and analysis in table      –        –        –        48

4.3            
Summary of findings       –        –        –        –        –        –        52

4.4            
Research finding    –        –        –        –        –        –        –        53

4.5            
Discussion of findings     –        –        –        –        –        –        54

CHAPTER FIVE

Summary,
Conclusions and Recommendations

5.0            
Introduction –        –        –        –        –        –        –        –        56

5.1            
Summary     –        –        –        –        –        –        –        –        56

5.2            
Conclusion  –        –        –        –        –        –        –        –        58

5.3            
Recommendations-         –        –        –        –        –        –        –        58

References  –        –        –        –        –        –        –        –        –        62

Appendix     –        –        –        –        –        –        –        –        –        63

CHAPTER ONE

INTRODUCTION

 

1.0            
BACKGROUND
OF THE STUDY

 

The dynamic role of government agencies in the
development of small and medium enterprises is an engine through which the
growth and development objectives of developing nations can be achieved which has
been recognized and stated in the literature is quite interesting. These enterprises
have a very important impact on the life of everybody in the society. The small
independence business are everywhere 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 done in life involved the element of business. Small  and medium  enterprise constitutes an importance in todays
business activities or system. The role of small and medium enterprise in our
economic history however, has been one of the distribution and contribution.

Although its relative importance has decline with
the growth of the big business, small and medium business is till major
contribution to the countries economy. Business in Nigeria today is made up of
both large and small business. Today small scale enterprise have to enjoy more
prestige than ever before because of its vital contribution to the nations
economy. So vital is small scale business. There are successful small scale
enterprise operating like the manufacturing plants, retails, stores,
wholesales, drugs, computers, construction firms and hundred of other type of
business.

Nigeria population was estimated to be 167 million
in 2012 with about 75% of this made up of small scale enterprise operators.
Lack of full study of government agencies in the development of these
enterprises especially, the financial institution made it impossible to   know the size, structure and function of
these small and medium business to the development of the economy of Nigeria.

Government agencies are charged with the
responsibilities among others to carryout duties and deliver utilities as it 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 bank of industry
(BOI) is charged with the responsibility like provision of medium and long term
finances by way of equity funding, loan and lease financing, guarantees,
investment in corporate bonds business development services, co-financing,
working capital finance and    promotion
of small and medium  enterprises and
industries project, co-sponsoring financial institutions and small and
medium  enterprises.

This bank of industry was formerly originated from
Nigerian industrial development bank limited was established in 1964 following
the reconstruction of the investment company of Nigeria limited (ICON) NIDB was
set up primarily to accelerate Nigerian industrialization.

The bank was to conceive shortly after Nigerian
attains independence in 1960. The idea was to set up development of financial
institution to serve as a dedicated window for channeling fund from within and
outside the country to the young nation states industrial sector. Economic
reconstruction fund (NERFUND) in the last regime of Obasanjo administration is
renamed as BOI.

1.1            
STATEMENT
OF THE PROBLEM

Several studies have indentified financial
constraints as the major obstacle to good small and medium enterprise
development in developing countries including Nigeria. Most government agencies
have undergone numbers of re-organization especially bank of industry (BOI)
which affect their forces and activities that leads to effective performance
and lack of proper control on their activities.

The most obvious problems facing the society  is the most basic economic problem such as
what to produce, how much to produce, for whom to produce, How efficient of
resources use or providing efficient financial resources technical assistance,
how much to consume and to save and problem of unemployed resources etc,
security on loan given out to  customer SMEs
evaluating of project that are financed which may take more time than stated at
the beginning.  Also the finance project
time table, which depends on nature and complexity of the project, it may take
one to two years sometimes longer from when project was identified to when it
was commissioned.

The project financing involves giving loan to a new
entity established specifically to own or operate project. On the part of small
and medium enterprises (SMEs) how effective are they utilizing the services
rendered to them by the bank of industry (BOI). Also are they able to cope with
the policies adopted by these agencies (BOI) in obtaining loan and other
services rendered such as interest rate on capital collateral facilities and
the role of government.

1.2            
OBJECTIVES
OF THE STUDY

The aims and objectives of the study is to identify
and consequently analyze the most effective and efficient way through which
bank of industry is  developing of small
and medium enterprises as well as the activities of government policies such as
provision of infrastructural facilities, provision for local finance facilitaties
and funding of industries and funding institutions like small scale industrial
credit scheme (SSICS), center for industrial research and development  (CIRD),  and Federal Institute of industrial research,
Oshodi (FIIRO) etc are they to what does the policies of government are
achieved towards developing SMEs by so doing that, the researcher intends
giving an in-depth information and analysis on the various strategies thorough
which SMEs can be financed by BOI.

1.2.1                 
General
Objective

i.                  
To find suitable
strategies that will improve the financing growth and development and survival
of SMEs in Nigeria

ii.                
To investigate and
identify the constraints confronting financing of SMES in Nigeria

iii.             
To investigate and
examine the effects of corporate governance of BIO on the performance and
contribution of SMEs to the economy of Nigeria.

iv.              
To investigate and
examine the trend of financial support given to small and medium  enterprises in Nigeria.

v.                
To appraise the
contribution of bank of industry to the funding of small and medium enterprises
in Nigeria.

1.2.2                 
 Specific Objectives

i.                  
To evaluate the
services and dissemination of the results or contributions of the SMEs

ii.                
To introduce these
services in the daily activities of the institutions, industries or operators
and partners of SMEs

iii.             
To update and redefine
the tasks of the operators responsible for providing the services to SMEs.

iv.              
To identify the differences
between services and current demand of find innovative services and related
tools that will be used by SMEs in order to improve the use of the instrument
of intellectual property and promoting the research and development (R and D)
of new products in project areas.

1.3            
SIGNIFICANCE
OF THE STUDY

The study is to serve as a reference material to
other students or researchers such as scholars, the management, the prospective
investors, the general public, researchers and academic and banking
professional body and banking and finance students etc who might be interested
to write on or make research on similar topic and serve as recommendation to
the bank of industry (BOI) in discharging its functions to their customers as
well as mode of rendering services to the customers SMEs. Since the SMES in
Africa rely largely on own savings, not only to grow but also to innovates,
firms often need real services sup[port and formal finance assistance, failing
which under investment in long term capabilities training and research and
development (R & D) may result to evaluate the operations of a vital
segment of the industrial sector-small and medium scale enterprises which shall
be done with special focus on their financing thereby adding to the existing
literature on the subject matter. The following can benefit from this studies.

1.     The
management: Managers and the operators of the bank of industry will find this
study very great benefit as it will give rise to the confidence of the banking
public in the BOI thereby repositioning them to play their vital intermediation
roles in the economy of Nigeria.

2.     The
prospective Investors: Investors or entrepreneurs and bank of industry
customers will further be enlightened on the beneficial service maintaining and
offered by the bank of industry from the results of this study. If the
investors or customer comply with the efficiency of the management in terms of
customer relations and some other activities that will determine the reputations
of the corporate which will encourage more investors to invest more and by
developed an orientation devoid of financial indiscipline the investors will
use this study in repositioning their business for easy access to BOI’s credit
facilities.

3.     The
general public: Public can benefit from this study through by devoting a
research and development (R & D) initiatives.

i.                  
     Regulatory Bodies: The regulatory bodies
will find this study very useful, such body are central bank of Nigeria (CBN)
and Nigeria Deposit Insurance Corporation (NDIC). The study will serve as a
guide in the review of monetary policies guidelines on the operations of Bank
of industry by the CBN. The study will also assist the NDIC in granting the
extension of deposit insurance cover to bank of industry.

ii.                
     Policy makers: The government and other
relevant agencies should utilize the knowledge gained from this study in
assisting the bank of industry by designing appropriate policies and training
programmes for the operators of banking sector.

4.             Banking professional Body: The chartered
institute of bankers of Nigeria (CIBN) will find this study useful toward
building and implementing the baking industries been competency framework by
supporting the variety of career path ways for banking professionals in
enriching their syllabus and accreditation criteria as well as review of
licensing criteria for practicing bankers.

5.     Research
and Academics: The researchers and academic can use the result of this study by
using juggling process such as step by step self-regulated problem solving
format with automatic reinforcement at every level of accomplishment and stay
on task, screen out distractions, manage their energy to act appropriately and
with the desired results using successive approximations, persevere through a
series of minor failure (drops), analyzed final results of the process and
incorporate the newly learned activities that can be demonstrated and through
to others as a basis for conducting further research studies like for student
of banking and finance.

Student of
banking and finance         

This study will be useful to students who is studying
in this field by also using that of juggling process format such as step by
step self-regulated problem solving. The juggling process format provides a
series of sequential problems solving which might require the researchers
(Students) to calm down and settled by paying attention, listen analytically,
observe critically focus on one activity at a time and plan a learning strategy
by using that of juggling process format. The study will make empirical
contribution to the field of banking sectors to the bank of industry and the
student who are yet upgrade of working in bank and other industries, who seek
to pursue a career in banking sector as well as to help bank professionals in order
to keep pace with the development of banking.      

1.4            
RESEARCH
QUESTION

Based on the subject matter, the researcher prefers
to use the following questions for research findings;

1.                
What are the problems
of small  and medium scale enterprises
business?

2.                
What are the roles of
small and medium enterprises?

3.       Are
banks of industry the sole financier of small and medium  enterprise?

4.       Does
government have favourable policies towards development of small and medium
enterprise?

5.       Does
government policies have an impact on small and medium enterprise?