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1.1            Background of the study

The successive development plans of Nigeria have laid emphasis on the attainment of self-reliance. The need for this national objective is because much is expected from individuals from the view point of providing employment opportunities self-reliance in basic food and material production, high per capital income, foreign exchanging earnings and the production of industrial raw materials.

Customers are increasingly complaining about inaccurate information, irresponsible, rude or poorly trained personnel and long wait time. However, Owuola (1997), view on change as the important of small scale industries in promoting industrialization and economics growth has shown that: small scale industries have in many countries provided the mechanism for stimulating.  

Indigenous entrepreneurship, enhancing greater employment opportunities per unit of capital invested and aiding the development of local technology.

(Erik 1986; World bank 1995), they help to mobilize saving for investment and the use of local raw material though their dispersal nationwide, contribute to move distribution of income among individuals and regions as well as mitigate rural-urban and contribute to the strength of commercial banks.

Ekenyong and Nyong (1992) observed that small scale industries hold the key to industrialization, economic development creation for our teaming youth, the high crime rate in our community today is traceable to an extend to unemployment therefore, any scheme that could help to address this social problem cannot be over looked. To be able achieve this laudable objectives it become necessary for government and financial policy to encourage subsector of this financial efforts in Nigeria include: Nigerian National Enterprises (NNE), National Agency for Poverty Eradication Programs (NAPEP), Nigerian Agricultural and Rural Development Bank (NARDB).

The bedrocks of development in any nation are the small scale industries, the live wire of any business is funding. While the most important source of business funding is the bank.

The important of small scale industries (SSI’s) in order to achieve sustainable industrial development was realized, this is why financial arrangement for small scale industries have undergone several stages of metamorphosis these include: the establishment of the Nigerian Industrial Development Bank (NIDB) in 1971, the formation of Nigerian Bank for commerce and industries (NBCT) in 1973, and acquisition of the NIDB’s controlling interest by the federal government in 1976. ( Olashore, 1987 ).

One of the major hurdles militating against the expansion of small scale industries is lack of financial resources, the mobilization of financial resources requires an institutional framework which encourages mobilization of fund from the financial sector (surplus) to the real or productive sector (deficit).

The government believe that the dynamic and growing small Scale industries manufacturing   sub-sector can contribute to the implementation of a wide range of development objective has enunciated various policies to encourage their proliferation and make them veritable engines of growth and development (obitayo, 1991).

Commercial Banks as financial intermediaries are therefore the major relevant financial institutions in most developing countries which encouraged and mobilized savings and also channel savings in to productive investment.

The last two decades in Nigeria have witnessed a switch of emphasis to the small scale industries, Banks plays a crucial role in the development of these industries. Traditionally, Banks are catalyst for economic development intervention in the form of financial subsidies or guarantees the bank represents the only source of finance that can complement often inadequate savings of small scale industries.

1.2     Statement of the Problem

The statement of this study is to inquire the role of commercial banks in financing small scale industries (SST’s) as a means of enabling them to attain optimal performance. Therefore, banks find it difficult to engage in promotional services, they turn to service differentiation. Banks seek to develop a reputation for superior performance on time delivery better and faster answering of inquiries. Yet not all banks have invested to provide superior services to all their customers faced with the ever increasing competition, advancement and privatization as well as the recent consolidation of the banking sector by the Central Bank of Nigeria (CBN). Banks are moving towards expansion of powers (product offering) example the higher interest deposit account by the Diamond bank a (HIDA) acquiring power such as securities break age and expanding new retail financial services.

The intention of this study is to examine the role of commercial banks in financing small scale industries, taken union of Nigeria plc Yola branch as the case study.

1.3     Research Questions

In pursuit of the research of the research objective of the study, the following research questions have been formulated.

                i.            What role does the commercial bank play in financing small scale industries?

              ii.            are the problems does the commercial banks faced with small scale industries with respect to granting of credit facilities?

           iii.            What are various measured introduced to boost industrial production and its financing and how this has affected the realization of the set goals?

           iv.            What are the causes of changes in small scale industrial financing by commercial bank of Nigeria plc?

              v.            What is the sectional performance of commercial banks to improve credit delivery to small scale industries? 

1.4     Objective of the study

The major objective of this study Is to examine the role of commercial banks in financing small scale industries (SSI’s) in Nigeria. Specific objective are to:

         i.            Determine whether commercial banks provide the needed capital to finance small scale industries.

      ii.            Examine the problems that exist between commercial banks and small scale industries with respect to granting credit facilities.

    iii.            Determine the sectional performance of commercial banks with respect to granting credit facilities.

    iv.            Make suggestion and recommendation based on the data generated by the study.

1.5     Research hypotheses

The following hypotheses are formulated for this study.

                i.            Ho: commercial banks do not help in improving credit delivery to small scale industries.

H1: commercial banks help in improving credit delivery to small scale industries.

              ii.            Ho: commercial banks have impact on the performance of small scale industries with respect to granting credit facilities.

1.6     Scope and Limitation of the study.

This research covers the study of financing small scale industries in the banking sector. The study was limited to the small scale industries in Adamawa State, with special reference to union Bank Yola plc branch. From the period of 2011-2015. Hence, the role of commercial banks in financing small scale industries (SSI’s) can be viewed to a barest minimum, because of some difficulties during the gathering of data.

1.7Significance of the study

                i.            The importance of small scale industries as one of the major cornerstone in building of a country’s industrial structure is not in doubt, due to the low capital base of small scale industries; they inevitably have to rely on banks for a considerable part of their financing needs. This study therefore, will be of immense benefit to entrepreneurs, potential or prospective entrepreneurs. Financial institutions and the three arms of government. In our present democratic dispensation.

              ii.            The information obtain from this study will provide useful reference material for intending investors. It will give them democratic idea of the hurdles they are likely to have scale as they go in to the business world or attempt to expand their existing business, especially with regard to security loans, repaying them and the general management of their industries takes a breath.

           iii.            More over the study will help to foster understanding between industries and commercial banks, making credit delivery more effective and efficient.

           iv.            The study will also prove useful information to the federal, state and local government in policy formation especially in this era of poverty alleviation.

1.7     Definition of Terms.

For better understanding of this research study, some key terms that will be used need to be defined.

i.            Small scale industries(SSIs),

Erick (1986). Defined small scale industries as an industry undertaking with the investment not exceeding N750, 000 including capital but excluding cost of land.

It is also defined by centre for industrial research and development of Obafemi Awolowo University 11e 1fe as those industries whose total assets in plant equipment and working capital do not exceed N250,000.00 with not more than 5- employees.

  ii.            Tiny Industry: turner (1974) Defined tiny industry as an industry undertaking with an industrial limit in plant and machinery of RS.2S lakhars irrespective of the location of the unit.

iii.            Industry: Amos (2004) defined industry as a department of branch of craft, art and business of manufacturing of similar products or services.

iv.            Trade: This refers to the buying and selling of goods and services. it covers as at when people need and want things that are produce by other.

  v.            Business: This includes activities of all commercial or trading of goods and services. This activities range from small shop owned by one person to huge organisations owned by shareholders.

vi.            Capital: This refers to the sum contributed by owners of the business to start the business. It is an inclusive term embracing plant, machinery, tools, inventory and the financial resources for conducting business.

vii.            Commercial banks: this simply refers to the intermediaries that move money from capital market to businesses and institutions it offers services such as trade-finance, project finance, payroll, foreign exchange transactions.

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