BANKS PARTICIPATION IN INDUSTRIAL DEVELOPMENT OF NIGERIA
(A CASE STUDY OF UNION BANK NIG. PLC)
The researcher intends to identify and evaluate the services rendered by banks in Nigeria so as to ascertain the adequacy and efficiency of these service to the industrial development of Nigeria of otherwise to recommend appropriate steps to be taken by those banks in contributing its quota in the industrialization process in Enugu state and Nigeria as a whole.
To achieve this the researcher will undertake the project work by making a case study of union bank of Nigeria Plc Enugu main office.
In pursuances of this research the researcher employee the use of primary and secondary data, oral interview an personal observation will also be used.
Based on the primary and secondary data that will be collected form union bank in Enugu state it will be observed that some of the services rendered by these banks only will exist in theory by providing answers to the research question that will be in chapter one. In view of these findings, it will be recommended among other things that these banks commercial and merchant banks should be staffed with professional staffs. These professional staffs will adhere strictly to the modalities worked out by the federal ministry of finance and central bank of Nigeria (CBN) to prevent any bank distress and failures.
On the other hand, the researcher recommends that the industrialist should be realistic when preparing their estimates and values of project they intend to executive, and they should give time figure of their financial statement and make sure that the funds or loan that will be extended to them will not be diverted to private ventures. It will be the belief of the researcher that if all these recommendation are strictly herd to and is implemented, the problems military against the industrial development of our country will be reduced if not totally eliminated.
1.1 BACKGROUND OF STUDY
A country wealth development and advancement by its level of industrialization, a country becomes famous among other countries of the world when it has been able to attain to a remarkable degree in industrialization. In view of the above we have deemed it necessary to embark on a research project on “Banks participation in industrial development of Nigeria. This is an attempt and effort to draw the mind of every Nigeria to ask himself certain silent questions like.
1.2 STATEMENT OF PROBLEM
How far has our country advanced in industrial development
What are the things necessary for the industrial development of our country?
Why have certain financial bodies not participated fully in the exercise?
If we are able to give answer to these question and if we are able to identify the problem I encountered in the process and also to give solutions to these problem both collectively and individual then, there is hope that within a short time. Our country Nigeria will be able to develop ten times more than it has done in the long past.
A developing country as Nigeria is characterized by a high degree of subsistence products with very limited application of technology. As a result manufacturing industries are relatively low and the agro- based industries are paramount.
Industrialization should apply to all sector of an economy implying the application of science and technology to raise the worker, in other words all sectors of the economy (mining, agriculture, manufacturing, industries, commercial service should advance.
1.3 OBJECTIVE OF THE STUDY
Industrialization means the development of industries, applying science and technology in order to provide work for the growing population and raise the standard of living by increasing per capital net income and improve balance, of payment situation. Industrialization is aimed at impact restriction and increasing export.
For our country to attain any degree of industrialization, it must overcome a series of obstacles and difficulties because it has had its development plans disrupted by series of military interventions and civil war. It should be noted that there is no limit to the degree of development a country can attain if and only if its reserves are full y utilized. Whether our country is developed or not depends on the existing level of wealth and material welt are. The measure of development of any country is based on its per capital income. That is dividing net national income by the total population to get capital income.
Nigeria has high rate of population increase but has land still available for agriculture expansion. Its per capital income are as a result of its chronic under-utilization of resources rather than substantial utilization. Although Nigeria is now spending on industrial projects, the stage of industrial development is still at its lower level. Nigeria is still developing and so it is per both in income and in capital and its resources are not yet fully tapped. It is therefore most patient to state at the juncture that for nations resources to be fully utilized the aid of science and technology must be sought.
There are three major things that requirement to achieve success in any venture in life viz time interest and money. Behind every successful business there must be an interest on the part of the investor solidly backed by find, which is very necessary to execute any meaningful project. For the purpose of our topic, we shall be examing the banks with regards to their values in aiding industrial development.
1.4 SIGNIFICANCE OF STUDY
First we should know that there are types and class of banks established to develop respective sector of the economy and they are commercial banks merchant banks and others.
Nigeria’s engagement in economic activities is on a subsistence basis e.g. Agriculture, poultry weaving, mining etc. these are mainly small scale and mediumsized enterprises and there re give credit guideline policy by the central bank of Nigeria (CBN) on how to lend to the industrialists and these guidelines are not normally adhered to by these banks with some reasons.
Development of modern business and government is serious effort towards prompting industrialization in the country. It started only about three decades ago. The 1972 indegenization decree was necessary so as to direct financial institution through central bank of Nigeria credit guideline to extend certain percentage of their total loans and advance to indigenous borrower also be extended to browers in small scale and medium size enterprise. Banks have their reasons for inadequate credit to small scale and medium size enterprises as:
1. Their attitude towards risk makes restrictive in their lending policy.
2. Many small scale enterprise have ill conceived project in which they have estimates which is often ridiculously valued. Other reason include management deficiency inadequate staffing, detective infrastructure as nil communication. These are defects partly on the side of the banks and also partly on the side of the industrialists
Problem arise when there are stipulation for small scale industrial to meet certain requirement before they are granted loans and they are
(a) Most proprietors of small-scale business do not possess the necessary financial expertise to put together bankable propositions.
(b) They do not prepare cash flow projection their do they know the dealing with banks nor how to interpret projected balance sheet etc.
There is also the problem of communication gap between the small scale business and the banks. The proprietor might have good idea of their needs based on his experience but would not know how to put it on paper. There is this other problem of promising to comply with condition of the banks on the part of the borrower, but once the loan is approved the investor diverts it to another venture and this jeopardizes the repayment of the loan. One of the identified problem
With credit facilities more especially the ones obtained from commercial banks to the industrialists is its short term nature and high interest rates which will enable the individual have enough time to recomp the funds invested e.g invectives on farm implement like tractors and harvesters etc. to recoup the money invested on these implement will take some time because they are capital investment and need a long tension of repayment.
To remedy these problem and to encourage the full participation of bank in the industrial development every Nigeria should see to the following.
(a) To be honest in estimating the value of their project and the appropriate application of the fund obtained.
(b) Banks should grant medium and long term loan with fairly low interest rate to the industrialists. They should also initiate and finance industrial project themselves.