THE ROLE OF COMMERCIAL BANKS IN FINANCIAL SMALL SCALE BUSINESS ENTERPRISES IN NIGERIA ECONOMY

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY.

In the role of commercial banks in financing small –scale enterprises in Nigeria economy, there has not been a lot of work but the available few have given an in –depth up to date study of its operation.    In Nigeria economy, attention has been drawn to the fact that small –scale enterprises have received very little attention where as they provide employment for approximately triple the number engaged in large scale enterprises as well as playing their roles of crucial importance to our developing economy. This is why it is important to reconsider the problem hindering the growing of small-scale business enterprises in Nigeria economy. Numerous opinions and comment ion on the role bank should play in financing and advising the small –scale enterprises since the federal government shift its policy with greater emphasis towards small- scale business in achievement of self- reliance.

Unfortunately, some of the opinion have tended to observe the long ending relationship which the bank has enjoying with the small scale business community and some misconception have arise, perhaps, here is need to clarity some of the misconception.  In Nigeria, some small –scale business enterprises constitute over 70 percent of all registered companies they are considered to have specified importance of the economic development of the country for a number of reasons. This enterprise provides the opportunity for employment on large scale and therefore makes the possibility of equal table distribution of national income more realistic. The relatively low cost this in a labour abundance economy like Nigeria and in the present economic down turn, they are even more relevant in the mobilization of capital and human resource that would otherwise be left idle.

1.2  STATEMENT OF PROBLEM

Inspire of the fact that various forms of assistance have been designed by the D.B.N. to promote the development of small –scale enterprises, there are indication that small- scale enterprise, are still of discriminated against by financial institution, because of high risk associated in financing them. They preferred financing large scale financing are very risky than small scale financing. Though the central bank has made it compulsory for bank to invest 10 percent of its profit after tax to small –scale enterprises, there are complains that the interest rate charge on the loan is high. Many small-scale investors who want to get money from commercial bank unable and difficult to get, it is also to determine the extent to which commercial banks have helped in financing small –scale enterprises. It will examine how commercial banks in Nigeria assist the government to promote the small –scale enterprises as a sector of the economy. To identify the problems encountered by the small –scale enterprise in obtaining funds from the commercial banks.

1.3   PURPOSE OF THE STUDY

The continuous escalation of Nigeria import bill and employment are a threat to the country.

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