PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM ENTERPRISES IN NIGERIA. A CASE STUDY OF NNEWI NORTH L.G.A ANAMBRA STATE.
This research is on problems and prospects of small and medium enterprises in Nigeria. A case study of nnewi north L.G.A Anambra state. The major purpose of this study is to determine factors influencing small and medium enterprises in Nigeria. To determines the extent finance house strick condition have affected the development of small and medium enterprise in Nigeria and also assess the extent poor financing has affected small and medium business operations. This study will help small and medium enterprise to assess and appraise their role in solving the problems of unemployment in Nigeria. It will guide the compliance with government monetary policy. It will also equally server as a guideline to researchers who may wish to decide with this study in the future. The following findings were made is the course of analyzing the data. There has been a phenomenal growth in the number of small and medium ventures for past few years. The nature and dimension of small and medium enterprise in Nnewi North made profit of about N5000 daily. The following recommendations are made in the belief that they will promote and stabilize small and medium enterprise of implemented. To overcome the problem of financial constraints, the government should re-introduce the small business credit scheme to that beneficiaries can use them to run the small and medium enterprise.
BACKGROUND OF THE STUDY
This research is on problems and prospects of small and medium enterprises in Nigeria. A case study of nnewi north L.G.A Anambra state.
In recent years, particularly since the adoption of the economic laicism programme in Nigeria in 1986, there has been a decisive switch emphasis from the grandiose, capital intensive, large scale industries project based on the philosophy of import substitution to small scale industries with immense potentials for developing domestic linkages for rapid – sustainable industrial development. Apart from their potential for ensuring a self reliant industrialization, interms of ability to rely largely on local raw materials small scale enterprises are also in a better position to boost employ raw materials, small and medium enterprises are also in a better position to boost employment, guarantee a more even distribution of industrial development in the country industry the rural areas and facilitate the growth of non-oil exports.
In Nigeria the definition of small and medium enterprises also varies from time to time and according to institutions for instance, the Central Bank of Nigerias (CBN) monetary policy circular No: 27 of 1988 define small and medium enterprises in (exchange general commerce) as enterprises in which total investment (including land and working capital) did not exceed N500,000 and or the annual turn-over did not exceed N12 million small and medium enterprises is one of the modern strategies under develop countries are employing to break into the ÒleagueÓ of developed countries fasua (2006) categorized business that fall under small scale as follows firewood, supply plantain production restaurant services small scale poultry raising, operating a nursery for children home laundry services and host of others. Business grouped under medium scale according to fasusa are soap production, commercial poultry profession approaches (law, accountancy, education) food and beverage production among others.
Consequently, both the federal and state government and recently local government, have stepped up efforts to promote the development of small scale enterprises through increased incentive scheme including enhanced budgetary allocations for technical assistance programmes New lending schemes and credits institutions for technical assistance programmes New Lending Scheme and credit institutions such as the National Economic Reconstruction Found (NERFOUND), World Bank assisted small and medium enterprises loan scheme (SMES), Nigeria Export and Import Bank (NEXIM), the Peoples Bank of Nigeria (PBN) and the Community Bank have also emerged at both the national and local levels to boost the flow of development finance of small scale enterprises which have so far depended largely on personal funds and credit from informal sources for both their investments and working capital.
Unfortunately, all these formal credit scheme have not been able to adequately redress the fundamental problems which have constrained small scale enterprises access to credit. The low credit rating of this class of enterprises is attributable largely to their weak capital base high mortality rate, low productivity and shortage of managerial skills. Indeed, the problems of weak capital base and poor access to finance appear to have developed into some vicious circle, leading to slow growth stagnation and even rapid demise of the small scale enterprises. The impact of all existing credit scheme interns of providing for meaningful and sustained development among the small scale enterprises had medium enterprises to serve the expected role of catalyst for rapid industrial development there is need for a more innovative strategy for improved access to development finance for the small and medium enterprises that would address their inability to provide collateral securities for loans formal credit institutions.
BRIEF HISTORY OF NNEWI NORTH LOCAL GOVERNMENT AREA
Nnewi is the second largest city in Anambra State in south eastern Nigeria. Nnewi as a metropolitan city encompasses two local government areas Nnewi North and Nnewi South. Nnewi North is commonly referred to as Nnewi Central and Comprises four autonomous quarters, Otolo, Uruagu, Umudiro and Nnewi-Ichi. Nnewi North also include Ichi an autonomous neighboring town.
As of 2006, Nnewi has an estimated population of 391,227 according to the Nigerian Census. The City Spans over, 1,076.9 square miles (2,789 km?) in Anambra State. Nnewi metropolitan area and its satellite town is a home to nearly 2.5 million residents. As of figures as the largest Inland town of all other in the Eastern State.
1.2 STATEMENT OF THE PROBLEM
Small and medium enterprises are mostly managed by owners and relations. The financing in most cases in normally provided by the owners. The owners fail to realize the importance of external source of capital in order affect expansion in the business. In most cases, by the owner member of the family and friends in most cases. In another development small and medium enterprises experience difficulties in raising equity capital from the finance houses or individuals.
Even when the finance house agrees to provide equity capital, the conditions are always dreadful. All the result to inadequate capital available to the sector and thus lead to poor financing, this leads to poor financing. This is the have of most collage industries in Nigeria. About 80% of small and medium enterprises are stifled because of this problem of poor financing and other problems associated with it (Chukwuemeka, 2006). The problems that emanated from poor financing include:
a. Lack of competent management which is the consequence of inability of owners to employ the services of experts.
b. Use of obsolete equipment and methods of production because of ownerÕs inability to access new technology.
c. Excessive competition which resulted from sales which is a consequence of poor finance to cope with increased competitors in the industry. In view of the above, the researcher decided to investigate poor financing to the organization.
1.3 PURPOSE OF THE STUDY
The specific purposes of the study are: –
- To determine factors influencing small and medium enterprise in Nigeria.
- To determining the extent finance house strict conditions have affected the development of small and medium enterprise in Nigeria.
- To assess the extent poor financing has affected small and medium business operations in Nigeria.
1.4 SIGNIFICANCE OF THE STUDY
- This study will help small and medium enterprises to access and appraise their role in solving the problems of unemployment in Nigeria.
- It will equally serve as a guideline to researchers who may wish to decide with this study in the future.
- It will also help small and medium enterprise to make sufficient preparation in their request for the credit assistance.
- It will guide the entrepreneurs in making credit demands that are compliance with government monetary policy.
- The last but not the least it will help the entrepreneurs to displayed competence in preparing justification for their project. It is rear to see most of them coming up with cash projections, projected balance sheets.
1.5 RESEARCH QUESTIONS
1. What extent does the Nnewi North L.G.A affect the operation of small and medium enterprise?
2. What are the factors responsible for phenomenal growth of small and medium enterprise in Nnewi North?
3. What are the feelings of the customers on small and medium enterprise in Nnewi North?
4. What are the problems of setting up small and medium enterprise?
5. What are the problems of managing small and medium enterprise in study area?
6. What are the future prospects of small and medium enterprise?
1.6 SCOPE OF THE STUDY
The study focuses on the problems and prospects of small and medium enterprises in Nigeria using Nnewi North as a case study.
The study intends specifically to investigate the problems and prospects of small and medium enterprises in Nigeria the strategies adopted by them to survive.
1.7 DEFINITION OF TERMS
MANAGEMENT: Is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively, management comprises, planning organizing, staffing, leading or directing and controlling.
ORGANIZATION: Is a group of one or more people or entities or effort for the purpose of accomplishing a goal.
RESOURCING: Encompasses the development and manipulation of human resources, financial resources technological resources and natural resources.
EXPORT: This term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country.
The seller of such goods and services is referred to as an exporter who is based in the country of export whereas the overseas based buyer is referred to as an importer. IN international trade exports refers to selling goods and services produced in the home country to other markets.
ECONOMIC GROWTH: It means designed to give a project in the science of products distribution and consumption of goods condition of a country as to material prosperity.
SMALL SCALE INDUSTRY: Any industry with capital not exceeding N750,000 including capital but exchanging cost of land.
SOLE PROPRIETORSHIP: Is a business owned and conducted by one person presumably assisted by one or more persons for intakes wife and children.
- Store Name: Brilliantng
- Vendor: Brilliantng
- No ratings found yet!
AN ANALYSIS OF CREDIT MANAGEMENT IN THE BANKING INDUSTRY (A CASE STUDY FIRST BANK OF NIGERIA PLC.)ABSTRACT Credit extension is an essential function of banks and bank management strive to satisfy the legitimate credit needs of the community it tends to serve. This study is aimed at analysing the credit management in the banking industry in Nigeria with particular reference to first Bank of Nigeria PLC. The importance of credit in the economic growth and development of a country cannot be overemphasized. Despite the important role played by credit in the economy, it is associated with a catalogue of risks. The Nigeria banking industry witnessed some failures prior to the consolidation era due to imprudent lending that finally led to bad debt and some ethical facts. The issue of non performance of asset and declaring of ficticious project has become the order of the day in our banking system as a result of poor credit management leading to bank distress in the industry. Three hypotheses were formulated and tested through use of chisquare on questionnaires administered to various respondents. From the data collected and the tested hypothesis, results showed that: i Inadequate feasibility study affects loan repayment in the banking industry, ii The diversion of bank loan to unprofitable ventures affects loan repayment and iii The problem of poor attention given to distribution of loan has negative effect on banks performance. Amongst several recommendations were the following: a Banks should establish sound and competent credit management unit and recruit well motivated staffs b Banks should ensure that the chief executive avoid approval in principle in the credit management, and c Banks should have a monitoring and control unit or department to carry out a sort of post modern exercise by way of controlling and monitoring credit facilities and also ensuring completeness of all conditions precedent to draw down. CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY Credit management in our banking sector today has taken a different dimension from what it used to be. The banking industry has adopted a lot of strategies in checking credit management in order to stay in business. Thu the banking industry in Nigeria has lost large amount of money as a result of the turning source of credit exposure and taken interest rate position. Nigerian banks are being required in the market because of their competence to provide transaction efficiency, market knowledge and funding capability. To perform these roles, the banks act as the most important participants in their transaction process of which they use their own balance sheet to make it easier and making sure that their associated risk is absorbed. Credit extension is essential function of banks and the bank management strive to satisfy the legitimate credit needs of the community it tends to serve. This credit advances by banks as a debtor to the depositor requires exercising prudence in handling the funds of depositors. The Central Bank of Nigeria established a credit act in 1990 which empowered banks to render returns to the credit risk management system in respect to its entire customers with aggregate outstanding debit balance of one million naira and above Ijaiya G.T and Abdulraheem A 2000. This made Nigerian banks to universally embark on upgrading their control system and risk management because this coincidental activity is recognized as the industry physiological weakness to financial risk. The researcher, a New yolkbased, said that 40 of Nigerian banks that made up exchange rate value in west Africa, has reduced the operating lending as a result of bad debts which hit more than 10 billion in 2009 and this has led to a tiedup questioning asset that is holding almost half of Nigerian banks. The banks identify the existence of destructive debtors in the banking system whose method involved responding to their debt obligations in some banks and tried to have contract of new debts in other banks. Banks are trying to make the database of credit risk management system more open for them to be more functional and recognized as to enable banks to enquire or render statutory returns on borrowers. There are some banking practices which increase the risks in the bank and cannot be easily changed. This result still leads to the question: what are the possible ways that will help make Nigerian banks manage their credit risks Credit risk management helps credit expert to know when to accept a credit applicant as to avoid destroying the banks reputation and making decision in order to explore unavoidable credit risk which gives more profit. Controlling a risk results in encouraging rewards that give internal audit more technical support service and customized training in banks or financial institutions. This research is presented to outline, find, investigate and report different state of techniques in risk management in the banking industry 1.2 STATEMENT OF THE PROBLEM In the history of development of the Nigerian banking industry, it can be seen that most of the failures experienced in the industry prior to the consolidation era were results of imprudent lending that finally led to bad loans and some other unethical factors Job, A.A Ogundepo Aand Olanirul 2008. Also the problem of poor attention given to distribution of loans has its effect on the banks performance. Most of the people collected loan from the banks and diverted the money to unprofitable ventures. Some bankers are not actually considering the necessary criteria for disbursement of loans to the customer. This work therefore intends to outline, explain these problems identify the causes and suggests lasting solutions to the problems associated with credit management and consequently banks debts. 1:3 OBJECTIVES OF THE STUDY The objectives of this study is as follows 1. To examine how feasibility study affect loan repayment in the banking industry. 2. To highlight the extent in which diversion of bank loans to unprofitable ventures affect loan repayment. 3. To examine how distribution of loans affect banks performance if banks give proper attention. 1.4 RESEARCH QUESTIONS Bank lending is said to be effective if it successfully achieves the bankers obligation of maximum liquidity to the depositors. The questions here are 1. To what extent does feasibility study affect loan repayment in the banking industry 2. To what extent does diversion of bank loans to unprofitable venture affect loan repayment 3. Does distribution of loans have effect on banks performance if given proper attention 1.5. SCOPE OF THE STUDY This study is aimed at analysing the credit management in the banking industry in Nigeria with a particular reference to First Bank of Nigeria plc. The study intends to analyse the credit facilities in banking industry. It also reviews the various concepts procedures for efficient and effective credit management. It examines the success and failure if any as well as recommending corrective measure. 1.6 SIGNIFICANCE OF THE STUDY This study will be useful to the executive and managers in the banking industry and other financial institutions. This is because it provides guidance which will enhance effect and efficient credit management aimed at attaining and boosting maximum profitability and liquidity in their banks. The depositor public on the other hand will be more enlightened on the need to be honest and fulfil the responsibilities in credit transaction with the banks so that they can look up to improve service from the banks. Finally to the researcher, this is an eye opener because as a potential manager it will guide one in future on how to manage credit facilities. 1.7 DEFFINATION OF TERMS Below are the major terms used in the course of this research work. 1 BANKRUPTCY: A state where a person or firm is unable to meet their financial obligations. 2 MANAGEMENT: management is the study of decisionmakers from the supervisor and line managers at lower levels to the Board of Directors. 3 LOANS AND ADVANCES: These are credit facilities granted by banks to their customers. They could be short, medium or long term depending on the length of period of repayment 4 OVERDRAFT: A credit facility usually short term granted by banks to current account holders and it carries interest charges on daily basis 5 BANK: Section 61 of BOFIA 1991 Act defines a banking business as business of receiving deposits on current account or other similar account paying or collecting cheques drawn by or paid in by customers. 6 CUSTOMER: A person is a customer if he or she has account with the bank.