(Business Administration and Management)





A small and medium scale enterprise are many in our economy and plays the vital role of providing specialized services to the customers of the large scale enterprises. More so, it is a source of income or employment for greater percentage on Nigerians. It becomes paramount that financing of the small and medium scale enterprises to the agenda of the financial institutions. But are they at all in their agenda? What are their relationships with regards to financing? It is the aim of this research to find out the role of commercial banks as the financing of small and medium scale enterprises, taking the First Bank PLC as a reference point. To delve into the matter, the research work has five chapters. Chapter one is the general discussion of the small and medium scale enterprises from different perspectives. As a further discussion, there was the statement of problems of the study , the need of the study, the scope, limitations and the definition of terms.      Highlighted is chapter two are the review of related literature as carried out by authors and researchers.         Chapter three of this researcher work deals with the design of the study, the data collection method. In other words, the ways through which the questionnaires were distributed to the respondent were discussed. In the fourth chapter of the research work, the data collected were analyzed and interpreted.  Finally, the summary of findings, conclusions and recommendation are made in chapter five.       It is the belief of the researcher that the recommendations if strictly adhered to by the entrepreneurs and financial institutions will ensure their mutual survival and growth



1.1        Introduction                                                               

1.2        statement of problem                                          

1.3        objective of the study                                         

1.4        significance of the study                                              

1.5        scope limitation and delimitation                           

1.6        limitation of the study                                         

1.7        definition of terms                                                      



2.1        Historical background of small scale industry          

2.2        Importance of small scale industries                      

2.3        The major forms of financial assistance                 

2.4        The role of banks finance                                            


3.1        Research design and methodology                        

3.2        Research design                                                 

3.3        Election of Data                                                  

3.4        Sources of Data                                                 

3.5        Research Instrument                                           


4.1        Data presentation                                                       

4.2        Analysis and presentation of responses                  

4.3        Test of hypothesis                                                      



5.1        Summary of Findings                                          

5.2        Recommendation                                               

5.3        Conclusion                                                         





1.8         INTRODUCTION

The world as it is today is categorized into two broad groups namely the industrialized bud the non industrialized nations represent those whose economy have been made vibrant by the participation of industries small scale and medium scale and activities. This has never ceased to be the wish of any government that was a capitalist or a mixed economy.

However, owing to the differences in the strength of entrepreneurs, the industries are grouped into three, viz. the small-scale industries (SSI), the medium scale industries (MSI) and the large-scale industries (LSI) of industries that abound in many countries of which Nigeria is one. The services of these industries are indispensable even to the large firms and the need for expansion is always top on their agenda.

This is where financial institutions come, in, particularly the commercial banks. The short fall in the personal financial of the entrepreneurs are augmented by the financial institutions. However, it is a prominent situation today whereby one funds the bridge unable to cross to the other side of the river. In Nigeria, as in many other developing countries, there is the death of financial institutions, which cater for long and medium term credit needs of business operations. It suffices here to say that the entrepreneurs suffer a great deal in their bid to establish themselves in the ever-dynamic business environment

Nigeria is a nation endowed with abundant human and national resources that have yet been fully tapped. The issue remains that her pace towards economic development has not records with other naturally endowed nations. While some sectors of the economy have recorded some significant growth, others continue to lag behind in spite of increase financial allocations, resulting in uneven development and the attendant drift the rural –urban drift.

Government effort to check the above annualized have not been fruitful, rather the problem seem to be on high rise with every effort in certain cases. The last straw that broke the carnels back was the down turn of oil prices, for the growth in oil production coupled with high sales in the 1980s, has turned the economy from a production oriented one 5to an import and export one. It was when the oil glut was witnessed in 1981 that our economy planners recognized the need to reverse the trend. Hence the concept of diversifying the economy is the establishment of small scale industries. Again, the importance of these industries to the economic survival of the country cannot be over emphasized. They have moved from the sub-existence level of indigenization to period to a position of importance in the country’s industrialization process.

Nigeria as a capitalist economy with diverse and populous entrepreneur entrepreneurs in an attempt to bring about focused and religiously dedicated entrepreneurs in the many small scale industries their level of operation have to move into a capital intensive stage. To do this, a reasonable amount of capital is needed. That nature of capital needed in many cases is beyond the financial institution capacity of the entrepreneurs who set up the business.

The major alternative for provision of such capital is the financial institutions. Among the financial institutions operations in the country, the commercial banks is one the major sources of credit to various sector of the economy. However, it is a common knowledge that getting financial support from the commercial banks has been greatly unorganized for building indigenous entrepreneurs and even for those who have been in the manufacturing business for a long time.


The role of bank in financing small-scale enterprises is a quest any day as the researcher seeks to determine the role of banks in being the bridge between the small scale enterprises. This as well will as the yardstick for determining the actual achievement of the lending banks (commercial banks) in terms of size of loans, accessibility of credit, the frequency of lending, technical; assistances, etc. That small-scale enterprises have benefited appreciably from banks in terms of capital provision is a question which its answer will surface at the and of the research.

Practically, the major problems of small scale and medium scale industries consist of finance, organization. To be undertaken in this research is banks performance with other research is banks performance with other sources open to small scale industries to find out which source of industries to find out which source of credit is are most useful and important to small scale enterprises.


In view of the problem of small-scale industrialist, the objective of this study is to evaluate the role of banks in financing small-scale industries in Nigeria. The specific objectives are:

i.             To identify the problems encountered by the industrialist in obtaining finance from banks.

ii.            To appraise the situation and make recommendation on how to improve the banks

iii.           To highlight the extend to which the commercial banks have helped to finance small-scale industries and problems hindering such.

iv.          To create attractive opportunities for investment in Nigerian industries and provide outlets for production investment of Nigerian savings.

v.           To conduct research into other aspects of banking operations like acceptance of tem deposit and provision of loans to Nigerians.


In the process of carrying out this study, the following assumptions were made:

a.           The small-scale industrialists frequently apply for overdrafts from commercial banks.

b.           The small scale industrialists frequently apply for loans from commercial banks

c.           An increase in bank interest will result in a decrease in industrial production.


        The significance of the study is to evaluate the extent to which the small-scale industrialists have been able to obtain the assistance of banks in capital funding of their business. The research will be importance in that it will provide data for future studies in the subject. Thus, the study will be of benefit to students, who will live to carry out research on related topic in future, it will make their work easier because already a foundation has been laid.

Industrialists will benefit because the research project will reveal any problems in relationship between the banks and the small scale industrialists when there problems are revealed it will aid small scale borrowers ti obtain loans easily without much problems.

Banks will benefit because the actual size they play in financing of small-scale industries will be revealed. This gives them the reason to ask federal government for loan, when they have needed for that.

        Individuals will also gain because when banks give loans to industrialists, the needs of the people are provided if not fully but to an extent that a good number of people benefit.

1.6    SCOPE

        This topic “The Role of Financial institutions in Enhancing Small – Scale Enterprises” (A case study of First Bank PLC) is very vast but for purpose of manageability, and financial constraints, it has therefore been restricted or limited itself to banks in Enugu state. In choosing the banks the researcher has limited his research to those areas of the banks or operations of the institutions that enhance economic emancipation of Nigeria and used inference drawn upon to apply to other development financial institution. This has been so because the research assumes that all-financial institution are saddled with the sole responsibility of enhancing even growth in the economy and assisting the small scale industries.  


        Some of the words used in this research work have their meanings in the English usage but are given contextual meaning in this research work. The words or used will be given their contextual meanings:

Small Scale Industry: - Bearing in mined the literary

meaning of small-scale industry, different authors have different views of what a small-scale industry is. According to Kerelu F.N. (1990), a small-scale industry is one whose paid up capital falls within the range of N750.000. The Nigeria Bank for commerce and Industry (NBCI) which currently plays an active role in the promotion of small scale industries defines a small scale industry as one employing up to N500, 000. In most cases, the varied definitions appeared the definition and the stage of development in which the definition was employed. Generally, a small-scale industry is defined, as one which is owned and managed by one or two persons, influenced by the family in decision making, has no undifferentiated organizational structure, market share is small and employs less than fifty (50) persons. The National Economic Reconstruction Fund (NERFUND) defines small-scale industries as one whose annual turnover is less than five hundred thousand Naira (500,000) as a small-scale industry. To National directorate for Employment (NDE) defines small scale industry to include projects with capital investment of below five hundred thousand naira (500,000) and a staff strength of three (3) persons.

Role: For the purpose of this study role should mean and

includes all parts played and exhibited by financial institutions.

Loans: This is the transfer of fund from one economic

entity to another who must be repaid with interest over a stipulated period of time.

Credit: The word credit comes form a Latin word “Cred”

meaning “I believe”. It means the ability to command the capital of another in return for a promise to repay as specified in the future.

Finance: This is concerned with available money and

capital goods for investment in industries to boost production.

Industrialisation: This could be defined as a strategy

through which more industries are encouraged to spring up.

Money: Money can be defined as anything which i9s

generally acceptable in a given society or locality as a means of exchange and for settlement of debt.

Short Term Loan: This is a source of fund, which has a

short period of maturity usually less than a year.

Period of Maturity: This is the time in which money

borrowed is due for repayment to the lender with the accrued interest if any.


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