1.0 INTRODUCTION 

1.1 BACKGROUND OF THE STUDY

Industrial development involves development of a technical arrangement that moves on economy from the traditional method of production to a more complex system of mass manufacturing of verity of goods of services involving technology and management techniques.  

Industrialization tends to propel growth adequate the achievement of structural transformation and diversification of economy. It enable a country to utilize it’s factor endowment and depends less on external sector. For its growth and sustenance. They provide employment for a substantial proportion of the industrial establishment. Therefore due to the above incentioned role played by industrial sector, that is small-scale industrial in the economy, it requires some financial support from government for the smooth running of the industrial.         

But small-scale industries is a sub-sector of development that is of great importance as mentioned above, but it has not received the types of attention it deserves that is why the government and the Federal Ministry of industries lay-down the parameter under which a industrialist may take advantage of the various incentive erected by the government for the growth of the small-scale industries. Such incentives are in the form of loan provision of machinery and raw materials. 

The process of taking advantages of the various incentive scheme are so cumbersome and its subject to bureaucratic radicalism and only few small-scale industries are able to utilize them. 

The importance of small-scale industries to the survival of a nation can no longer be saved. They have moved from the substance level to pre-indigenization period of importance in the country’s industrial process. Therefore the authorities should not relent on the inactive dec to lack of fund.

The Nigeria Bank was established to provide among other financial services to the indigenous business community, especially small sale industries of the recommendation of the financial system review committee of 1976 government made bank the apex financial institution for small-scale business. The bank obtains fund from the federal government to assist small business and the loan granted are relating on soft terms. During the 1970s and 1980 banks promoted of soft loans and advisory services of operational and liquidity problems attributed to reduced government funding and poor loans repayment by medium scale entrepreneur. Bank loans and advances fluctuated from N984 million, N223 millionm, N305.3 million, N87,7 million and 1994 respectively similarly, it’s deposit liabilities fluctuated from N252 million. In 1990 to N423.3 million in 1991 N318.7 million in 1992 and N320 million in both 1993 and 1994 following this, the government utilized the opportunity equip it banks with power to act as catalyst in development by operating like an all purpose universal bank to engage in all types of investment banking and under writing operation. 

2.0 REVIEW OF RELATED LITERATURE

In recent years, particularly since the adequate of the economic reform programme in Nigeria. In 1986, there has been a decisive switch of emphasis from grandiose,  capital, intensive large scale industrial projects based on the philosophy in input substitution to small scale industries with immense potential for developing domestic linkage for rapid, sustainable industries development. Apart from their potential for ensuring a self reliant industrialization in terms of ability to rely largely on local raw material, small scale enterprises are also in a better position to boost employment guarantee a more been distribution of individual development in the country, industries development to the country, including the rural areas, and  facilities the growth of non oil exports. 

According to Akamoioh (1999; 19) both Federal and States government and recently local government have stopped up effort to promote the development of small-scale enterprises through increase incentive scheme including enhanced budgetary allocation for technical assistance programmes. New lending schemes and credit institution such as the National Economic Reconstruction Fund (NFRFUND), World Bank Assisted Small-Scale Enterprise Loan Scheme (SUEX) Nigeria Export and Import Bank (NEXIM) the People Banks of Nigeria (PBN) and The Community Bank have also emerged at both the national and local level to boost the flow of development finance to small scale enterprises have so far depended largely on personal funds and also from informal sources for both their investment and working capital. 

According to Him, all fundamental schemes have not been able to adequately redress the fundamental problem which have constrained small-scale enterprises access to credit. The low credit rating of this class of enterprises is attacintable largely to their weak capital base, high mortality rate, low productivity and shortage of managerial skills, indeed the problem of weak capital base and poor access to finance appear to have developed into some visions circle leading to slow growth stagnation and even rapid disrness of small-scale industries. The impact of all existing credit scheme in terms of providing funds for meaningful and substance development among the small-scale 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 scale enterprises that would address their inability to provide collateral securities for loans from formal credit institution. 

The objective of this chapter is to review the crucial role of small-scale industries that would address their  inability for loans form formal credit institution.