The Role of Commercial Banks in Financing SMEs in Nigeria; A Case Study of First Bank Plc
Chapter One
OBJECTIVE OF THE STUDY
- To appraise the nature and roles of SMEs in Nigeria
- To determine the role of commercial banks in financing SMEs in Nigeria
- To appraise the role of First Bank in financing SMEs in Nigeria
CHAPTER TWO
REVIEW OF LITERATURE
Overview of Small and Medium Scale Enterprises.
According to allbusiness.com (2010), the abbreviation of small and medium scale enterprises (SMEs) occurs commonly in the European Union and in International Organizations such as the World Bank, the United Nations and the World Trade Organization. Also the term Small and Medium Scale Businesses (SMEs) is predominantly used in the United States of America. The European Union states traditionally have their own definition of what constitutes SMEs. For instance, the traditional definition in Germany Limits Small and Medium Scale Enterprises to two hundred and fifty (250) employees while in Belgium, it is limited to one hundred (100) employees. Recently, the European Union has standardize the concept by categorizing enterprises with less than ten (10) employees as ‘micro’, those with fewer than fifty (50) employees as ‘Small’ and those with fewer than two hundred and fifty (250) employees as “medium”. In the United States of America, any business with fewer than one hundred (100) employees is classified as “small” while medium scale business refers to a business with fewer than five hundred (500) employees.
In India, Micro and Small Enterprises play a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector account for about 39% of the manufacturing output and about 33% of the total export of the country. Also in South Africa, the term Small, Medium and Micro Enterprises (SMMEs) is usually used, while in Nigeria, the term Small and Medium Scale Enterprises (SMEs) is generally used. From the foregoing, it can be deduced that Small and Medium Scale Enterprises, are enterprises that have the capacity to employ at most five hundred (500) employees at a time and it has been proved to be the back bone of every economy.
The brain behind every successful Small and Medium Scale Enterprise is entrepreneurship which in the words of Olagunju Y. (2004) is an undertaking in which one is involved in the task of creating and managing an enterprise for a purpose. The purpose as further stated may be personal, social or developmental. One who is involved in this task is called an entrepreneur. Also a line between an entrepreneur and business owners must be drawn. While business owners establish and manage their own enterprise for personal gains, entrepreneurs exploit ideas that create a business that benefit them, the society and act as developmental weapon.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
This chapter states the various methods used in research, as well as the population of the study, and sampling techniques used in determining the sample size for the research. How data was collected and analysed is also discussed in this chapter.
The main objectives of this research were achieved through quantitative methods, as inferential statistics were used to measure the level of accuracy and validate responses from the respondents in accordance to the objectives of the research.
STUDY AREA
Abuja, the capital of Nigeria was the study area for this research. It is located in the centre of Nigeria, within the Federal Capital Territory (FCT). Abuja is a planned city, and was built mainly in the 1980s. It officially became Nigeria’s capital on 12 December 1991, replacing Lagos, though the latter remains the country’s most populous city. At the 2006 census, the city of Abuja had a population of 776,298, making it one of the ten most populous cities in Nigeria. Abuja has witnessed a huge influx of people into the city; the growth has led to the emergence of satellite towns such as Karu Urban Area, Suleja, Gwagwalada, Lugbe, Kuje and smaller settlements to which the planned city is sprawling. The unofficial metropolitan area of Abuja has a population of well over three million and comprises the fourth largest urban area in Nigeria, surpassed only by Lagos, Kano and Ibadan.
RESEARCH DESIGN
The research design used for this study was the descriptive research design. Since data characteristics were described using frequencies and percentages, and no manipulations of data or variables were necessary, the researcher chose this research design. The researcher discarded other alternatives such as the causal and explanatory research designs, because accurate findings and data analysis may not be achieved.
POPULATION OF THE STUDY
The population for this study are employees of first Bank of Nigeria, Abuja. The population figure for the study was 32 respondents, comprising of first bank officials from various departments such as operations, finance, administration etc.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
This chapter is devoted to the presentation, analysis and interpretation of the data gathered in the course of this study. The data are based on the number of copies of the questionnaire completed and returned by the respondents. The data are presented in tables and the analysis is done using the chi square test.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
SUMMARY OF FINDINGS
The objectives of this study were;
- To appraise the nature and roles of SMEs in Nigeria.
- To determine the role of commercial banks in financing SMEs in Nigeria.
- To appraise the role of first bank in financing SMEs in Nigeria.
Findings from the study revealed that majority of the respondents are of the opinion that SMEs are important for the development of the economy and that the impact of commercial bank in financing SMEs is high.
CONCLUSION
Small medium enterprises (SMEs) are considered the backbone of economic growth in all countries. They play an important role in Nigerians economic growth, as they constitute 97.2% of the companies in Nigeria .They also contribute to national development by positively influencing the distribution of income in both functional and nominal terms.
RECOMMENDATIONS
Based on the findings, the following recommendations were made;
- Commercial banks should encourage SMEs by issuing out easy loans to aid their business.
- SMEs should be assisted in every way in order to reduce the challenges suffered by them.
- Training and global education on business should be given to SMEs.
REFERENCE
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