ABSTRACT
This
study was carried out to examine the impact of banking lending on industrial
development in Nigeria. The objectives of the study was to examine the impact
of bank lending on industrial development in Nigeria and to examine the
relationship between bank lending and employment in the industrial sector. The
method used in gathering data for this study was from publication of the
Central Bank of Nigeria and the Federal office of statistics. The method used
in testing hypothesis was analysis of variance (ANOVA) and regression analysis.
Data was analyzed into gross domestic product and loan from 1999 to 2008. At
the end of this work, the researcher made the following findings:
(a) Industrial development will
be achieved through promotion and encouraging of the small and medium scale
industries in the country. (b) The industrial sector in Nigeria has been
largely stunted in growth, since the era of the failed import substitution
strategy of the 1960s. Also the researcher made the following recommendation;
(a) Financial assistance could be extended by banks as part of the preventive
measure. (b) The policy of the import substitution and export promotion should
be stipulated by the government to encourage infant industries. (c) The
findings are expected to provide insight into likely contemporary policy
choices facing a typical Nigeria economy in the pursuit of an export-led
industrialization strategy.
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Industries are found both in developed and developing nations of the
world, and they form the bedrock of economic development of any country and
essentially their impact is felt round the world.
Through bank lending, the industrialization development in Nigeria will
grow from small scale to medium scale and to large scale industry.
Ekukanam (1999), notes with deep concern that development of industries
in Nigeria will provide solution not only to the basic economic problems but
also to social problems like unemployment, poverty and over dependence.
The development of industries through bank lending is not just an
effective way of contributing to the diversification and development to the
economy and thus the standard of living but also one of the principal means of
attaining social and political emancipation of the people of the society.
Bank lending is a catalyst for industrial and economic development. This
simply means that bank lending is directed towards stimulating and facilitates
economic growth. Banks serve not only as store of value where money is
deposited for safety purposes alone. Some percentage of loans is extended to
the desirable public to gear up the economy. The banking industry is an
important medium for investment of funds needed or organizations engaged in the
production of goods and services.
Bank credit and lending function as we are aware, evolved from rather
humble beginning as a result of discovery made by the goldsmith some century
ago. Bank have in recent time been described as the machine of economic growth
in an economy, banks extends credits (money which is an assets) to a customers.
Most people who wants to start a business complains of lack of sufficient
capital to start with. Commercial banks have proven to be financial
intermediaries in Nigeria. They maintained a good position in economy. The role
banks play in the industrial development cannot be over emphasized. Banks go a
long way in providing financial resources for a business growth and
development.
Over the years, the federal government has taken
various steps; employing monetary, fiscal and industrial policy measures to
promote the development of industries. A scheme was also set requires all banks
in Nigeria to set 10 percent of their profit before tax (PBT) for equity
investment and promotion of industries in Nigeria. The establishment of
specialized financial institutions including the small scale industry credit
scheme (SSICS), Nigeria Industrial Development Bank (NIDB), Nigeria Bank for
Commerce and Industry (NBCI) to provide long term credit. The government also
assists in the industrial development in Nigeria through; (1) facilitating and
guaranteeing external finance by the World Bank, African Development bank and
other international financial institution.
(2)
Facilitating
the establishment of the National Directorate of Employment (NDE), which also
initiated the setting of new small and medium enterprise.
(3)
Establishment
of the National Economic Reconstruction fund (NERFUND) to provide medium to
long-term local and foreign loan for industries, particularly those located in
the rural areas.
(4)
Small
and Medium Industry Equity Investment Scheme (SMIELS).
The fact that has emerged
from the appraisal of the various past and policy initiatives on the promotion
and development of industries in Nigeria, is that fiancé is a major constraint
to the development of industries in Nigeria. The banking sector tends to be
lukewarm in meeting the credit requirements of industries. This is because
project proposals are poorly prepared, financial documentation and adequate collateral
are not provided, as well as the inability of the promoters of industries to
raise the required equity contribution. The banks regard many industries as
high risk venture because of absence of succession plan in the event of the
death of the proprietor. To most industries, working capital is still a major
constraint on production, as most industries are restricted to funds from
family members and friends and are therefore unable to respond to anticipated
challenges in a timely manner......
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Item Type: Project Material | Attribute: 54 pages | Chapters: 1-5
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