1.0 Introduction
1.1 General Overview of the Study
The post independence Nigeria Government adopted the import, substitution large scale industrialization strategy to accelerate the country's industrial development. The death of indigenous entrepreneurship constrained government to assume the role of the entrepreneur and the urge to off set the economic neglect of the colonial government resulted in ambitious industrialization programmes.
When the Nigerian industrial development bank limited (NDB) was established in 1964 for the purpose of spending up the industrialization process. Its mandate was to promote industrial project, which were large enough to make appreciation contribution to the national economy.
However, the collapse of the oil boom in the early 1980's exposed the inherent weakness of this strategy. The inability to sustain the importation of inputs resulted in large idle capacities thereby crippling many large industrial enterprises. Industrial out/put as well as industries contribution to the gross domestic product (GDP) declined in the face of the strong national aspiration for the restructuring of the economy and reduction of the dependence on petroleum. Small and medium scale industries have since become the focus of nation industrial policy.
The significance of finance in the drive for economic growth is fairly well established and generally accepted for instance, they take off and efficient performance of any industrial enterprise be it small or large will require the provision of funds for its capitalization working capital and rehabilitation needs, as well as for the creation of new investment.
Apart from the entrepreneur, funds are required to bring together the other factors of production, land, labour and capital before production can take place. Provision of funds to the industrial sector of particularly for the SMEs has therefore been of prime interest to policy makers in both the republic and private sectors.
Successive governments in Nigeria. Have since the last three decades, shown great interest in financing of SME by establishing specialized banks and other credit agencies/schemes to provide customized funding to the sub sector. Most of these institutional arrangements have however, performed bellow expectation over the years owing to operational bottle necks.
The failure of most of the schemes and the need for a sustainable source of financing small scale inductees (SSLs), therefore necessitate the recent central bank of Nigeria (CBN) inspired bankers committee initiative, which is aimed at committing the banking industry to the provision of finance and other ancillary support to the sub sector. This project therefore, attempts to articulate the prospects of the current desire to ensure efficient and sustainable credit delivery system to the SSLs.
1.2 Statement of the Problem
Although the development of finance institution has contributed significantly to the growth and development of small-scale industries, certain lingering problems still constrain it optional operation. They include:
Inadequate Record
It has been observed that many finance institution in Nigeria due to lack of adequate record of their operations makes it difficult for proper running of institutions Accounting records have been known to offer major assistance to enable one determine the success in operation. But due to the fact many. But due to the fact many finance institution takes no adequate record. This therefore constitute a major problem in the development of finance institution.
Lack of Management Expertise
Many finance institution still do not consider management training essential fore success in their business. The finance institution in Nigeria term to employ young school leavers that do not know much about the fiancé rather than employing gradates that are well trained in finance.
Lack of Data For Planning
Finance institution does not have proper planning for financing of small scale industries. Most of them do not look into the prospect of the small scale business before giving out loans. In this case some small scale do not get the loans their need why some get more that they need for financing their business.
High Interest Ratio On Borrowed Fund
The cost of borrowing in Nigeria is still high and un-affordable by most proprietors of small-scale business who need fund for starting or expanding their business because of the lending rate. Many people with variable business ideas, shy away from going to ask for bank loan.
High Collateral Securities
Coupled with the high interest rate is the problem of collateral or securities worth more than the amount they want to borrow.
1.3 Objectives of the Study
This research work aims at knowing the way development finance institutions (DFIs) contributes in the small scale industries. And how (DFLs) is used to channel funds to the newly industrialized countries for industrial development. DFL in Nigeria is used to channel funds to SSLs. The need for importance of SSLs derives form the fact that their development is what is requires to enable the country's industrial sector meet the contemporary challenges of globalization, economic restructuring and poverty eradication.
Government ensures that all future (SSLs) small scale industries as well as medium scale industries (MSIs) funding schemes have a working capital window. All these and others are been done to ensure that small scale industries in a country can no longer depend solely or foreign importation of goods. In other to ensure stability in the economy of a country and high standard of living.
1.4 Research Question
This study tried to seek answer to the following research questions.
- What are small scale industries?
- What are the importance of small scale industries?
- What are the roles of development finance institutions?
- What are the major constraints of the small-scale industries?
1.5 Scope of the Study
The project attempts to trace or know the roles the development of finance. Institutions plays in other to help the small scale industries to grow. And also how importance for the interest of the country.
The small scale industries (SSLs) have their share of the problems, which generally plague the country's industrial sector, which this project work attempted to know.
1.6 Significance of the Study
This study is of immeasurable benefits both to the financing institutions and also to the entire country and individuals as a whole.
The critical importance of adequate financial assistance to SSLs derives form the fact that their development is what is required to enable the country's industrial sector meet the contemporary challenges of globalization, economic restructuring and poverty eradication. The economic significance of SSLs has been recognized world-wide.
To the economy at large and the entire country's this research work will be of help since SSLs are critical in the effort to reduce industrial import dependence. They can be use to meet the input needs of larger enterprises.
1.7 Limitation of the Study
As a student researcher, time and money were my greatest problems. Therefore, there is non doubt that these two factors will have some limiting impact on my ability to men around for data collections.
Apart form these two factors, some of the development finance institutions like NIDB, CBN like very other business organization with its requirement of secrecy is handling its official document could not provide enough data as required by the researcher.
For instance, the staff of these three institutions NIDB, NBCL, CBN could not give any information on the level of their inability to release fund at the point it will be needed. If they were able to give the researcher the whole information needed, it would have been of a very good help to this project work.
1.8 Definitions of Terms
NIDB: Nigerian industrial development bank
GDP: Gross domestic product
SME: Small and medium enterprises
CBN: Central bank of Nigeria
SSI: Small scale industries
MSI: Medium scale industries
DFI: Development finance institutions
NASSI: National association of small scale industries
NASEM: Nigerian association of small scale medium enterprises
IDC: Industrial development centers.
