Appraisal Of United Nation Development Programmes (UNDP) Micro- Credit Funding Of Small And Meduim Scale Enterprises

INTRODUCTION

In Nigeria, the majority of the populations (70%) live in the rural areas in conditions of poverty, limited access to health, sanitation, education and other facilities.
Majority of Nigerians are poor and are concentrated in the rural areas depending directly on agriculture, small and medium scale enterprises for their livelihood.
The vicious cycles of poverty has been sustained by a strong orientation of the greater segments of the urban and rural population towards high rate of consumption and low propensity to save with attendant low investment capacity. It has therefore become increasingly necessary to find a suitable remedy to this ugly phenomena.
The development of Agriculture, artisan fishing, micro and medium scale enterprises as well as the empowerment of the rural and urban poor women, disabled people and other disadvantaged population are considered variable option for addressing the critical issues of poverty among the urban and rural population of Nigeria.
However, since these have remained largely stagnant and traditional, there appears to be a consensus among development experts on the need for credit delivery to the urban and rural poor especially the small holder farmer, urban and rural women, artisanal fisher follies and rural artisans among others. Credit delivery to those litherto-marginalized population is considered necessary to finance the adaptation and use of material or modern technology, purchase of working materials and equipment for expansion of holdings (Moriam, M.O. 1997).

1.1 BACKFROUND OF THE STUDY
The primary motive behind this study is to make a modest attempt at appraising the United Nation Development Programme (UNDP) micro-credit option granced towards efficient and effective funding of small and medium enterprises under the world body’s poverty alleviation programmes.
Successive Nigerian government have made several attempts at poverty alleviation among the urban and rural poor particularly through the establishment of credit institution and programes. These includes the fund for Agricultural credit and industrial Development (FAID), Fund for small-scale industries (FUSSI), Agricultural credit Guarantee Scheme Fund (ACGSF) and the supervised Agricultural Credit Scheme (SACS).
The Fund for Agricultural and Industrial Development (FAID) was established and implemented in Eastern Nigeria in the Gos. It provided the base for providing supporting services to farmers and the small scale industries as well as technical and management services.
Similarly, (FUSSI) WAS ESTABLISHED IN THE EAST CENTRAL STATE IN THE SECOND National Development plan period to give loans to indigenous entrepreneurs for small scale collage industries. It was inherited by Imo and Anambra state. It has been in existence from 1971 when Nigeria has a nineteen (19) state structure. Meanwhile it is now governed by Edith No 1 of 1976 as applicable to Enugu, Ebonyi and Anambra state.
The Agricultural credit Guarantee Schemes Fund (ACGSF) was established as both the Federal and State level in the mid 70s under the supervision of central bank of Nigeria (CBN). Under this scheme, all commercial banks in Nigeria were required by government to lay aside 6% of their loan portfolio to farmers. In addition the banks were required to established branches in the rural and semi-urban areas.
The supervised Agricultural credit scheme (SACS) was established by Edith No. 13 of April 1978 in the then Anambra State. The main policy objectives of the scheme is to increase food production in Enugu State through provision of credit to small holder farmers.
Such institutions as the Nigeria Industrial Development Bank (NIDB), Nigeria Bank for commerce and Industry (NBCI) and the Nigerian Agricultural and co-operative Bank (NACB) were established to facilitate the implantation of the micro-credit scheme among the urban and rural poor in Nigeria. Within the last decade, government introduced NERFUND, people Bank and National Board for Community Bank and the attempt to alleviate poverty through provision of credit for income generation activities.
From all indication, these attempts have failed to address the issue of poverty in Enugu state due to poor implementation of credit programmes (Daniel S.U. 1996).

1.2 STATEMENT OF PROBLEM
The concern of the policy makers to make credit available to urban and rural poor had led to the design and establishment of specialized credit institutions to channel credit to vulnerable populations. The expectations that these institution would provide this target population with easer access to credit have often been met with disappointing results.
For a long time, the financial policies and package that were directed to the promotion of small-scale enterprises rural development and self- reliance were mainly based on the promise that the rural small-scale entrepreneurs were unable to organize themselves, collateral, tool poor to save and therefore needed cheap credit (subsidy) to form well. This situation led to the setting up of development oriented institutions and programmes such as subsidized credit delivery and credit schemes, which neglected savings mobilization as a means of credit formation and group approach as a strategy for urban and rural credit delivery. This has resulted in sub-optimal development and utilization of small- scale enterprises.
The existing financial institution or channels of credit have attributed their inability to meet with the credit needs of these marginalized population to the following reasons:-
1. The high cost of credit delivery and recovery among the small entrepreneurs scattered in the country side, making them not to have adequate access to banks and financial agencies which are mainly located in the cities.
2. Inadequate and suitable security or collateral to secure credit which has over the years constituted a serious bottleneck to rural credit programmes especially by commercial banks.
3. High default rate associated with urban and rural credit programmes which had discouraged rural lending.
4. Ignorance on the part of this vulnerable population of the requirement of the bank and available facilities as well as the socio-cultural environment of the rural population.
5. Inadequate loan able funds which directly affects size of loans of these rural-urban neglected population. This is aggravated by the rising cost of inputs, galloping inflation and low purchasing power of Naria which predisposed the beneficiaries to loan diversion and consequent default.
6. Classification of Agriculture and related activities as network of roads, Agriculture imparts as well as Agricultural marketing problems in the rural areas which reduces the viability and attractiveness of the rural business environment.
One the part of the rural business and urban marginalized population, there is a constant low return to scale due to small holdings. The inability to adopt modern techniques of operation due to lack of credits result in low productivity which is further aggravated by unorganized markets. Moreover the loan administration procedure is cumbersome and bureaucratic without due consideration to the limitation of the target population. This results in untimely disbursement of approved loans.
Loan repayment rate is low due to low production levels. This helps to sustain the vicious cycles of poverty of low output, low income and low production.
Given the above circumstance, it becomes expedient to adopt a more suitable and sustainable strategy of credit delivery to these target population that will address these problems. This forms the basis for the research (Imogu J.S. 1996).

1.3 OBJECTIVES OF THE STUDY
The objectives of this study are five dimensional
1. The study aims at assessing the practicability of the UNDP micro-credit option as a new experiment opposed to the previous efforts made in funding small and medium scale enterprises in Enugu State.
2. To access the roles expected of the credit Administration Entities or financial institutions in addressing the issues and factors that hitherto militated against effective and efficient financing of small businesses: Some of these factors include high cost of credit delivery and recovery, absence of suitable security or collateral to secure credit, diversion of credit to uses different from that for which it is sought, which more often than not result to high default rate among other factors.
3. The evaluation of the above factors.
4. To assess the impacts positive or negative of government international in the funding of small and medium scale enterprises.
5. The study also makes suggestion and recommendations on much desired objectives of industrial development aimed at poverty reduction in Enugu State.

1.4 SIGNIFICANCE OF THE STUDY
It is the desire of the research to ascertain the immediate and remote causes of the bottleneck that negatively affect efficient and effective funding of small and medium scale enterprises in Enugu State. Past attempt aimed at finding lasting solutions to the interact able problem of funding small scale industrial development appear not to have made the desired impacts. Moreso, the distress that has bedeviled the banking industry in recent times has made it all the more difficult to raise the necessary fund by small businesses.
It is believed that micro-credit option of funding small and medium enterprises will be immense help to the rural and urban poor. This well be so because past errors of commissions that hampered successful implementation of funding small businesses are adequately addressed in the formation of micro-credit.
To the Government, successful finding of small and medium scale industries will improve and provide the fertile grounds for achieving national industrial development.
Finally, it will be of immense help to academicians and future research in funding of small businesses.

1.5 LIMITATIONS OF THE STUDY
The study reviews the UNDP micro-credit funding of small and medium scale enterprises in Enugu State.
However, references can be made to certain national economic measures generally adopted with regard to funding small businesses.
The authors are mindful of a number of limitations. The study would have extended to more states in order to have a fair representation of the country but because of the following limitations it was unable to do that;
1. Time: means that there is no enough time to make more research through secondary sources of data.
2. Availability of resources (like fund) in the sense that attempts would have been made in crossing over to other nearly states to have study of the efforts in that direction.
3. Dearth of relevant texts on this subject also is a major constraints obviously because of the newness of this subject.