Role Of Commercial Banks In The Financing Of Small- Scale Industries

INTRODUCTION
Background of the Study
With the way the world is today, it is categorized into two broad groups namely, the developed and the under developed nations. The developed nations stand for those whose economy have been made resonant by the involvement of industries at small scale medium scale and large scale activities. This is always the wish of any government that was a capitalist or a mixed economy.
However, because of the differences in the strength of entrepreneurs, they are grouped into three e.g the Small Scale Industries (SSI), the Medium Scale Industries (MSI) and the Large Scale Industries (LSI) that abound in many countries of which Nigeria is among. The services of these Industries are very essential even to the large firm and the need for growth is always the first thing in their plan. (AGBO, 2000).This is where financial institution comein, especially the commercial banks. The deficit in the personal finance of the entrepreneurs are argued about by the financial Institutions.
ANI (2004) Stated that in Nigeria as in many other developing countries, there is the scarcity of financial Institutions, which will provide for long and medium term credit needs of business operations. It went further to say that the entrepreneurs suffers a lot in their attempt to establish themselves in the ever changing business environment.
NAMARA (1993) Stated that Nigeria is a nation blessed with sufficient human and natural resources, but are not utilized properly. The issue remains that her rate of progress towards economic development has not recorded with other nations that are naturally endowed, while some sector of the economy are improving, others are lagging behind despite the increased financial allocations, causing uneven development and not reaching the achieved drift (the rural – urban drift).
Governments ability to check the above inconsistency have not been successful, instead the predicament seem to be increasing. As a result of the Nigerian economy being over dependent on oil made its benefits to be high in 1970s, which has diverted the economy from an independent oriented one to a dependent one was the last straw that broke the carmels back. It was when the oil was supplied in excess in 1981 that our economic planers saw the need to change the general idea or their pattern.
For this reason, the general idea of introducing varieties into the economy setup occurring as a result of Small Scale Industries, medium scale industries and large scale industries.
Again, the usefulness of the Industries to the economy survival of the country is of great value. They have moved from staying in a particular place to where they will be of great importance to the country’s development.
Nigeria as an investment based economy of different kinds of entrepreneurs, trying to bring about serious minded entrepreneurs in the many Small Scale Industries and in the attempt to beef up operation have exceeded into an investment intensive stage in order to carry this out, a huge amount of money is needed. The money needed most of the time is above the financial capacity of the entrepreneurs who are involved in the business.
Obasanjo (2002) Stated that the only help for the provision of such money is the financial Institutions. And that the commercial bank is one of the major sources of credit to various sector of the economy from all the financial Institutions in the country.
Nevertheless, it is a common knowledge that acquiring financial assistance from the commercial banks has been immensly organized for raising indigenous entrepreneurs and also those who have long time been in the managing business.

Statement of Problems
This research work is to know the role of Commercial Banks in the funding of Small-Scale Industries in Nigeria and to compare it with other source of finance to entrepreneurs of these Industries. This will serve as the means for calculating the exact achievements of the lending banks. Commercial banks in terms of the amount of loans, accessibility of credit, the rate of lending, technical assistance etc. that Small Scale enterprises have received from banks in terms of funding is a question that the answer will be known at the end of the research.
Virtually, the major problem encountered by Small Scale and Medium Scale Industries is finance and organization. To be carried out in this research, is banks performances with regards to funding Small-Scale Industries in Nigeria. Is bank performance better when compared with other financial Institution opened to Small-Scale Industries? In other to find out which sources is not useful and important in funding Small-Scale enterprises.

Purpose of the Study
Focusing at the predicaments of Small-Scale Industrialist, the aim of the study is to find out the role of banks in funding Small-Scale Industries in Nigeria.
These Particular Aims are:
1. To know the problems experienced by the Industrialist in getting fund from banks.
2. To estimate the situation and make recommendation on how to enhance the qualities of the banks.
3. To list the extent on which the commercial banks have assisted in funding Small-Scale Industries and problems stopping such.
4. To produce different opportunities for making money or investment in Nigeria Industries and provide way out for production investment of Nigeria’s savings.

Significance of the Study
This study will find out the limit to which the Small-Scale Industrialist have been able to get help from banks in raising money for their business. As a result, the research will be of usefulness in that it will give information for further studies in the subject. This study will be of great help to students who will carryout the research.
This research is carried out to know more about the study. And also to know the roles of commercial banks in funding Small-Scale business and how commercial banks has helped in financing Small-Scale Industrialist.

Research Questions
1. How often do commercial banks grant loans to Small-Scale Industrialist?
2. What are the change produced by rise in bank interest rate on production output of Small-Scale Industries?
3. Do Small-Scale Industrialist satisfy the banks order or needs for loan grants?

Delimitation of the Study
The researcher looks at the functions of commercial banks in assisting Small-Scale Industries in Nigeria through loan advancement. Given the time and money involved in this type of work, we are forced to limit over efforts to Union bank of Nigeria, Plc, Okpara Avenue Enugu and about one hundred (100) reachable industrialist within Enugu metropolis.
There was no trial however, by this research to study very careful all the bank performances in relation to Small-Scale business, neither did the work contain effort to examine the difficult problems befalling Small-Scale Industrialist and their ventures. These are areas for further research.

Limitations of the Study
They would have benefited more from this study if a greater number of Industrialists at Enugu have worked together with researchers as generalization would have been correct. However, only about 98 replied to questionnaires. Again, because of time, financial involvements and personnel, only Union Bank of Nigeria Plc, Okpara Avenue branch employees were sampled.
Lastly, even the branch of Union Bank that was sampled, they hoarded information so much, that they were not coming with any vital information that would have made the validation of this work more successful. A good case for this, is the fact that the bank did not agree to access the file for those that are owing in the past.

Definition of Terms
In other to improve reading and understanding of this research work by a lay man, it is very important to operationalize some of the concepts which we will encounter frequently.
Small Scale Industry
A Small-Scale Industry is defined as one which is owned and managed by one or two persons, influenced by the family decision making, has no differentiated organizational structure and market share. It is small and employs less than fifty (50) persons.
Kerehe,(1998) Stated that a Small-Scale Industry is one whose paid up capital falls within the range of 750,000.
The National Economic Reconstruction fund (NER FUND) defined Small-Scale Industries as one whose annual turnover is less than Five Hundred Thousand Naira (500,000).
Medium Scale Industry
A medium Scale Industry is defined as an Industry with a labour size of between 101-300 workers or a total investment of over N50 million but not more than N200 million, including working capital but excluding cost of land.
Large Scale Industry
It refers to the Industries which require huge infrastructure and influx of capital of capital assets.
Role: For the purpose of this study, role means all the functions, attributes and parts played by financial Institutions.
Loans: This is the transfer of fund from one economic entity to another which must be paid back with interest over a given period of time.
Credit: The word credit comes from a latin word “Cred” which means “believe” it means the ability to command the capital of another in return for a promise to pay back as specified in the future.
Finance: This is the availability of money and capital resources for investment in industries to improve and increase production.
Industrialist: This could be defined as a method through which more industries are encouraged to spring up.
Money: Money can be defined as anything which is generally acceptable in a given society or locality as a means of exchange and for settlement of debt.
Short Term Loan: This is a kind of loan opened to firms, which has a short period of maturity usually less than a year.
Period of Maturity: This is the time in which money borrowed is due for repayment to the lender with the agreed interest (if any).