ABSTRACT
This study was carried out to assess the contribution of commercial banks to entrepreneurship development in Nigeria. Purposive sampling was used to the select there spondents along with snowballing sampling as the first respondents who accessed the loan helped the researcher to identify others whom they knew did the same until there search recollected sufficient data from them. Sample size was 85SMEs.Primary data were collected using structured questionnaires and interview guide.Descriptive statistics by use of frequencies and percentages was used to analyze responses. Correlation analysis was used to determine the relationship between creditd determinant factors and profit while regression analysis was used to examine thecre indeterminate factors effecting Entrepreneur’ profitability.Results showed that, grant and amount of loan provided byGTB bank had significant relationship with profit (p-value<0.01).Loan hadal so significant contribution to profit (p-value <0.05).Shortage of human resources development(entrepreneurial skils),bank financial restrictive regulations landlocked market information hampered more profit gains. It was recommended that, the bank should provide higher amount so floan to entrepreneurs with low interest rates .Business management trainings houldbere gularly provided to cope with the changing business situations, but more relevant to firms on enterprise exercises. SMEs should employ well trained and skilled personnel while considering the costs of human resourced envelopment (trainings)in their general operation costs form orient entrepreneurial skills as well as customer care. The commercial bank should relax restrictive regulations which may discourage borrowing and offering more credit facilities for SMEs in Anambra state.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND INFORMATION
Small and medium-sized enterprises (SMEs) are the backbone of all economies and area key source of economic growth, dynamism and flexibility in advanced in industrialized countries as well as in emerging and developing economies (Oni,2021). SMEs constitute the dominant form of business organization, accounting for over 95% and up to 99% of enterprises depending on the country.They are responsible for between 60-70% net job creation in Organization for Economic Co-operation and Development (OECD) countries.However,small business are particularly important for bringing innovative products or techniques to the market(Edmiston,2007). There is no consensus of SME definition as various countries had different definitions depending on the phase of economic development and their prevailing social conditions (Berry et al, 2002). In this, various indexes are used by member economies to define the term such as number of employees, invested capital, total amount of assets,sales volume (turnover) and production capability(Ayyagari,2006). In the contt Nigeria, micro enterprises are those engaging up to 4people, in most cases family members or employing capital amounting up to Tshs.5.0 million.Them ajority of micro enterprises allunder the informal sector. Small enterprises are mostly formalized undertaking sengaging between 5 and 49 employees or with capital investment from. 5milliontoTshs.200million. Medium enterprises employ between 50 and99 people or use capital investment from Tshs.200 million to Tshs.800 million (URT, 2003).
There are numerous potential sources of finance but SMEs encounter problems in accessing them. This has been due to stringent conditions including the need to before malized,high interest rates,lack of collateral and highly bureaucratic loan procedures (Osei et al, 1993). In general SMEs are owner-financed and/or financed by informal money-lenders and consequently have are latively low capital base (Ngowi, 2006). The start-up and operating capital are mainly from the pocket of owner(s) of a particular enterprise. The sources of these finances are in most cases from meager personal savings. They are relatively small amounts of money in the context of having strong, dynamic, vibrant and competitive SMEs (Kayanula and Quartey, 2000). It is also found that most SMEs do not enjoy many products that formal financial institutions offer. They normally do not borrow from institutions such as banks. This is due to many factors including strict conditions set by these formal financial institutions when SMEs seek access to their services. Among the common barriers to entrepreneurs’ access to formal banking services is the informality of most SMEs (Bouri, 2011). Informal SMEs’ properties are effectively legally and economically invisible and cannot be used as security (collateral) against a loan. Asan alternative to borrowing from formal financial institutions, SMEs are said to borrow from informal money lenders that include friends and relatives. The amount of money that is made available to entrepreneurs from these sources is rather small and hardly documented(Ngowi,2006). The findings above suggest that SMEs are in great need of finance.