THE ROLE OF COMMERCIAL BANKS IN FINANCING SMALL-SCALE INDUSTRIES. A RESEARCH PROJECT MATERIAL ON ECONOMICS
The main purpose of this important research was to examine the effect and role of commercial banks in financing small-scale industries. It was discovered that small-scale industries play a major role in terms of employment creation, income generation and output growth. The role of commercial banks towards the growth and development of small-scale industries cannot be overemphasized, since it enhances the financial strength of the small-scale industries, which further increases productivity in the economic development in the country.
The data generated from the questionnaires, were presented in tabled (frequency and percentages %) and the chi-square (x2) method were used for analysis and interpretation. Finally, summary of major findings, conclusion and recommendations, was made, which if attention is given will go along way in enhancing the economic status of Nigeria.
1.1 BACKGROUND OF THE STUDY
The important role played by small-scale industries in developing economics has been increasingly realized over the past years. Not only are they important for the vitality of the business sector, they also play a major role in terms of employment creation, income generation and output growth. But in order to play their role in future, there is need for researchers and policy makers to identify this role and constantly interact to bring about a sustainable policy framework for industrial development methods to have maximum effectiveness, they must include methods specifically adapted for work with small industries.
Stanley and Morse (1965) identified three types of policies towards SSI’s development, namely passive, protective and developmental. A passive policy is one of neglect, resulting from indifference, lack of information, or lack of leadership. A protective policy is designed to defend existing small enterprises against competition from large and modern industries,. The developmental approach to small-scale industries promotion has as its objective the creation of economically viable enterprises which on their own feet without perpetual subsidy can make a positive contribution to the growth of real income and therefore to better living standards. Policy instruments that can be used to achieve developmental policy objectives include the following:
– The provision of industrial advisory services.
– Provision of developmental finance.
The policy instrument identified above are by no means exhaustive. However, these are the main problems areas identified by researchers of SSI’s. Financial constraints have been identified by researchers as the most threatening challenge (Mashly and Stanley 2008). The small-scale industries were not accorded significant importance in developing countries (Africa) until 1975 when the various government realized that its industrialization strategy of import substitution only resulted in the setting up of large-scale industries.