THE IMPACT OF MICRO-FINANCE INSTITUTION IN THE PROVISION OF SHORT-TERM LOAN TO SMALL SCALE ENTERPRISES (A STUDY OF EKONDO MICRO FINANCE BANKS LIMITED), CALABAR SOUTH LOCAL GOVERNMENT AREA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
1.1 Background of the study
Entrepreneurship is the foundation for small scale enterprises. Small scale enterprises are the key for economic growth and development. They constitute the bedrock of many economies by providing the impetus opportunity for job creation and value added activities (Anyanwu, 2007). In Nigeria, small scale enterprises play crucial role in economic growth and development process. For instance, they are responsible for the establishment of a robust industrial sector by stimulating indigenous entrepreneurship and technology. They represent an essential link between primary production and large scale industrialization. Besides, they have enormous opportunities for growth due to their nature. But the worst hit is that most of them exist in rural areas. As such, they face myriad of problems that limit their positive contribution to the economy, summarily their major challenge is financial constraint.
To solve the problem of financial constraint, government over the years has put in place a number of economic schemes, programmes and policies. One of them is the rural banking programme (RBP) which was introduced in 1977. Under this progamme, banks were mandated to open a number of rural branches and bring banking services nearer to the rural dwellers. It was hoped that banking habits would be imbibed by the people and savings would also be mobilized. But this scheme was not successful because, it turned out to be costly and unprofitable for commercial banks (Akanj, 2008). Apart from the rural banking progamme, some development finance institutions were established by government to support and promote SSEs such as Nigeria Agricultural and Cooperative Bank(NACB), the People’s Bank of Nigeria, the Community Banks, Bank of industry (BOI), the Nigeria Export Import Bank (NEXIM) and the Nigeria Agricultural Cooperative and Rural Development Bank(NACRDB). In addition to these includes: The Agricultural Credit Guarantee Scheme (ACGS), Agricultural Credit Support Scheme (ACSS) and Small and Medium Enterprises Equity Investment Scheme (SMEEIS).