This study examines the performance of Commercial Banks institutions in Kaduna State, based on the development of small and medium Scale industry. Simply random sampling technique was employed in selecting the 110 that constituted the sample size of the research. Structure questionnaire was designed to facilitate the collection of relevant data which was used for the analysis. Descriptive statistics which involves simple percentage, and chi-square (contingency test). The findings indicate that the operations of CBN have grown phenomenally in the last three years, driven largely by expanding informal sector activities, the conversion of the community banks to commercial banks and the reluctance of banks to fund the emerging commercial enterprises. The study also reveals the sub sector faces a number of challenges, which have been addressed in this research. They include the urgent need to approved and implement a policy frame work that would regulate and standardize the operations; accessing medium to long term sustainable commercial sources of funds, such as SMIEIES. Commercials banks traditionally lend to medium and large enterprises, which are judged to be credit worthy. They avoid doing business with small and medium scale industry because the associated cost and risks are considered to the relatively high. Commercial institutions have therefore become the main sources of funding small and medium scale industry in Africa and in other developing regions.
1.1 BACKGROUND TO THE STUDY
The post-independence Nigerian government adopted the entrepreneurship government which constrained it to assume the role of entrepreneur and the urge to offset the economic neglect of the colonial government and that resulted in engaging in ambitious industrialization programs.
When the Nigerian industrial development Bank Limited (NIDB) was established in 1964 for the purpose of speeding up the industrialization process, its mandate was to promote industrial projects which were large enough to make applicable contribution to the national economy. However, the collapse of the oil boom in the early 1980’s exposed the inherent weaknesses of this importation of inputs resulted in large idle capacities, thereby creeping many gross domestic product (GDP) declined in the face of the strong national aspiration for the restructuring of the economy and reduction of the dependence on petroleum. Small and medium scale enterprises have since become the focus of national industrial policy.
In pursuit of self-reliance in a developing country particularly in Nigeria, the central government enacted a decree called “Enterprises promotion Decree” when there was need for small scale enterprises in the promotion of economic development. This has since been at the fore front of development strategies.
However, many developing countries have failed to adopt these strategies owing to their belief it is a relatively slow process of industrialization. Without the development of small scale enterprises in Nigeria, the nation’s quest for industrialization will certainly remain forever at a slow pace. It is the humble opinion of the researcher that further development on our business enterprises must add to the basic issue of creating linkages within the economy to begin to yield real inputs to our economic activities. Priority attention must therefore be given to those business enterprises for which domestic inputs could easily be produced. The objective should be to maximize the value added in their processing and manufacturing as final strong producer incentives to small scale enterprises are necessary not only to meet the food requirement but also to promote growing input supplier industrial growth.