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THE ROLE FIRST BANK IN EMPOWERING SMALL AND MEDIUM ENTERPRISES TO THE SUSTAINABLE DEVELOPMENT IN NIGERIA
The study examined the Role of First bank in empowering Small and Medium Enterprises to the sustainable development in Nigeria. The population of the study consisted of all the populace of Guma local government area of Benue state. Simple random sampling techniques were used to select 105 respondents out of the population. The instrument used for data collection was questionnaire. The instrument was validated by two experts in evaluation and Test. Data from 105 completed questionnaires were subjected to independent t-test analysis. the findings showed that There is significant effect of the role of First bank in empowering Small and Medium Enterprises to the sustainable development in Nigeria. Recommendations were that Regular training and retraining should be provided, for SMEs to reduce the perennial problems of inadequate managerial capacity and poor quality services and products. To this regard, facilities should be adequate for training and developing the human resources (managers) needed in translating business in the right question in an empowerment for stainable development. The enabling environment by government to small and medium scale enterprises should always be complete in any particular circumstance. In other words, transport, electricity, water, communication; educational infrastructure, etc should be available or adequate in all times on any small and medium scale enterprises empowerment for stainable development.
1.1 BACKGROUND OF THE STUDY
In the recent decades, small and medium enterprises (SMEs) financing has been one of the major interesting research subject for economists and policymakers working on financial and economic development. This interest is driven in part by the fact that SMEs are key drivers of growth and development of the economy through their positive effects on employment generation and poverty reduction. (Sule, 1986; Takats, 2004; World Bank, 1995) In contributing meaningfully to economic development, access to finance by SME operators has become critical as it is often cited by firm owners as one of the key determinants of growth and expansion. SMEs depend on financial institutions to raise funds, undertake productive investment, expand their businesses and acquire the latest technology that ensure their competitiveness and that of the nation as a whole. Yet, in developing countries, the majority of SMEs are unable to acquire the financing they need to reach their potential. (Beck, Demirgüç-Kunt&Maksimovic, 2005; World Bank Ghana Office, 2014)
In developing countries, traditional banks are often unable or unwilling to give term loan to SMEs. They prefer to lend to large, established businesses with welldeveloped balance sheets and credit histories of additional assets for the collateral required in conventional bank financing (Gallardo, 1997), which obstructs the access to external formal finance of SMEs. This situation can be attributed to insufficient asset and low capitalization, vulnerability to market fluctuations and high mortality rate of SMEs. Berger & Gregory (1998) and Binks et al (1992) added that information asymmetry arising from SMEs lack of accounting records, inadequate financial statement or business plans make it difficult for creditors and investors to assess credit worthiness of potential SMEs proposal and high administrative/transaction cost of lending or investing small amounts do not make SMEs financing a profitable businesses. This creates a huge financing gap to SMEs. The implication is that young firms are put out of business or stunts growth of SMEs.
To reduce the financing gap, financial institutions, governments, and donors create various schemes and programs to support SMEs. Likewise, several scholarly studies have suggested many credit facilities to enhance SMEs growth and innovation. However, the extent to which such schemes, programs and facilities promote the most efficient and cost-effective ways to expand access to finance for SMEs has general not been rigorously evaluated. Therefore, this study brings a unique addition to the various studies in the field by taking a holistic view of the more viable bank financing for SMEs as it classifies firms financing into mudharabah (Islamic bank equity finance) and usury (conventional bank debt finance). The study is motivated by the need to undertake an objective analysis of usury and mudharabah bank financings with a view to determine the more ideal bank financing for SMEs growth in Nigeria. The findings of this research are hoped to contribute to the existing body of literature, provide a better understanding of the subject matter to SMEs owners/managers, financial analysts and serve as a frame of future reference to researchers, academics and students.
By definition, Small and Medium Scale enterprises are business with investments in fixed assets (excluding land) of not more than #10 m (Ten Million Naira). There are several other criteria by different authors and scholars to describing Small Medium Scale enterprises. A significant aspect of small and medium scale enterprises is in the following developing areas, creation of employment, stimulation of indigenous entrepreneurship, transformation of traditional industry, linkage effort, contribution to regional activities or cooperation, utilization and multinationalisation of indigenous enterprises. To Adewolu (2005:43) small and medium scale enterprises are activities undertaken by a person or group of persons for the provision of goods and services to meet the present and future needs of third parties at a price and for a profit through the management of available resources. To him, small and medium scale enterprises could be found in the following areas; marketing of goods, provision of services, manufacturing of goods/products, cultivation of land and dissemination of information/knowledge. On the strength that small and medium scale enterprises are formed on the basis of partnership between owner(s) and the providers of conducive environment (i.e. the government), suggests that encouragements and assistance (i.e. empowerment) are usually expected from the government and her agents.
To Balogun (2004:22) some of the empowering factors from government to SMEs include; electricity, transportation, communication, water supply, financial infrastructure and educational facilities among others. Thus, government, agencies, corporate organizations, international sponsors, etc are expected to adequately provide or empower SMEs for sustainable economic (activities that guarantees) development and growth. Trade policies and barriers are other critical areas to which government empowerment are needed for small and medium scale enterprises to effectively and efficiently accelerate or sustain the economy. To Daniju (2007:54) finance and skills acquisition which cut across all ages forms the key to empowerment of small and medium scale enterprises. A typical empowerment banks initiative to small and medium scale enterprise is the small and medium scale industry equity investment scheme (SMIEIS) and bank of industry (1301). Similarly the National Economic empowerment and development strategy (NEEDS) by the federal government addes as path of sustainable economic growth and development for small and medium scale enterprise in Nigeria.
The said NEEDS initiatives were borrowed from the programmes of the new partnership for African Development (NEPAD) in African Union. The government through NEEDS is a facilitator, providing the enabling environment for a free-maker system. Other areas of special empowerment of small and medium scale enterprises are; research institutions provision of industrial estate, protective benefit laws (i.e patents, copy right, trade marks and farm close), etc. Infact from forgoing analysis it could be understood that empowering small and medium scale enterprises as given by government and institutions is favourable as it reflects all sector of the economy, hence even or sustainable economic growth. A more result oriented step about developing small and medium scale enterprises in Nigeria is the focus on initiating and practicing courses on small and medium scale enterprises in the educational systems (at all levels) in Nigeria. This step is capable of expanding the entrepreneurship and the production of goods and services in the economy. It is strongly believe that if business owner(s) could respond according to the various
‗empowerments, small and medium scale enterprise will continue to occupy their pride of their place as ―bedrock‖ for national development and growth. Moreso, it need be emphasize here that empowerment of small medium scale enterprises and their operations are limited to market forces, information and knowledge available to operators, technological innovations, international standards and financial I resources available.
1.2 STATEMENT OF THE PROBLEM
Empowering small and medium scale enterprises for sustainable economic development could have been very much appreciated and practiced if not for certain deficiencies, hence the need to tackle the following problem areas:
Businesses owners often times fall short of the required information and knowledge, as to when, where and to whom to refer to in time of empowerment in their businesses. Small and medium scale enterprises report show that failure usually result from their inability at identifying accurate and reliable marketing, financial and information technology facilities available in their operating environment(s). Other reasons for small and medium scale enterprises not developing and growing in empowerment includes; difficulties of access to fund set aside for their use by financial institutions or the direct loans occasionally extended to them by the government; There are also the perennial problems of inadequate managerial capacity and poor quality services and products. To this regard, facilities could be absent or inadequate for training and developing the human resources (managers) needed in translating government empowerment into their business in the right quantum. Thus a business dominated by inexperienced and unskilled manpower has limits to application of government‘s empowerment to their businesses and the enabling environment by government to small and medium scale enterprises are not always complete in any particular empowerment. In other words, transport and electricity may he available while water, communication, educational infrastructure, etc may not be available or inadequate. Thus, no environments are comprehensive or complete in any small and medium scale industry.
1.3 RESEARCH QUESTIONS
The following questions were formulated to guide this research,
v What is the adequacy of science and technological facilities empowered to operators of small and medium scale enterprises by Firstbank Nigeria?
v What are the training facilities (including research) provided for small and medium scale enterprises in the form of empowerment by Firstbank Nigeria?
v What are the strategies built by Firstbank Nigeria through empowerment in meeting resources (finance and non-finance) requirement of small and medium scale enterprises for sustainable economic development?
v What are the factors militating against effective empowerment of small and medium scale enterprises for sustainable economic development by Firstbank of Nigeria?
1.4 OBJECTIVES OF THE STUDY
Other objectives of the study include;
v To determine the adequacy of science and technological facilities empowered to operators of small and medium scale enterprises by Firstbank Nigeria.
v To identify the training facilities (including research) provided for small and medium scale enterprises in the form of empowerment by Firstbank Nigeria.
v To assess strategies built by Firstbank Nigeria through empowerment in meeting resources (finance and non-finance) requirement of small and medium scale enterprises for sustainable economic development.
v To examine factors militating against effective empowerment of small and medium scale enterprises for sustainable economic development by Firstbank of Nigeria
1.5 STATEMENT OF HYPOTHESES
Based on statement of the problem and objectives of the study, the following hypotheses are formulated;
v There is no significant influence of the adequacy of science and technological facilities empowered to operators of small and medium scale enterprises by Firstbank Nigeria.
v There is no significant influence of training facilities (including research) provided for small and medium scale enterprises in the form of empowerment by Firstbank Nigeria.
v There is no significant influence of strategies built by Firstbank Nigeria through empowerment in meeting resources (finance and non-finance) requirement of small and medium scale enterprises for sustainable economic development.
v There is no significant influence of factors militating against effective empowerment of small and medium scale enterprises for sustainable economic development by Firstbank of Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The outcome of this research will be beneficial to the government, small and medium scale enterprises, management practitioners and academia.
To small and medium scale industries, they are empowered through this research to learn new skill/capabilities by adjusting to the trends towards the development and growth of their businesses and the economy. In other words, the small and medium scale enterprises could develop and grow in marketing, production of goods and services, agriculture, science and technology, finance and information. Through this study, small and medium scale enterprises could begin to do things, which ordinarily they could not do. Training and development of work force of SMEs arc enhanced. This study also is capable of correcting certain anomalies likely to come up following efforts of small and medium scale enterprises for development and growth. Thus, strength and weaknesses, opportunities and threats are discovered and used for the advantage of developing and improving small and medium scale enterprises.
To management practitioners, this study will make them keep abreast o[ new developments and techniques in the practice of empowering the development and growth of small and medium scale enterprises for sustainable economy. In this process, they could serve their clients better and efficiently.
1.7 LIMITATIONS OF THE STUDY
In every research work, it is likely that the researcher may encounter some limitations. The researcher encountered some challenges during the period of carrying out this research. Some of these challenges include the dearth of materials for a proper and effective research work constituted a major limitation. Again, how to get the true and required information from the students through questionnaire also constituted a constraint in the study.
Finally, there was the problem of convincing the students on the primary objectives of the questionnaire so as to give the true and required information. However, the intervention of the class teachers in the schools who took time to clear the air and convince his students helped the investigator to administer the instrument successfully.
1.8 SCOPE OF THE STUDY
This study will be focused on the roles of Firstbank Nigeria in empowering of small and medium scale enterprises for sustainable economic development specially selected SMEs in Nigeria using Federal Capital territory as a study area.
1.9 OPERATIONAL DEFINITION OF TERMS
Small and medium scale enterprises: these are enterprises with small capital outlay and limited number of employees in its operations. They are private initiatives aimed at developing resources in small scale within an economy, and in the process earned sonic profits.
Firstbank business empowerment: this consists of the different provisions given by the bank to businesses aimed at improving by empowering their production of goods and services.
Proficiency: this is expertise delivery of services to a third party. It could be described as knowledge, skills and behaviour needed for effective performance. In this study, it could come from the government, business owner to .each other or customers.
Performance: Manner and success in the execution of a work. It is a measure based on the expected results and standards.