ABSTRACT
This study focuses on finding out the
extent to which development banking has aided in development of the Nigeria
Economy through financing and granting of medium and long term loans for
capital projects and other related services like providing technical services
to their bank customers who engage in promotional activities to stimulate
interest on new projects.
The study adopted a his historical
method of investigation because of the absence of the questionnaire and the
nature of the research only historical research was designed since staff and
management of development banking carry
out the same functions and the same business activities. The staff and
management of development banking constitute the population interest of 40 from
this population, a formular sampling method was use to arrive at a sample of B6
specifically, the objectives of the study are to among others.
To find out the role played by
development banking in the development of Agriculture, commerce an industrial
sectors.
To highlight the impact of development
banking in the Nigeria
in the Nigerian Economy.
To examine the extent of mobilization
of funds to finance capital projects.
To examine the sources of funds to the
development banking in Nigeria
To determine whether there is any
difference in functions of banks that make up development banking.
To accomplish these objectives data
were collected historically, which involved the sourcing of data from primary
and secondary from the past and present records and functions from the staff of
different kinds of development banking in Nigeria, published materials and
textbooks.
The
findings of the research work was based on the data on the literature in
chapter two.
Against this, background, both short
and long term measures were adopted and recommended in chapter five, and if
implemented will go a long way in boosting the development of development
banking in this country to carry out their business activities efficiently and
effectively.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Development
banking in Nigeria was established, as a result of strong needs to close the
gap created by the inability of the operating banks in Nigeria such as commercial
banks, central bank and merchant banks to provide the needed funds to finance
some special sectors of the economy such sectors which must be financed mainly
with long-term and sometimes with medium term funds, need finance from
specialized banks such as development banks. These banks were established for
the purpose of providing medium and long term loans for capital projects in
Agriculture commerce, industry and other essential projects that are necessary
for economic development of the country, such loans are usually provided from
the banks internally resources. For projects that require huge capital
resources than it can provided alone, development bank usually mobilizes other
financial institutions to raise the
required loan for the establishment that requires it.
Apart
from providing medium and long term loans for capital projects in specific
areas as already mentioned, development banks render ancillary services like
proving technical advice on new and existing projects to their customers, engaging
in promotional activities to stimulate interests among their customers on new
prefects which the banks consider necessary and profitable.
The
commercial banks in operation provided short term funds which was as a result
of the nature of funds available to them. Occasionally the provided medium term
funds and long-term basis. Development banks perform this function by providing
long-term loans for capital projects in specific areas. In Nigeria, we
have the Nigerian industrial development bank (NIDB), the Nigerian bank for
commerce and industry (NBCI) and the Nigerian Agricultural co-operative bank
(NACB) now known as Nigerian Agricultural, co-operative and rural development
bank limited (NACRD). These banks are owned by the federal government.
Following
the reconstruction of the Nigeria industrial development bank limited, NIDB in
2001, which incorporated the mandate of the Nigerian bank of commerce and
industry (NBCI), the (NBCI) apperar to have lost its identify. Today you may
not discuss the NBCI without seeing it as a part of NIDB.
Nevertheless,
since NBCI, is still in existence having not be swallowed by the NIDB,
The
NBCI was established through decree 22 of 5th may 1973 by the
federal government of Nigeria.
The bank which is believe to be a child of circumstance because it came up
after the Nigeria
civil was when the indigestion decree
was set up. It started its operation on 4th October, 1974.
The
bank’s authorized capital at inception was N50 million N35 million of this
fully paid up and subscribed by the federal government with 60% and the central
bank of Nigeria,
which had the remaining 40.
The
bank when established was meant to assist the implementation of the
indigensation decree of 1972
By
the decree No22 of 2nd April 1973, the bank was to provide equity
capitates and funds by way of loans to indigenous persons, institutions and
organizations for medium and long term investments in industry and commerce at
such rates and upon board in accordance with the policy directed by the federal
executive council
This
decree empowered the bank to borrow
monies from any source it can, to enable it meet its obligations and
discharge functions.
1.2 STATEMENT
OF PROBLEM
Following
the increase economic activities in Nigeria, commercial banks which
have been established to provide their customers with short term loans can no longer meet up
with duties of providing medium. At this point in time the monetary authority
and the federal government saw the need to create a bank that will cater for
the need of people living in rural and urban areas and those who want to invest
on capital projects.
The
aim of establishing this bank was to grant medium and long term loans to Nigeria
investors. The aim or establishing this bank was defeated due to culminated by
the economic depression pampging the Nigeria economy which had lead to the
Nigeria economy which had lead to the folding up or wounding up of many
industries which had slowed-down the business activates in our industries which
affect the development banking in Nigeria.
Development
banking have not performed satisfactorily area of capital projects and
promotional activities to stimulate interests among their customers on new
projects which the bank consider necessary and profitable. This can be attributed
to in equate capital base, the high rate of interest charged on loans borrowed
and high cost of building houses. New initiatives are therefore needed to
tackle these problems.
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are as follows:
1. To
final out the role played by development banking in the development of
Agriculture, commerce and industrial sectors.
2. To
highlight the impact of development banking in the Nigeria Economy.
3. To
examine the extent of mobilization of funds to finance capital projects.
4. To
examine the sources of funds to the development banking in Nigeria.
5. To
determine whether there is any difference in functions of bank that makeup
development banking.
6. Finally
to make general and specific recommendations for worthwhile for development
banking in Nigeria.
1.4 RESEARCH QUESTIONS
The following research questions have been
formulated for the study
1. What
is the role played by development banking in the development of Agriculture,
commerce and industrial sectors?
2. What
are the impact of development banking in the Nigeria economy.
3. What
is the extent of mobilization of funds to finance capital projects?
4. What
are the source of funds to development banking in Nigeria.
5. What
are the difference in functions in banks that make-up development banking?
1.5 SIGNIFICANCE
OF THE STUDY
The
results of the study will be beneficial to different people in different ways.
It will be beneficial to stakeholders in development banking industry,
management and staff of the development-banking sector where achievement has
been minimal.
The
study will benefit the public who will understand the role played by
development banking and use to apply for micro credit loans. It will be equally
beneficiary to investors who applied for medium and long-term loan on how
development banking finance capital projects. It will also stimulate new
thoughts and ideas on how development banking in Nigeria carry out its activities.
Finally,
the study forms the basis upon which further research can be actuated.
1.6 SCOPE
AND LIMITATION OF THE STUDY
The
study was limited to development banking in Nigeria. Because of the time frame
and finance constraint on the side of the researcher, the scope of the study
was limited to developing banking in Enugu
metropolis, Enugu
State.
However,
the researcher encountered problem in area of gathering materials/data for the
research work due to dearth of research materials on the topic. This however,
does not distort the researcher from getting relevant documents that aided her
in carrying out research work of this nature.
1.7 DEFINITION
OF TERMS
RESUSCITATE AILING INDUSTRIES: This bank resuscitating ailing industries that can
operate competitively in the country’s economy.
LOCAL SOURCES OF FUNDS: This are funds provided to
the development bank by the federal government of Nigeria
and the central bank of Nigeria.
INTERNATIONAL SOURCES OF FUNDS: This is a way by
which development bank obtain foreign loans and grants from international
agencies.
ABSORPTION OF EXCHANGE RISK: The bank provides facilities that will encourage
the absorption of exchange risk encountered by funds users in respect of
foreign dominated loans.
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