INTRODUCTION
1.1 GROUND OF THE STUDY
The
successive development plan in Nigeria
has laid on the attainment of self-reliance. The need for this national
objective is because much is expected form individual from the viewpoint of
providing employment opportunity; self-reliance is the basic for food and
material production of the industrial raw materials.
But Nigeria
small-scale industry continues to decline despite the so-called priority giving
to this sector. However, the discoveries of the central bank must reserve a
proportion of their minimum credit allocation for indigenous borrowers for
small-scale enterprises. The largest prescribed in 1979 was 10%. This was
subsequently raised to 16 percent in 1980 and had remained at that level till
date. Even though the available data shows that the performance of the
commercial against this directive have been disappointing the central bank
intents to spare no effort in ensuring that bank fully comply without
compromising the smooth functioning of the national banking systems.
Without the
development of the small-scale industry in Nigeria, the national guest for
industrialization will certainly remain at a stake. It the humble opinion of
the researcher that future development in our induet4ization must address the
basic issue of creating linkage within the economy to begin to produce real
input to our manufacturing activities. Priority attention must therefore be
giving to industry for which domestic input; could easily produce of this by
automatically bringing to mind the agro-allied industry like food processing
and other by-products, the objective should be to maximize the value added to
them in processing and manufacturing as final goods or immediate inputs.
Empirical
evidence indicate that strong producer incentive to small scale industry are
necessarily o met the food requirement but also to provide growing input
supplied and demand as a foundation for sustained industrial growth. The
present economic constraint may well turn out to be a blessing in disguise to
our industrialization effort particularly for the dynamic manufacturing sector
for instance the market determined exchange rate through them with its
resultant at high cost, and import input may serve as the adjustment to
industrialist to intensify their search for location institution..
In the
period of 1980 to 1985, loan approved for small scale project in the Nigeria
bank for commerce and industry (NCB) amount to 29, 983 million for 126 projects
while the Nigeria
industrial development bank (NIDB) during the Same period sutured N250.7
million to the enterprise. It will be recall that all the bank participating in
the national directorate of employment (NDE) have approve a total amount of N
23,353,938 (73.2%) as at the end of December 2002.
Similarly
in the circular of small scale and medium scale enterprises, loan scheme
release by the central bank of Nigeria
in September 2005. it was reviewed that world bank have granted a loan of 270 million to the federal government for
development of small sector, but of this loan, the sum of 265.7 million will be
made available for on lending to small and medium scale enterprises through
eligible participating bank. No doubt this will help to revitalize the economy.
1.2 STATEMENT OF THE PROBLEM
Small-scale
industry like any other business can not be carried on extensively unless fund
are available for maintenance and procurements of equipment in necessary input.
a.
Short term credit: this is the type of credit that is
used to finance yearly operation until the products and proceeds from the
industry are sold. The amount, which is involved in this type of credit, is
usually small. But small-scale industrialists who have little or no savings
upon which to draw, they are mostly beginners and do not accurately feel lack
of this credit.
b.
Long-term loan: this type of credit is necessary for
the acquisition of major industrial machines, improvement on the major
indstrial equipment building and land.
c.
Medium term loan: this type of loan is for more than
one year maturity period but not exceeding three to five years. This loan is
mostly required for the acquisition of most expensive equipment with relatively
short scale industrial credit.
Therefore
small-scale industrial credit can be powerful instruments in bringing out a
revolution in the industry if supplied in sufficient quantity and is used
effectively and efficiently. It is well known that the development of a
small-scale industry and the attainment of self-reliance in industrial production
coupled with the provision of raw material for other industry is among the top
priority of the successive government in the country.
Further
more, the continues escalation of import bills and unemployment are threat to
the country. It is therefore necessary for all to put heads together to
formulate a meaningful policy that will stimulate a positive take-off of our
small-scale industrial sector. Therefore, the aim of this research is to put an
end to these abnormalities.
The study
therefore identify small-scale industries high interest rate as part of the
wilder subject of the industrial development because finance is just one of the
factors of production.
1.3 OBJECTIVE OF THE STUDY
Ø To
ascertain the extent to which High Interest Rate has not help the
small-scale industry and problems hindering such.
Ø To identify
the problems encountered by small-scale industrialist in obtaining finance form
banks of a very low interest rate.
Ø To evaluate
various measures introduced to boost the industrial production and its
financing and how this have affected the realization of the set goals.
Ø To
appraised and evaluate the situation and make recommendation on high to improve
on high interest rate provision of finance on small-scale industry.
1.4 SIGNIFICANCE OF THE STUDY
The
development of small scale industry and self-reliance in the industry and food
production coupled with the provision of raw material for other industry is
among there top priority of the Nigerian government in the successive
development plan.
Against
this background, the review of the financial problems facing small-scale
industry id essential. Such a review will enable this sector face the
ever-increasing demand upon it. An examination of the interest rate performance
will enable us find to a larger extent why there has been a decline in the
industrial output in recent years.
1.5 LIMITATION OF THE STUDY
The
research was to determine the affect of high interest rate in financing small
scale industry in Nigeria.
The researcher carried out indept study on the operation of the commercial bank
interest on loan in financing to said industry.
Due to the
current emphasis on industrialization in the country in order to reduce the
countries import bill for foreign countries and employment, the study focused
attention on the evaluation of the small scale industry obtain loan for
interest rate to attain the needed weight and capacity. The researcher cover
selected small sale industry in Enugu.
Small-scale
industry as used in this study are those indigenously owned fully be Nigerians
and with an annual turnover not exceeding five hundred thousand Naira
(500,000.00). Some of the difficulty encountered by the researcher was the
in=cooperate attitude of the small-scale industrialist who misunderstood the
essence of the study. Another problem is that of time factor and high fare of
the public transport cost. This greatly increases the cost of production one
limited the scope of the area covered by the study.
1.6 DEFINITION OF TERMS
Interest:
the external money that you pay when you borrow money
Decline: This is a continuous decrease in number, values and
quantity.
Priority: Something
that you think it is more important than other things.
Rate: A fixed
amount of money that is charged or paid.
Small
Scale: These are organization or activity that is not large in size
or intent but limited on what it dose.
Finance: This is the
money used to run a business activity or a project.
1.7 REFERNCE
Agu C.C
(1986, P.185–186): Commercial bank role in financing agricultural and industrial
production in Nigeria.
Akuazaolu
B.A, (1979, P. 18–20): Financing small-scale industry in billion (Lagos, the Nigerian
institution of bankers)
Akwaeze
G.C, (1986, P3): How the government can fund small-scale industrial development
“without tears.†In the catalyst volume 2.No 2 (The Nigeria bank for commercial
industry
Aluko S.A
(P.12): Defining the problem of small scale industry.
Babinton
Ashiaye (1985, P.4) the problem of selling up a small scale industry in the
Nigerian. Accountancy (the institution of chattered accountancy in Nigeria)
A
correspondent (1985, P.5 – 8 – 6) the status of small and medium enterprise in
Nigerian. (The Nigerian Accountancy)
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