THE ROLE OF BANK OF INDUSTRY IN PROMOTING ENTREPRENEURSHIP IN NIGERIA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
ABSTRACT
This study was aimed at examining the role of Bank of Industry in promoting entrepreneurship in Nigeria using First Bank Plc as a case study. This objectives of this study is to determined the role and impact of Bank of Industry in the promotion of entrepreneurship development in Nigeria. The instrument use for this study were both primary and secondary sources. Questionnaire form was used for the collection of primary data. A descriptive and explanatory research design was used. A sample size of 23 was randomly selected at convenience from the total population size of 25 which is the population of the accounting staff of First Bank Plc, Ikot Ekpene. The sample were analyzed using simple statistical tools such as frequency table and percentages. The findings of this study revealed that; helping businesses to source for working capital, providing business support and financing plant and equipment constitutes the major roles of Bank of Industry in Entrepreneurship development while the challenges hindering Bank of Industry in executing their mandate effectively are corruption, political instability and poor financial policy. Furthermore, it was found that increased revenue, implementation of newer financial technology and adjustment of policy to favour effective functionality are the strategies to enhance the performance of Bank of Industry in entrepreneurship development in Nigeria. Therefore the researchers recommend that there should be sensitization of the benefit and roles of Bank of Industry (BOI), so that more entrepreneurs can take advantage of the opportunity.
LIST OF TABLES
Table 4.2.1: Responses from Research Question One – – 37
Table 4.2.2: Responses from Research Question Two – – 39
Table 4.2.3: Responses from Research Question Three – – 40
Table 4.2.4: Responses from Research Question Three – – 41
TABLE OF CONTENTS
Title page- – – – – – – – – – i
Declaration – – – – – – – – – i
Certification- – – – – – – – – iii
Dedication – – – – – – – – – iv
Acknowledgements- – – – – – – – v
Abstracts- – – – – – – – – – vi
List of Tables – – – – – – – – vii
Table of contents- – – – – – – – – viii
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study – – – – – – 1
1.2 Statement of the Problem – – – – – – 3
1.3 Objectives of the Study- – – – – – – 4
1.4 Research Questions- – – – – – – 4
1.5 Significance of the Study – – – – – – 5
1.6 Scope and Limitation of the Study- – – – – 8
1.7 Organization of the Study- – – – – – 9
1.8 Operational Definition of Key Terms – – – – 9
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Bank of Industry (BOI) – – – – – – 11
2.2 Entrepreneurship Sectors of the Economy – – – 12
2.3 Entrepreneurship Role in Economic Development – – 13
2.4 Role of Banks in Economic Growth – – – – 13
2.5 Concept of Small and Medium Enterprises – – – 15
2.6 Challenges of SMEs in Nigeria – – – – – 16
2.7 The Importance of Small and Medium Enterprises in
Economic Development – – – – – – 18
2.8 Roles of Bank of Industry in Entrepreneurship
Development – – – – – – – 20
2.9 Historical Development and Orientation of Small Scale
Industries in Nigeria – – – – – – 25
2.10 Credit Schemes and Institutions – – – – – 27
2.11 Theoretical Framework – – – – – – 28
2.12 Empirical Review – – – – – – – 29
CHAPTER THREE
METHODOLOGY
3.1 Introduction – – – – – – – – 33
3.1.1 Research Questions- – – – – – – 33
3.2 Design of the Study- – – – – – – 34
3.3 Area of the Study- – – – – – – – 34
3.4 Population of the Study- – – – – – – 34
3.5 Sample and Sampling Techniques- – – – – 34
3.6 Instrument and Method of Data Collection- – – – 35
3.7 Data Analysis Techniques- – – – – – 36
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Introduction- – – – – – – – 37
4.2 Data Presentation- – – – – – – – 37
CHAPTER FIVE
FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction – – – – – – – 43
5.2 Findings- – – – – – – – – 43
5.3 Conclusion – – – – – – – – 44
5.4 Recommendations- – – – – – – 44
References
Appendix
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Financial institution finances small and medium scale enterprises (SMEs) in other to promote economic growth and development of a nation. The finances allocated to SMEs by financial institutions accelerate the pace of income, savings and employment generation in Nigeria. In other to further develop the economic system of Nigeria, government employed different intervention schemes and policies with the establishment of Bank of Industry (BOI), Small Scale Industries Credit Scheme (SSICS), World Bank Small and Medium Enterprises I Loan, World Bank Small and Medium Enterprises II Loan, Refinancing and Rediscounting Facility (RRF) of the Central Bank of Nigeria, Small and Medium Enterprises Equity Investment Scheme (SMEEIS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) among others with the primary objective of assisting small and medium scale enterprises to secure needed funds with minimum interest rate and lengthy period of payback time in an attempt to make them grow. However, SMEDAN which is the coordinator of SMEs in Nigeria have not been effectively performing its role and purpose of establishment which is to create wealth and value to the economy through SMEs. This inefficiency has made SMEs to heavily rely on financial institution for finance (Ubesie, Onuaguluchi & Mbah, 2017).
The banking system provide both short and long term finances but mainly short term finances to individuals, corporate entity and institutions while stock market provides long term finances to individuals, firms and government but inaccessible to many SMEs in Nigeria which is attributed to perceived high level of risk associated with the business of SMEs especially farming which calls for the bank of industry to play a level playing ground in financing the business of SMEs (Sangosanya, 2011). Inconsistency in government policies couple with high monetary policy rate, loan diversion, exchange rate depreciation, infrastructural decay and tenor of loans constitute a problem to banks in advancing credit to SMEs. The fraction of the loans extended to SMEs by the Bank of Industry, the ascertaining of their role on SMEs growth remains difficult and unsettled owing to SMEs meagre contribution to gross domestic product. Furthermore, with regard to the important role of bank of industry finance in SMEs growth, there is no consensus that financial institution increases credit delivery to SMEs, particularly after the consolidation exercise.
Empirical evidence from Riding, Barbara, Orser and Brad (2010); Onakoya, Fasanya and Abdulrahman (2013) showed that financial institution credit to SMEs has no significant effect on their growth towards economic growth. This negates the results of (Okpara & Pamela, 2008; Bassey, Asinya & Amba, 2014; Samaila & Tahir, 2015) whose studies have empirically established the significant effect of bank of industry credit on SMEs growth. Based on the inconsistencies and mixed findings from the earlier researchers, further study becomes imperative. Hence, it agitates the mind of the researchers to carry out an empirical study on the role of bank of industry on Small scale entrepreneurial development in Nigeria.
1.2 Statement of the Problem
Because of the vital roles of SMEs in economic growth and development, government through bank of industry have come up with policies, programmes and increased funding to bring about the much needed development in Nigerian.
Despite government intervention through BOI, SMEs in Nigeria have not performed creditable well, which has been a source of concern to government, citizen and organized private sector e.t.c. Some of the constrained identified includes Inability to access bank loan, high interest rate, lack of collateral security, inconsistence in government policies, bureaucracy e.t.c. The Statement of problem is therefore to investigate if BOI credit Schemes would enhance the growth of SMEs in Ikot Ekpene.
1.3 Objective of the Study
The objectives of this study are;
- To ascertain the role of Bank of Industry in promoting entrepreneurship in Nigeria
- To determine the effectiveness of Bank of Industry in the promotion of entrepreneurship development in Nigeria
- To examine the challenges of Bank of Industry in Promoting entrepreneurship development in Nigeria
- To ascertain the ways Banks of Industry can improve their effectiveness in promoting entrepreneurship development in Nigeria
1.4 Research Question
- What are the roles of Bank of Industry in promoting entrepreneurship in Nigeria?
- Is the bank of Industry effective in their roles in promoting entrepreneurship development in Nigeria?
- What are the challenges hindering the Bank of Industry in executing their mandate effectively?
- What are the strategies to enhance the performance of Bank of Industry in entrepreneurship development in Nigeria?
1.5 Significance of the Study
This study is to serve as a reference material to other students or researchers such as scholars, the management, the prospective investors, the general public, researchers and academic and banking professional body and banking and finance students etc. who might be interested to write on or make research on similar topic and serve as recommendation to the Bank of Industry (BOI) in discharging its functions to their customers SMEs. Since the SMEs in African rely largely on own savings, not only to grow but also to innovates, firms often need real services support and formal finance assistance, failing which under investment in long term capabilities training and research and development (R &D) may result to evaluate the small and medium scale enterprises which shall be done with special focus on their financing thereby adding to the existing literature on the subject matter. The following can benefit from this study:
The management: managers and the operators of bank of industry will find this study very great benefit as it will give rise to the confidence of the banking public in the BOI thereby repositioning them to play to their vital intermediate roles in the economy of Nigeria.
The prospective investors: Investors or entrepreneurs and Bank of Industry customers will further be enlightened on the beneficial service maintaining and offered by the Bank of Industry from the result of this study. If the investors or customer comply with the efficiency of the management in terms of customer relations and some other activities that will determined the reputations of the corporate which will encourage more investors to invest more and by developing an orientation devoid of financial indiscipline the investors will use this study in repositioning their business for easy access to BOI’s credit facilities.
Regulatory Bodies: the regulatory bodies will find this study very useful, such body are Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC). The study will assist the NDIC in granting the extension of deposit insurance cover to Bank of Industry.
Policy Maker: The government and other relevant agencies should utilize the knowledge gained from this study in assisting the Bank of Industry by designing appropriate policies and training programmes for the operators of banking sector.
Banking Professional Body: The Chartered Institute of Bankers of Nigeria (CIBN) will find this study useful toward competency framework by supporting the variety of career pathways for banking professionals in enriching their syllabus and accreditation criteria as well as review of licensing criteria for practicing bankers.
Research and Academics: The researchers and academic can use the result of this study by using juggling process such as step by step self-regulated problems solving format with automatic reinforcement at every level of accomplishment an stay on task, screen out distractions, manage their energy to act appropriately and with the desired results using successive approximations, persevere through a series of minor failure (drops), analyzed final results of the process and incorporate the newly learned activities that can be demonstrated and though to other as a basis of conducting further researcher studies.
1.6 Scope and Limitation of the Study
This study focused on the “the role of Bank of Industry in promoting entrepreneurship in Nigeria” (a case study of First Bank of Nigeria, Ikot Ekpene)
During the conduct of this research work, some factors posed as constraints to the determined the effort of the researcher to carry out the research study to such a depth and in such a manner that it ought to have been carried out judging from its relevant to management such factors include;
- Reluctant attitudes of the respondent to giver attention and provides answers to the questionnaire forms.
- Time Constraint: Time is also another factor that acts as hindrance in carrying out this research study. This is as a result of the fact that other things were still being attended to in the course of carrying out this research work.
- Financial Constraint: money also acts as a problem in the conduct of the research work. Travelling expenses were incurred in getting the materials for the research work. Also incurred were expenses for the typing and distribution, building and a lot of other expenses.
1.7 Organization of the Study
The study is organized into five chapters; chapter one focused with introduction/background of the study, research questions, scope of the study, organization of the study and definition of the terms.
Chapter two deals with the reviews of related literature on the subject matter that is the contribution of scholars and anchors on the subject matter.
Chapter three describes the researcher design and methodology, population of the study sample and sampling techniques, instrumentation method/plan of data analysis and problem of data collection.
Chapter four is concerned with data presentation, analysis and interpretation.
Chapter five given the summary of findings conclusion and recommendation.
1.8 Definition of Terms
Loan: A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
Business Enterprise: This is a business ventures that provide profits as a rewards.
Assets: Assets simply refers to the economic resources owned by a business individuals, such as cash, equipment, plant and machinery, vehicles and inventory etc. assets can be divided into fixed and current assets.
Account Payable: This is the amount of money a company owes for goods and service it has received, any outstanding debt that a company has.
Non-Current Asset: Are assets that cannot be easily changed into cash (within twelves month). They are items that the company acquires for long term use.
Account Receivable: This the amount of money which is owned to a company by its customers for product and services provided on credit
Current Assets: Are assets that is expected to be converted into cash within a year, eg. Cash, stocks etc.
Business Opportunity: This is an attractive investment idea or preposition that provides the possibility of a return for the person taking the risk.
