The Role Of Bank In The Development Of Small Scale Industries.

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Many banks are involved  in entrepreneurship development in Nigeria in many ways. Some of them are set up by government for specific functions, while others are set up by private
organizations.
Their main objectives /aims are to provide funding, relief from the financial mess of uncertainty and advisory services for business enterprises, public  and private.
Banks such as  Nigerian bank for commerce and industry (NBCI),  Nigerian Agricultural and. Cooperative bank (NACB), Nigerian industrial development bank (NIDB),  and commercial banks  etc. For any individual sourcing for fund  and enough funds/cash cannot  be mobilized from friends and relatives, the next thing that comes to mind is to try the banks.
The banks for example, is the centre of the leading market and makes the greatest number and variety of loans. The banks are the creators of credit in the economy they are very
conservative in lending.
The banks look at many things apart from the ability of the entrepreneur /individual to provide the needed collateral and may be interested in having a general view of the proposed business by looking at the feasibility report, the exposure of the entrepreneur individual, his/her personal account records,  profit potentials/abilities. Etc.
Apart from the banks,  financial institutions like the insurance companies provide relief from financial mess of uncertainty, the relief from financial loss and especially
from fear of loss is perhaps one of the reasons the insurance industry is one
of the fastest growing industries in Nigeria. It is import for the entrepreneurs/individuals
who want to be free from uncertain loss or threat of loss to have adequate insurance cover/policy.
Major entrepreneurs faces risks  in all his/her activities irrespective of the
extensive precaution that he would like to take. There is need for protection
against claims,  personal injury and worker’s compensation or employees liability.
Banks and other financial institutions help to promote  and develop entrepreneurs by giving guidance on investment opportunities  and structuring of business.
For instance,  citing areas of profitable investment like Agriculture,  manufacturing, and distribution.
However,  structuring involves financial structuring, personal structuring, organizational structuring of the Business  for proper functioning to achieve the profit aim of the Business.
Banks also advice on sources of raw materials and other resources needed for production, export opportunities  e.g products needed by other countries that are profitable and export
activities.
Some banks encourage factoring, for example, the bank can introduce an entrepreneur to an organization or individual that can give loan to the entrepreneur to produce what the organization needs, after production, the organization would buy up what the entrepreneur has produced and from the proceeds the entrepreneur would then pay back the loan.
 
1. Extension of credit facilities : Banks primary function is the extension of credit to worthy borrowers. They are vehicles for implementing government national development plans. In making credit facilities available to individuals, industrialists, and entrepreneurs, they are rending a great social service. Banks makes funds available for general development in all aspects of the economy,  for instance, in industries, commerce, mines and agriculture etc.


Through their actions, production is increased, there is extension of capital investments and a higher standard of living is realized. Banks make it possible  for industries to produce in large quantity of goods which may remain in stock as inventory before eventually being sold or reprocessed  into another form. Credit facilities can be in form of loans and overdrafts.
2. Business advisory services : The main aim of this advisory service is to assist  small business customers to develop their business in such a way that they can attract bank
finance. Small business are taught how to introduce a simple record keeping and accounting in their operations.





This is because most business do not keep accurate recording of their business and this can lead to business failure.
Banks also help small business in national and international business transactions. For instance, giving letters of credits, bill of exchange etc.to facilitate business transactions.
In conclusion, banks are a driving force in the financing of small scale business in Nigeria.
Testimony Arioga

 

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