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


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
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.
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
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 facilitate business transactions.
In conclusion, banks are a driving force in the financing of
small scale business in Nigeria.
Written by:
Testimony Arioga

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