University of Nigeria Research Publications

ONA, Anthonia Nnedinso

Aut

hor

PG/MBA/91/10703

Title

Industrial Promotion in Nigeria: An Appraisal of the Impact of Govt. Specialised Financing Schemes on the

Promotion of Nigerian Small and Medium Scale Enterprises

Facu

lty

Business Administration

Dep

artm

ent

Banking and Finance

Dat

e

1993

Sign

atur

e

AN APPRAISAL OF THB IMPACT OF [;OVERNMKNT

SPECIALISED FINANCING SCHEMES ON THE

PROMOTION OF MIGBRULN 61-11AU AND

HEDIUM - SCAGE ENTERPRISES

ONA ANTHONU I4WDINSO

PG/MBA/91/10703

BEING A PAPER SDBnrli.m&, IN PARTIAL P U L ] P ~ OF

'PHg RBQCIIrnS FOR 'PHg AWARD OF

MSTER OF BUSINESS ADMINISTRATION (MBA)

IN BANKING AM) FINANCE, FACULTX OF BUSINESS

ADMINISTRATION, UNIVERSITY OF NIGERIA.

CERTIFICATION

ONA, ANTEONIA, N, a post graduate student in the

Department of Banking and Finance and with the

registration number PG/MBA/91/10703, has satisfactorily

completed the degree of Haster of Business

Administration (MBA) in Banking and Finance.

This research work is original and has not been

submitted in part or full for any other Diploma ror

Degree of this or any other University.

DR. J, E, EWUlJYAGU

Head of Department

DR. J, E, EBBANYAGU

Project Supervisor,

DEDICATION -- -

T'?lir; t.:or'; is dedicated t o my nmther a.nd iay l i t t l e

... r" i :.:,-c e n.s .

I wish to express my sincere gratitude to various

individuals who contributed in one way or the other to

the completion of this MBA dissertation.

1 am grateful to my project supervisor and the Head of

Department of Finance, Dr. J.E. Ezeanyagu for his

helpful suggestions at each stage of this work and for

guiding me throughout the exercise. B

Also, I am thankful to my special friend and classmate,

Miss Ima Egbuziem, and her parents, for their special

assistance and support.

Finally, it is my pleasure to acknowledge the assistance

of my husband, UCEMNA, for his moral and financial

support throughout my HEA programme in the University

of Nigeria, Enugu Campus.

'i . HYPOTHESIS

1 . SCOPE ATSD L1~41TATI0f i OF STUDY

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iJ15r 3 F TPSLES p > ~ x ., .-- - - ---- -- --.-.I---..--.---- ---- - - - -1 -.-- - - - -.- u-.--- r -.--l*.-

So~: rzc s DJ: i r ;ves tmnt f i nancc f o r small iaidustlries i n l i c r e r i a

Ecrzor tnqe d i s t r i b u t i o n of i n d u s t r y group by s011rcc F: of cxtpitaJ.

B 1 a ta r i ty nncl sectoral d i s t r i 3x t ; i on of cormcrc ia l b-r.rks? loans and advances 1 9 3 0 -4 1 3 3 0

1 7 . NK L~.?IJNQ secixcal d i s t r i b u t i o n of s3nc t i o n d z,r,ri ;lis.;,ursed projects as a t July 1992. I QG

I . r"JERE"ciIJ;I : 1'ro-j ects sectors1 Al1.ocat ion 109

L . i,L:'RE1UND: i';,;, lo:r:,k? r t Generated by Sector 109

ABSTRACT

The development of small and medium-scale real

production sector is very essential to the growth of Nigerian

economy. This is evident from the fact that it will provide

numerous desired products to the society for both domestic

consumption and exports, thereby reducing excessive imports

of manufactured goods which will make it possible for the

Country to conserve and to accumulate enough foreign

exchange; generate employment opportunities for the ~ountry's

teeming population; facilitate higher domestic processing

of our local raw materials; provide relatively large

potentials for creating linkages, technological adaptation

and transfer of skills. Indeed, like the giant industries

ol: today, some of these small and medium-scale enterprises

(SPIES) will in future metamorphose into large-scale

industries.

It is in recognition of these important roles of small

and medium scale real production enterprises in the

industrialisation process that the government set-up various

specialised financing schemes and institutions to cater for

the sub-sector. These schemes and institutions have the

iriajor r o l e of providing s o f t nediun t o long-term c r e d i t s t o

br;l3s ; providing t e c h n i c a l a s s i s t a n c e as w e l l as bus iness

advisory s e r v i c e s .

However, the s tudy r e v e a l s t h a t i n ssite of governmnt

va r ious e f f o r t s t o s t i m u l a t e t h e growth of the6Xis sub-

s e c t o r , the impact o f e x i s t i n y c r e d i t schenes, i n t e r m s of

providing funds f o r m a n i n g f u l and s u s t a i n e d deve1ol)mnt in +

axlrang t h e SlGs had ha rd ly been not iced. These e n t e r p r i s e s \

b a r e y e t t o er:joy reasonable a c c e s s t o c r e d i t as t h e y s t i l l .

dellend l a r y e l y on ~ e r s o n a l / f a m i l y and ot l ler i n f o r m 1 sou rces

oE fund. Indeed, t h e problem o f weak c a p i t a l base and poor

access t o i n s t i t u t i o n a l i s e d f i n a m e appears t o have developed

i n t o son-e v i c i ous c i r c l e , l e ad ing t o slow ~ r o w t h , s t a g n a t i o n

and even r a p i d demise of t h e SfiIEs.

3ased on t h e s e , and bea r ing i n rrl ird t h e important r o l e

o f smal l and ~ x i i u n i - s c a l e r e a l product ion e n t e r p r i s e s i n t h e

i n c h s t r i a l deve lo2mnt of t h e country , t h e r e sea rche r has a p t l y

recormended sorre nieasgres aimed a t improving t h e inflow of

c r e d i t from t%e va r ious yovernment s p e c i a l i s e d f i nanc ing

s c h c i i ~ s and i r , s t i t u t i o n s t o t h e small and mzdium-scale

e n t e r p r i s e s (SHES) .

fqicjeria'n i n d u s t r i a l i s s t i o n i n the post- inde,en-

iience era was based on the iifiport s u b s t i t u t i o n

s t ra te<;y , which i n thc o i l boom per iod of the scvec-

tics encouraged l a rge - s ca l e , cay=ital i r k e n s i v e ,

icpord;.-deycndent type of i r+c?ustr ies . Apart. f roirt t h e

high c o s t s t r u c t u r e and gcoqraphic cor iccntra t icn cF

nost s f t h e s e l a r g e - s c a l e i n d u s t r i e s , the value added

h:. t h ~ m to the domestic rconcrrty has been r a l a t i v e l y b

low. The economic r e a l i t i e s o f the p r e c i p i t o u s

d e c i i n e i n o i l e a rn ings i n t h e e i g h t i e s n e c e s s i t a t e d

a ~ o l i c y r e - d i r e c t i o n aimed a t r e - a l i g r ~ i n g donicstic

~ ~ r o d u c t i o n p a t t e r n with t h e l o c a l resources base.

Accorclincjly, t h e promotion of srnall and mediuin s c a l e

e n t e r p r i s e s (SMEs) which was recognised by t he govern-

ment as f a r back as the e a r l y 1370s as one of the nieans

of ach iev ing r a p i d i n d u s t r i a l i s a t i o n , w a s i n t e n s i f i e d .

The focus on small and n ~ d i u n s c a l e e n t e r p r i s e s

i s ~ ' r e d i c a t e d on t h e i r inzpac t and p o t e n t i a l c o n t r i b u t i o n

t o broad-based econornic development a s w e l l a s t h e

c a t a l y s t i c e f f ec-t i n ach iev ing macro economic o h j e c t i v e s

such as e n ~ p l o y m n t , d i f f u s i o n of economic power and

promotioc of indiqenous technology. Small and mediun

s c a l e e n t e r p r i s e s are ~ l a r t - i c u l a r l y condusive t o t h e

1 c r e a t i o n of more j o b s p e r u n i t o f Xa i ra inves tment . rhrough a network o f i n t r i c a t e l i n k a g e s w i t h l a r g e - s c a l e

e n t e r p r i s e s , t h e y are c a p & l e of enhancing a d i v e r s i f i e d

p roduc t i on b a s e and a s u s t a i n a b l e i n d u s t r i a l developrent- .

A1)art from t h e i r p o t e n t i a l r ~ + : . e n s u r i n g a s e l f - r e l i a n t

i n d u s t r i a l i s a t i o n , i n terms of a b i l i t y t o r e l y l a r g e l y on

l o c a l raw materials, SPEs are a l s o i n a L e t t e r p o s i t i o n t o

quarar l tce a more ever: d i s t r i b u t i o n of i n d u s t r i a l dcvelopxrsnt

i n t h e coun t ry , i n c l u d i n g t h e r u r a l a r e a s , and f a c i l i k a t e

t h ~ growth o f non-o i l e x p o r t s . TIowever, a s i n n p r t a r t a s

t h e sml l and medium s c a l e e n t e r ~ r i s e s (SPIES) a r e i n t h e

d e v e l o p n ~ n t a l p roce s s , t h e i r a c t u a l c o n t r i b u t i o n ha s becn

less than adequate owing t o v a r i o u s i n s t i t u t i o n a l c o n s t r a i n t s

as w e l l as problerrs i n h e r e n t i n them. I n p a r t i c u l a r , SXZs

a r e c h a r a c t e r i s e d by problems of u n d e r c a p i t a l i s a t i o n , h igh

r a t e of h u s i ~ e s s f a i l u r e , s h o r t a g e of s k i l l s , poor accoun t ing

s t anda rds , and r e s t r i c t e d a c c e s s t o b i q markets . These

problems i n t u r n , restrict t h e i r a c c e s s t o i n s t i t u t i o n a l i s e d

c r e d i t .

Consequently, i n r e c o g n i t i o n o f t h e i r p o t e n t i a l b e n e f i t s

as w e l l as problems encountered by t h e snail and n ~ d i u m - s c a l e

e n t e r L > r i s c s , b o t h the Federal. and S t a t e Governments and,

r e c e n t l y , l o c a l rjovernnents, have s t epped up e f f o r t s t o

promote t h e d e w l o p m r i t o f SMds t h r o ~ g h i n c r e a s e d i n c e n t i v e

s c h e m s , i n c l u d i n g enhanced budge ta ry a l l o c a t i o n s f o r

t e c h n i c a l a s s i s t a n c e progranmes. O r g a n i s a t i o n s , schcmes,

f a c i l i t i e s , and g u i d e l i n e s set up ' ~ y t h e goverrmi?nt t o

promote sn~all. and m e d i u m s c a l e e n t e r p r i s e s ( S L W s ) i n c l u d e s

aniorlg o t h e r s t h e N i g e r i a n Bank f o r C o m r c e and I n d u s t r y

( N B C I ) , v a r i o u s s tates ' Development Finance I n s t i t u t i o n s ,

the C e n t r a l Bank c r e d i t g u i d a l i n e s t o banks i n r e s p e c t o f

l o a n s t o s m a l l - s c a l e i n d u s t r i e s , the E a t i o n a l D i r e c t o r a t e

o f Employmnt Programme, t h e I n d u s t r i a l Develop~rlent C e n t r e s

e tc , Atso t h e new l e n d i n g s c h e n ~ s slid credit i n s t i t u t i o n s

such a s t h e N a t i o n a l Economic R e c o n s t r u c t i o n Fund (NERFUVD) ,

h'or l d Bank - a s s i s t e d small and n ~ d i u n ; - s c a l e e n t e r p r i s e s

Loan Schenle (SNEII) , N i g e r i a n Expor t and 1 r ; i y o r k Bank ( N Z X I K ) ,

t h e Peoples Bank o f N i g e r i a (PDT?) ard t h e Comnu~.i ty E a n k s

have energed a t b o t h t h e n a t i o n a l , state and l o c a l levels,

t o b o o s t the. f low o f d e m l o p n ~ n t f i n a n c e t o SMEs which have

s o f a r depended l a r g e l y o n p e r s o n a l f u n d s and credi ts from

informal s o u r c e s f o r b o t h their inves tnrents and working

c a p i t a l .

Phe t h r u s t o f t h i s r e s e a r c h work t h e r e f o r e is an i n d e p t h

a p p r a i s a l o f t h e ir~tpact o f governrllent I s v a r i o ~ s p o l i c i e s

and i n c e n t i w s f o r promoting SWZS. To b r i n g o u t t h e

u n d e r l y i n g i s s u e s i n v o l v e d , the paper i s d i v i d c d i n t o

f i v e chap te r s . The f i r s t chapter i n t r o d u c e s t h e t o p i c ,

st3tes t h e o b j e c t i v e s and s i g n i f i c a n c e of s tudy among o t h e r s .

Chapter two exainines t h e concep ts and d e f i n i t i o n s o f S F l s

w i t h i n t h e Niger ian con tex t . I t a l s o h i g h l i g h t s t h e s t r e n g t h s

( r o l e s ) a n 3 weaknesses o f t h e subsec to r , examines t h e va r ious

t ypes of: f i n a n c i a l needs and the 4 d i f f e r e n t source a v a i l a b l e .

The chap te r a l s o reviewed the va r ious government scherncs and

i n s t i t u t i o n s f o r t h e p rov i s ion of i n s t i t u t i o n a l c r e d i t s t o

SfiriEs. T h e r e sea rch methodology used i n t h e r e s e a r c h work

was presen ted i n c h a p t e r t h r ee . I n chap te r fou r , ap f l r a i s a l s

of t h e v a r i o u s schemes and i n s t i t u t i o n s w e r e mde. I t

h igh1 i 7 h t s t h e i r achievements ( i n term of l oan approvals

and disbarsc?r.ents) and major f a c t o r s t h a t have n i i l i t a t e d

aga.inst t h e i r e f f e c t i v e n e s s . F i n a l l y , c h a p t e r f i v e analysed

t h e responses from t h e q u e s t i o n n a i r e , t e s t e d t h e va r ious

hypo thes i s p o s t u l a t e d i n c h a p t e r one, examines t h e p rospec t

o f bo th GM7s and the s c h e m s , nade some recommendations,

sumla r i s e s f i n d i n g s and t h e n concludes .

1.2 FRCIBLEM IDENTIFICATION - -----.---

Despi te t h e w e l l a r t i c u l a t e d o b j e c t i v e s o f t h e v a r i o u s

governm n t pol icies and i n c e n t i v e s f o r t h e prornot i o n of

sml l and medium-scale e n t e r p r i s e s ( S I Y I E s ) , t h e sub-sector

s t i l l encounter t h e sane age-long problem of low a c c e s s i b i -

( 1 J-3 To exn arlilic t h e r o b l e m and corLs t rn i r l t s h i n d e r irsg

tile ( j ro t~th and development of tllc s~ j ) -sec tor .

(iv) P o a s c e r t a i n the degree of awa.rencss, thc adequacy,

in :pr tanc :e and e x t e n t of accessibility t o the

sc-henes/ ins t i t .u t ions b: t h e SidEs.

(v) Fo a s c e r t a i n the pospcc t s of bo th ;bll:s and t h e

r'inaric i r q scheri~es .

( v i ) To make s ~ ~ p g e s t i o n s and advance a more e f f i c i e n t

arrangements f o r t h e p rov i s ion of i n s t i t u t i o n a l

c r e d i t s t o SbEs by government.

H I . Inadequate awareness o f t h e o p e r a t i o n s of t h e

schcrnes by SPEs is the ~ a j o r c o n s t r a i n t s t o

t h e i r u t i l i s a t i o n .

4 H 2 . The spec i a l i s e d f i nanc ing schexmsi i n s t i t u t i o n s

a r e the m j o r sou rces of c r e d i t s t3 SPIES.

3 3 . The s t r i n g e n t 1endir:g cond i t i ons o f t h e schernes

do ne t c o n s t i t u t e any hinderance t o t h e i r

a c c e s s i b i l i t y .

134 There are adequate n ~ m b e r s of s c h e m s a v a i l a b l e

t o t h e SPlZs.

1.5 SCG%'~ AND LIMITAT ION OF STUDY . --.- ->--------- ---------- -

The main i n t e r e s t o f t h e au tho r is t o a s c e r t a i n

from the SlWs pe r spec t ive , t h e impact o f t h e v a r i o u s

governrsn t spec i a l i s e d f i n a m i n 7 schernes/ins t i t a t i o n s .

O n t h e p a r t o f the sche~res therrselves, the a p p r a i s a l o r

assessnient o f t h e i r adequacy r e q u i r e s a wide range of

inei ieators of e f f e c t i v e n e s s such a s t h e c a p i t a l abso rp t ive

c a p a c i t y of t h e S F I S , and Ulc f i nanc ing gap of t h e SiWs.

J n f o r t u n a t e l y , s t a t i s t i c s needed f o r computing t h e above

i n d i c a t o r s , e s p e c i a l l y i n t h e contex t o f Nigerian S K Z s, a r e

n o t r e a d i l y a v a i l a b l e . Consequent1 y, t h e francwork of a a r

e v a l u a t i o n w i l l be based l a r g e l y on such d a t a a s Lhe gap

between t o t a l loans approved and d i sbu r sed over t h e vea r s b

t o t h e SMJ3s by t h e var ious schenes.

To a s c e r t a i n t h e views and opinions of t h e SPEs as

regards t he impact o f t h e schenes, the r e sea rche r adminis-

t e r e d p c s t i o n n a i r e t o one hundred and f i f t y i l5@E S Y G s i n

t h r e e s t a t e s of the Federa t ion - La.gos, Enugu and A n a ~ 5 r a .

Norma3.ly, t n c t e s t i n g of hypo thes i s o f t h i s natilrz r e q u i r e s

a randon sampling drawn from a l a r g e populat ion t o v a l i d a t e

t h e i n i t i a l p o s t u l a t i o n t!lat t h e r e i s poor a c c e s s i b i l i t y

t o t h e s c h e n a s / i n s t i t u t i o n s by SiYEs. Though the researcher

daes nrt overlooir t h e need f o r a l a r g e p p ~ l a t i o n , she

b e l i e v e s t h a t s i n c e it is a coxnrran f a c t t h a t some of t.hese

schemcs have p e r f o r m d below expec ta t ions , t h a t what

o b t a i n s i n t h e t h r e e s t a t e s w i l l be a p p l i c a b l e i n t h e o t h e r

s t a t e s a s f a r as t h e s e schemes m e concerned.

The s t u a y w a s however, l i ~ i t e d by t i m e and

f i n a n c i a l c o n s t r a i n t s coupled w i t h d i f f i c u l t y and

unwi l l i nqhes s by manaqenent and s t a f f of some of

t h e s c h e m e s / i n s t i t u t i o n s and e n t e r p r e n e u r s t o releaee

needed i n f o r m t i o n .

1.6 SIGNIFICANCZ OF STUDY .--- ------------

*Chis study i s s i g n i f i c a n c e because i t s v a r i o u s

f i r d i n g s and recor~unendations w i l l e n a b l e t h e govern-

ment and f i n a n c i a l a u t h o r i t i e s t o dev ice , modif$ and

adopt b e t t e r p o l i c i e s and s t r a t e g i e s f o r t h e p r o v i s i o n

o f i n s t i t u t i o n a l credits t o t h e s n l a l l and mediur-sca le

e n t e r p r i s e s i n N i g e r i a . It i s b e l i e v e d t h a t t h e

r e s u l t a n t b e n e f i t s o f t h e s t udy w i l l p rov ide t h e

genera l p u b l i c , e s p e c i a l l y t h o s e engaged i n sma l l o r

nlec?iun.-scale b u s i n e s s e s , with t h e awareness o n t h e

existence of t h e s e s p e c i a l i s e d f i n a n c i n g schenes ,

i n s t i t u t i o n s , t h e i r r ange o f s e r v i c e s , and how t o

3 e n e f i t from t h e schenres. I t w i l l a l s o h e l p t o change

,peoples impress ion about t h e schemes, a s Fede ra l

y n r e r n n e n t ' s " I a t i o n a l cake" .>ha r ing bod i c s t h a t

distribute f r e e locurs.

'The skudy w i l l a l s o i d e n t i f y t h e s t r e n g t h s ,

weaknesses and p r o s p e c t s o f bo th the s c h e ~ s and t h e

SPUs. For t h e academic and Niger ian s o c i e t y , the r e s e a r c h

w i l l serve the purpose of a rous ing deepe r and genuine i n t e r e s t

on t h e s u b j e c t - m a t t e r f o r f u r t h e r r e s e a r c h aixied a t improving

SHES' a c c e s s i b i P i t y t o t h e s c h e n e s / i n s t i t u t i o n s .

Chapte r One Notes .--- --I--- I

P h i l l i ps , Toyiri, The N a t i o n a l Econornic R e c o r . s t r u c t i o n

Fund Gu ide l i ne s , Xgnture I:'inm,c,e_, J u l y 1 9 9 0 P.47

LITERATURE MnEK ------

Thn, t e rns srna&l, rredium and l a r g e s c a l e e n t e r p r i s e s

a r e r e l a t i v e and d i f f e r from i n d u s t r y . to i n d u s t r y ,

c m n t r y to count ry . The re is no unique o r u n i v e r s a l l y

azce;:)ted d e f i n i t i o n of t h e s e t e r m s . Th i s a r i s e s f ror,-.

d i f f e r e n c e s i n indl1 s t r i a 1 o r g a n i s a t i o n of c o u n t r i e g a t

d i f f e r e n t l . , e m l s o f economic a d v a n c e n ~ n t o r d i f f e r e n c e s

i n econoraic development i n p a r t s o f t h e s a w coilntry. 1

According t o Masha, " t h e c l a s s i f i c a t i o r i e s s e n t i a l l y

v a r i e s accord ing t o t i n = and s e t t i n g . ' 2 What Niger ia

cons idered very l a r g e - s c a l e i n t h e 1 9 4 0 s nay c p a l i f y now

as s r i a l l - s ca l e . Also what may be t e r r e d as a small o r

nadiuiu scale e n t e r p r i s e i n t h e Uni ted States m y be

considerect l a rye - s ca le i n 2J ly e r i a o r some o t h e r develo-

ping c d u n t r i e s . " i 'hus, each coun t ry c ier ives i ts a m

d e f i n i t i o n i l s inq m n c e p t s based on t h e r o l e s SMEs are

expected t o ? l ay i n t h e c o u n t r y ' s economy an.d t h e

3 prograrrine o f a s s is . tance b e i n g des igned for t h a t pury;osel' . Q t h e r c r i t e r i a used ir. d e f i n i n g S h E s i m l u d e . c a p i t a l

i n v c s tnen t . ( f i x e d ass ets) , annual t u rnove r , 9x0s s ou t l ~ u t

and s ta f f coxplenunt . C o u ~ t r i e s khich cmploy t h e

c r i t e r i a o f inves tncn t - i n f i x e d assets, excluding t h e cost

of land. and b u i l d i n g , make adecpa te p r o v i s i o n f o r i n d u s t r i a l

e s ta -ks so t h a t SYZs do n o t have t o l s e 5orrowed funds f o r

t h e c o n s t r ~ c t i o n of b a s i c i n f r a s t r u c t u r e s . Also t h e u se o f

c a p i t a l i n v e s t m n t and t;l rnover are widely employed

because they are e a s y t o rreasure a n d t h e r e f o r e f idnct ional .

l i a ~ y i n d u s t r i e s a l s o g r adua t e from small t o n~edium o r l a r q e .

Probably dde t o d i f f e r e n c e s i n p o l i c y focus , d i f f e r e n t

gove rn ren t a g e n c i e s i n N ige r i a app1.v v a r i o a s d e f i n i t i o n s

which a r e c o r s i d e r e d below : b

( i) I n i t s credit g u i d e l i n e s t o banks, t h e Central. BaPuc.

o f N ige r i a s t a t e d t h a t i r , t h e case o f C o r r n ~ r c i a l

B a l k s , sma l l - s ca l s e n t e r p r i s e s axe t h o s e w i th a n m a 1

t a r n o v e r no t excceding 8500, 006. I n the case of

Fkrchant Banks, t h ey a r e e n t e r p r i s e s w i th c a p i t a l

inves t r ren t n o t exceeding H2 m i l l i o n (exc lud ing c o s t

o f l and ) o r w i t h maxirwrn o f N5 m i l l i o n ;

(ii) In the Fede ra l M i n i s t r y of I n d u s t r y ' s g u i d e l i n e s t o

t h e i3igeria.p Bank f o r Cornfierce and I n c h s t r y ( N B C I ) ,

snail-scale e n t e r p r i s e s are de f i ned a s those with

t o t a l . c o s t not r,,ore t h a n H500, GO0 ( exc lud ing c o s t o f

l a n d b i i t i n c l l ~ d i n g working c a p i t a l ) . The PJBCI i n

i t s r e g u l a r o p e r a t i o n s has a d o ~ t e d the .3e f i n i t i o n

of s n v a l l s c a l e a s those with c o s t o f c a p i t a l riot i n

excess o f H750, C O O ( e x c l u d i n g c o s t of l a n d S a t

inc luding- working c a p i t a l ) ;

(iii) T h e C e n t r e for I n d u s t r i a l -search and Developarei?t

( C I F D ) a t the Obafen i Awclowc, J n i v e r s i t y , I l e - I f e

d e f i n e s a s smal-1-scale t h o s e e n t e r p r i s e s w i t h t o t a l

a s s e t s i n c a p i t a l e q u i p r e n t , p l a n t and working ca ;>i ta l

n o t exceeding W250, GO0 and employing n o t nore th,.an

50 f u l l t i r e workers , 4

( i v ) The N i g e r i a n I n d u s t r i a l Deve lopren t Bank def i n c s a s

small s c a l e e n t e r p r i s e s w i t h p r o j e c t c o s t ( i n v e s t ~ : ~ n t

a n d workinq car i ta l ) n o t exceed ing 5750,000 whi le it

d e f i n e s as mdiam scale, t h o s e b u s i n e s s e s i n t h e

r a n g e of W756, 00 0 t o W 3 s-..illion;

(v ) The i a i t roduc t ion o f t h e 8 t r u c t u r a l Adjastx.ent

Proyranme ( J u l y 19d6 to dake) and wi th i t , the '

r e a l i g n m n t o f t h e n a i r a , e x c h a n ~ c r a t e r a i s e d

~ ) r o d u c t i o n c o a t s , p a r t i c u l a r 2 . y f o r h i g h i q o r t

dependent h ~ d u stries . T h e h i q h e r o ,wrat iunal . c o s t

as a r e s u l t o f t h e d e p r e c i a t i o n o f t h e n a i r a mot iva ted

the World Bank to c o n s i d e r a d e f i n i t i o n c l o s e l y

r e l a t e d to present - -day c o s t - p r i c e c o n f i g u r a t i o n . I n

i t s proqraIril!e of 0270 M i l l i o n l o a n ass is ta lxce t o

Niger ia 's s m a l l and medium xa3.e Sus incsscs, the World

ria& i d e n t i f i ~ c l a group referred Lo a s rxLcrc-enter:?rises.

l'hcse are e n t e r p r i s e s x i t h f i xed a s s e t s ( e x c l ~ d i r q land)

p l ~ s cost of t h e i n v e s t m n t p r o j e c t below N 4 0 0 , G O G i n

c o n s t a n t 1933 p r i c e s . I t a l s o def ined sml l and rredium

s c a l e e n t e r p r i s e s as those wi th f i x e d a s s e t s (excluding

land) p l u s c o s t of t h e inves t~ i len t p r o j e c t not exceeding

W 1 C rr , i l l ion i n c o n s t a n t 1933 p r i c e s ;

&

( v i ) I n t h e newly-launched I n d u s t r i a l Po l i cy , s n d l s c a l e

i r d u s t r i e s are de f ined a s t h o s e w i t h t o t a l i n v e s t m n t of

between 00, 000 and HZ. G n i i l l ion) exclixding cost of

cap i ta l - hut; includinc_r working c a p i t a l .. T h e new po l i cy

r e c o ~ n i s e s what it r e f e r s t o as micro /co t tagc i n d u s t r i e s

which a r e de f ined as those e n t e r p r i s e s wi th i n v e s t m n t

c o s t below W1G0,000 (cost. of land excluded, bu t wor?:ing

c a p i t a l i n c l u s i m ) ;

( v i i) h i t h r ega rds t o the Na t io r~h l Ecoi~oxnic Reconstruct ion

Fund (~'JJ~IIEGND) , small--rcedium scale e n t e r p r i s e s are

de f ined a s t hose w i t h f i x e d a s s e t s o t h e r %ban l a n d

b u t i n c l a s i v e of t h c c o s t of new investxrent, n o t

exceeding 3371 6 ;u i l l ion .

The foregoing h i g h l i g h t s t h e f l u i d i t y i n t h e

concept of smal l and i ~ d i ~ n : s c a l e e n t e r p r i s e s . The

rarcge ir: the d e f i n i t i o n is extrene1.y wide from WP50,bBb

i n total a s s e t s (2IIW) t o M I L m i l l i o n in f i x e d a s s e t s

exc lud i rq c o s t of l and (Worfd Eank sad tne PjSRFUMD) . 'Cihil-e t h e d e f i n i t i o n o f SHES d i f f e r s frorr! c o u ~ t r y t o

count ry and even from one i r . s t i t d t i o n t o another w i th in

a country , the c h a r a c t e r i s t i c s o f SMXs are u n i v e r s a l l y

recoynised. These inc lude :

b

( 1 ) Limited access t o f i n a r c i a l r e sou rces

( 2) High labour- i n t e n s i t y ( low cap i t a l - - l abour r a t i o )

( 3 ) S i r y l c management structllrc?

( 4 ) Grea te r nse of l o c a l r e sou rces

( 5) Predominant ownersh i11 by indiqenes

( L) TJidcspread d i s t r i b u t i o n t!~rc;iigl~out a c o u n t r y , and

( 7 ) Xasy emeqence a n d a l s o high r m r t a l i t y r a t e s .

d e f i n e a s mdium s c a l e , e n t e r p r i s e s w i t h p r o j e c t

c o s t above W i m i l l i o n b u t n o t exceed ing N 3 . 5 ~ c i l l i o n

j t o s t of: l and exc luded) . Also by s m a l l arid iaiefiium

s c a l e e n t e r p r i s e s , t h e r e s e a r c h e r exc ludes t h o s e i n

t h c distributive s e c t o r (ic. bu:7ing and sell in^) and

s e r v i c e sector.

In most c o u n t r i e s of t h e world i n

the less developed coun t r i . e s , t h e r e s p e c t i v e

q o v c r n m n t e n u n c i a t e p l i c i e s and prsgramrries t o

a cce l . e r a t e i n d u s t r i a l c l e v ~ l o p r i ~ r , t ~ a r t i c u l a r l y throilyh

t h e porno t ion o f SMEs. T h i s is because o f t h e

preponderant p ropo r t ion o f S YXS ove r l a r g e --scale

e n t e r p r i s e s i n t h e c m n t r y , as d e p i c t e d i n Table 1

(obtained fron a su rvey c a r r i e d o u t i n 19.34 by t h e

Fede ra l Min i s t r y o f l n d ~ z s t r y fo r s o r e s e l e c t e d

h ' c r the rn St-skes] , arc1 t'r1~i.r perce ived r o l e s i.r.

f o s t e r i n g t h e a t t a i n m e n t lof Sam macro-econoinic g o a l s .

adopted as a s t r a t a q y f o r growth and development

because of t h e f 01 lowing r o l e s which t h e e n t e r p r i s e s

p l a y :

A.ccording t o Oguntoye 1['1975) the c o s t per person

eii~ployed i n t h e s n ~ l . 1 i n d u s t r i e s i s rtluch I.ower t h a n

that o f the l a r ~ e r i n d u s t r i e s . A l - s o i f c n e cornpa.res t h e

larc je-sca le i n d u s t r y , it w i l l h e s e e n t h a t pre-SF'!XUI

whi le i t t a k e s a c a p i t a l i n v e s t m n t of abou t W 7 , 5 0 0 i n

a small. i n d u s t r y t o c r e a t e an employmrmt for a worker,

it retpires about 8 2 5 , 0 0 0 i n a l a r g e - s c a l e i c d u s t r y for

thc sarrcr purpose . 'I'hus ShEs c r e a t e Kore jobs p e r a n i t 0

of i n v e s t e d c:apj.tal an3 F r u n i t of eneryl - c o n s a n ~ d . 4

He also f o i n t c d o u t t h a t i f t h e capital-l .a ' ,our r a t i o

r e f l e c t s t h e i r . t e n s i t y of t h e rise of c a p i t a l and

the p reee rk ccsnor:ic down-turn t hey are even niore

relc-want. Khen one r e a l i s e s t h a t the bulk of t he

uznefi~y;loyed i n K i g c r i a and nost developing cmunt r i es

are u n s k i l l e d t h e need for a g r e a t e r emphasis o n

smaSI-scale enterprises t h a t ~ t i l i s e sach labour i n l a r g e

S t a t e E x i s t in9 S m l l - S c a l e T o t a l :1; of 2 ~ 1 ~~r.qe-Cca1.e I n d u s t rias i n T o t a l I n c h s t r i e s {SSI)

13 au ct i.

Conqcrln

P l a t eau

Kaduna

Kigar

Soko to

SOURCE :

f o r Cormiberce and I n d u s t r y , :iarch, 19\35.

by i-re!,;?i;rg to check. ir$3alarce bet-wsen va r ious l o c a l i t i e s o f

a collntry a.n.1 hetween d i f f e r e n t income grollps i n t h e s ane

L o c a l i t y . 0 By doing t h i s , they a s s i s t n o t o n l y i n el icl . inat inq

a sou rce o f s o c i a l ~ ~ i d p o l i t i c a l c o n f l i c t , b u t a l s o i n

reducing the rush t.o t h e few dewlol-ed c e n t r e s o f thc coun t ry

and h e l p t o r a k e the sta.ndard o f l i v i n g of t h e r u r a l populace .

SPSs serve as schools for clevel.opinent of

enterprencurshi? , They provide a t r a i n i r L g ground

f o r t e c h n i c a l r!rd. ~ v m a g c r i a l e x p e r t i s e , a grooming

ground f o r t h e 'noble c a p t a i n s ' of torrlurrow i n d u s t r y

t o acquire the necessary i n d u s t r i a l acumen;:discipl ine

w h i c h makes f o r cnhanced e f f i c i e n c y , j u s t a s t h e y

givc: a n o p p o r t u n i t y f o r the c l o s e s t i d e n t i E i c a t i o n

n o t o n l y between t h e en te rp rene l l r and h i s c a p i t a l b a t

a1 so betwecr: t h e en t e rp r eneu r and h i s erilployees.

According t o S t a n l y and Morse, "Econon,ic growth

reql,? ires more and r;,orc men with pz!rsonal q iaa . i i t i e s

+ of i n i-tistive ,. leadership co rb ined w i t h d:ills 111

organisi-n.:j and a a n a g i q . Charnels are needed b y which

su i.t.ahPy t z l en tec4 am.? ;no-Livated i nd iv idua l s can f i n d

tJie Fr wn17 to rncw sad c o n i r t r ~ c t l v e ty2es of c i c ~ n ~ r ~ k i c

h : r . ~ i i l ' ; d ~ s k r i e ~ se;-vi., ar; ~,~i,$;y a\-lv;ir)ccm.>+~ * :;r-. - - ir!& s tx-ielisiric, . sreas, n o t only by t h e fi- f u n c t i o n i c g

a s a r i u r s c q ..: of e n t a p r e n e u r s h i p and mariayerial

i te 1 i . t s . I'

S r r d l nr.L nediu:n s c a l e i n d i l s ~ r - i e s a r e know^ t o

b r i n g i n t e g r a t e d a g r o - i n d u s t r i a l c l e v e l o p h ~ n t and

order ly growth of u rban i sa t i . cn in the growth c e n t r e s

i n d i f f e r e n t p a r t s of t h e ccun t ry . They a l s o ? l a y

a n in ipor tant r o l e i r i d i f f u s i n r j t h e ownership o f

i n d u s t r i e s . I t should be r,oted t h a t one of t h e

tenciencies ir: t h e e a r l y i n d u s k r i a l i n a t i o n p r o c ~ d u r e

was t h e r :s taSl . i shtent .of g i a n t Fndust ries which

did becowe rnon.opo2ies . The tievelol?rx?nt of SI4Co

i1sl2 i n red:lciny t h i s terdency a ~ i d i n spread ing

t h e ow-iership of industries ove r tholasands of people.

% ~ E E a l s o prEorl;i h i ~ k i cxmrnornic r o l e i n those areas

where consun3er s e r v i c e s is o f Icey importance. They

offer consumers a v a r i e t y of cho ice of p roduc ts o r

s e r v i c e s and a l s o produce i n t e r m d i a t e p roduc ts

f o r u s e ir, l a r g e - s ~ a 1 . e en te rpr i . ses .

Desp i t e t h e s e c o n t r i h u t i o n s , S b E s a r e y e t t o impact

t h e i r ~ . u l t i p l i e r e f f e c t s on t h e i~erformance o f our

econoay. 'This i s due tc s o m i ~ h e r e n t 5 u t curable

k~roblecs .

T rans l a t i ng t h e a 3 o w S e n e f i t s / r o l e s of SMEs i n t o

r e a l i t i e s has n o t been easy due t o v a r i o u s c o n s t r a i ~ t s

t h a t i n h i b i t t h e i r promotion. These problenrs and

c o n s t r a i n t s have ~ i l i t a t e d a g a i n s t t h e e f f i c i e n t develop-

r ~ n t of the i n d u s t r i a l s e c t o r i n gene ra l and t h e SKES

i n art i c u l a r .

However, problcrns o f SMEs c a n be c l a s s i f i c d nlainly

i n t o two categories :

(i) t h o s e i n h c r e r . t i n SMEs and

(i i) t h o s e a r i s i n g f ror.1 non-harnioniseci and weak

i n s t i t u t i o n a l suppor t .

Many &4Es have a s t r o n g a v e r s i o n to ownership d i l u t i o n , B

hence they r e r a i n s c l a l l and restricted t o f a m i l y

iaenbers w i t h I - imi ted c a p i t a l r e s o u r c e s . Many are

t h e r e f o r e u n a b l e t o t a k e u p new proclxcts lims o r

core w i t h r i s i n g costs. I n a d e q u a t e working c a p i t a l

restricts t h e i r p r o d u c t i o n a c t i v i t i e s . "Besides t h e

fact t h a t f i n a n c i a l c o n s t r a i n t s p r e v e n t them f r o m

2rociucinq e f f i c i e n t l y t h u s r e n d e r i n g t h e i r o p e r a t i o n

less c o m p e t i t i v e w i t h t h e i r l a r g e scale c o u n t e r p a r t ,

3% a l s o lircits t h e i r a b i l i t y t o envaTe i n ar,rqressive

321 l i n g techr:icque. ,,a

(ii) ..IicVh I a t e o f d u s i m s s F a i l u r e : -d.i--- - - - - - - - - -. - - - -- -- - - -- -- I n a d e q u a t e working ca l - : i ta l which restricts t h e

g r o d u c t i v e c a p a c i t i e s o f s0r.e SMEs 1-eads, i n some

cases, t o t h e i r demise. F i n a n c i a l i n s t i t x t i o n s ,

e s p e c i a l l y t h e banks, c o n s i d e r them hi* r i s k

ven tu r e s and ver) ' v u l n e r a b l e to e x t e r n a l shocks

e spec i a . l . 1~ sudden c h a r g e s i n government p o l i c i e s o r

measures.

Nany SKEs do no t keep p roper r e c o r d s of: d i s h u r s e n e n t s

and r e c e i v a b l e s . Of ten , they do n o t f u l l y accoun t

f o r l a b o u r costs n e i t h e r do t h e y d i s t i n g u i s h between

own funds and company's funds. A s s e t s and liaailities

are n o t 1 ) r o p r l y accounted f o r ; sou rce s and u s e s o f

f unds a r e o f t e n no t c l . a r i f i e d and consequen t ly ,

e s t i m t e d p r o f i t s o r l o s s e s d o n o t t m l y r e f l e c t t h e

r e t u r n 011 c a l l i t a l i n v e s t e d . E f f e c t i v e plarining

t h e r e f o r e pose s a b i g problem and c a s h i n f l ow very

o f t e n lags b d l i n d o u t f 1 . 0 ~ . I n g e n e r a l , poor accountincj

and r eco rd keepirig i n h i b i t t h e i r access t o

i n s t i t u t i o n a l c r e d i t .

Piost SE:Es e n t e r p r e n e u r s l a c k t h e m n a g e r i a l s k i l l and

e x p e r t ise t o o p r a t e v i a b l e b u s i n e s s u n i t s . The

e r i t e rp reneurs a r e g e n e r a l l y f i rs t g e n e r a t i o n i n v e s t o r s

who h a w no p r ev ious b u s i n e s s expe r i ence t o f a l l upon;

t h e y h a m t h e r e f o r e f i r s t t o l e a r n such s k i l l - a l l

d u r i n g t h e p r o j e c t d e v e l o p m n t s t a g e s . Inadequate

f i r n n c i a l r e s o u r c e s a l s o c o n s t r a i n many SPEs t o u se s e m i - -

s k i l l e d o r u n s k i l l e d l abou r . Th is , of course, a f f e c t s

p r o d u c t i v i t y , r e s t r a i n s expansion and limits c o r q e t i t i v e -

ness .

( V) Avers ion t o i) is c losure : ----- -- ---- --- - --- ----- hany s r i i i l l and mciiiurn s c a l e i n d u s t r i a l i s t s haw a

g r e a t a v e r s i o n t o d i s c l o s i n g t h e d e t a i l s of t h e i r

o l e r a t i o n , such a s supply sou rce s , p roduc t i on p roces se s , +

product i on c o s t s , p rof it margins and d i f f i c u l t i e s

encoantered, F u l l d i s c l o s u r e abou t t h e i r o k t e r a t i o ~ is

reyarded by solre SMEs as an i n c u r s i o n on 1-r ivacy, whi le

some a r e r e l u c t a n t t o l e t anyone a d v i s e them on how t o

run t h e i r b u s i n e s s e s . L e s s t han f u l l d i s c l o s u r e by

SIIEs o f t e n a t t r a c t s i n a p p r o p r i a t e a d v i c e and s o m t i n s s

l e a d s t o the pursu it o f wrong inves tment p o l i c i e s .

I n d i s c i p l i n e : ( v i ) ------- - - - - - Sonlc small and mdiurz. sscle i n d u s t r i a l i s t s are n o t

d i s c i p l i n e d i n t h e sense t h a t t h e y d e l i b e r a t e l y d i v e r t

l o a c s ob t a ined f o r p r o j e c t s u p p o r t t o o s t e n t a t i o u s

e x l ~ e n d i t u r e . Some do n o t d i v e r t b u t r e f u s e t o pay Sack

a s and when due, t h e interest and t h e p r inc ipa1 ,because

of misconceived n o t i o n o f s h a r i n g t h e so -ca l l ed " n a t i o n a l

cake" . Although t h e r e are some genuine ca se s of l oan

d e f a u l t s a r i s i n g from o p e r a t i o n a l d i f f i c i l l t i e s ,

i n d i s c i p l i ~ ~ e ren-ains a m j o r cailse of t e d i o u s l oan

recovcrlf . I t has c o n t r i b u t e d i n ro sma l l way t o bank's

accelmul-ation of bad and d o u b t f u l d e b t s , wi th the r e s u l t

t h a t new b a n s t o SNEa are n o t s o easy t o cone by.

Problenis Znanating from t h e I n s t i t u t i o n a l Set-up: - - - - - - - - - - -- - - - - -. - -- - ------ - ---- (i) R e s t r i c t e d Access t o I n s t i t u t i o n a l Cred i t : - ---- -... - -- - - ------------ - -- -------- -

I n g e n e r a l , comn-ercial and n~erchan t banks t end t o be

raigffardly i n meeting t h e c r e d i t requirc inents of SMEs . It is a l s o 9 e n e r a l l y accep t ed t h a t SMFls f i n d c a p i t a l

s c a r c e r and more expensive t h a n l a r r ~ e - s c a l e e n t e r p r i s e s

because o f t h e h i g h e r real and perce ived r i s k s and

adrninis t ra t i v e c o s t s involved i n l end ing t o them. fhe

barks regard most SNEs as h igh- r i sk ven tu re s an2 some

oank s t a f f are n e i t h e r pains takincj e n o u ~ h n o r p r o f e s s i o -

n a l i n s e l e c t i n g which SMEs t o f i n a n c e o r not . Even

w i t 1 1 t h e p e n a l t y iinposed i n r c c e n t years by t h e Fede ra l

Governnent, th rough t h e C e n t r a l s3ank ' s C r e d i t Guide l ines ,

on coirwercial and merchant banks f o r no t meeting l oan

ce i l - i ng t~ srnall s c a l e e ~ t e r p r i s e s , rmst of t h e s e

f i n a n c i a l i n s t i t u t i o n s o p t t o pay t h e p e n a l t y r a t h e r

thar, comi:ly w i t h governren t d i r e c t i v e s .

Oue t o t h e r e l a t i v e snmllriess i n t h e i r s i z e s ,

acce.ss t o f o r e i q n funds i s a l s o very rruch restricted

i f no t i n , l o s s ib l e . Without governren t a s s i s t a n c e ,

l i~ost SMEs would be s t a r v e d sf needed funds.

Snrall and n-edium-scale i n d u s t r i a l i s t s axe not a l l w e l l -

i n f o m ~ d on t h e f a c i l i t i e s a v a i l a b l e f o r a s s i s t i n g them.

Where they a r e i n f o r m d , they are o f t e n u n c e r t a i n o f , b

o r i n h i b i t e d by t h e p rocedura l s t e p s t o g a i n acces s *

t o fandirLg, t r a i n i n g and e x t e n s i o n s e r v i c e s . Nation-

wide, tlie f a c i l i t i e s va ry fro^ s t a t e s t o s t a t e and from

ope i r lc lus t r ia l developrrrent c e n t r e ( I n C ) t o ano the r . I n

terms o f suppo r t s e r v i c e s , r e s e a r c h and d e v d o p ~ n t

e f f o r t s are i nadequa t e n o t on ly f o r t h e e c p l o i t a t i o n

of r;:i* ~ ~ ~ t e r i a l s b u t a l s o i n t h e 3 r e a s of p roduc t and

~ c o c e s s i nnova t i ons such t h a t new produc t s o r s u b s t i t u t e

p r cduc t s f a r iteriis c u r r e n t l y b c i n e ir;iported, be colre

a v a i l a b l e i n t h e m r k e t . The p o l i c y environment and

i n s t i t u t i o r a l s ~ p p o r t sys tems c u r r e n t 1 y i n p l a c e are

n o t su f f i c ien t1 .y a t t r a c t i v e t o l u r e investment i n t o

i n d u s t r y ,

Restricted. F l r k e t Access: ----- - - - - - - - The h igh technology i n p u t s i ~ t o some p l a n t s and proces se s

which are n o t domic i led i n N ige r i a c r e a t e s a l o t of

p r o h l e r s f o r t h e SMEs. Also t h e i n e f f i c i e n t u t i l i s a -

t i o n , poor remunerat ion and lack of c o n t i n u i t v ir ,

r a n a g e m n t has r e s u l t e d ir . t h e s h o r t a g e of inaiqenous

personnel , wi th s k i l l s , f o r ~ l a n t s r e h a b i l i t a t i o n ,

maintenance and p roces s a d a p t a t i o n t o s u i t do r i e s t i c

raw m a t e r i a l s . I n terns o f o u t p u t s , t h e produc,ts of

Inany SMEs a r e no t s t a n d a r d i s e d and a r e r e l a t i v e l y iri

~ n ~ a l . 1 q u a n t i t i e s . Although many SMEs produce o r can

produce sone o f t h e i n p u t s f o r t h e l a r g e e n t e r p r i s e s ,

t h e non-s tandardised n a t u r e of t h e i r producks r e s t % i c ts

t h e i r a cce s s t o nat ionwide market such t h a t t h e

l a r g e e n t e r p r i s e s p r e f e r to i n p o r t than t o buy sm11

b i t s and pieces from numroua SMEs. Inadequate

harmonisa t ion o f t h e p roduc t ion p roces se s of s n i a l l ,

m d i n n l and l a r g e - s c a l e e n t e r p r i s e s con t inue t o restrict

the market ho r i zon of many SMBs. Furthermore, t h e

I : igerian s o c i e t y is s a i d t o bc. l a r g e l y void o f " p r o t e s -

t a n t ~ t h i c " and " t h e s p i r i t of c a p i t a l i s m , " The

c r a z e f o r foreign-made goods, which may be s a i d t o

d e r i v e f r o n ~ o u r i n f e r i o r i t y complex-borne o u t of

co lon i a l i sm , a l s o has ar, adverse e f f e c t on t h e growth

of Sf:Es in t h e count ry .

In£ r a s t r u c t u r a l I n a d e p a c i e s : .-.--- ----- -- - - ----- --- -- -----

I ~ f r a s t r a c t u r a l d e f i c i e n c i e s by f a r remain t h e weak

l i n k in the c o u n t r y ' s i n d u s t r i a l cKeve1opr:ent. The

a t t a i n r e n t o f c e r t a i n o b j e c t i v e s o f i ndus t rd . a l i s a t i o r :

c a n becon;e i r iposs ib le u n l e s s t h e i n f r a s t r ~ z t u r e i s

the r e . T h e l a c k of adequate , e f f i c i e n t and f a i r l y - *

p r i c e d i n f r a s t r u c t u r e s a d d l e s t h e i n d u s t r i e s w i th

e x c e s s i v e f i n a n c i a l burden a s t hey are compelled t o

provide t h e s e i n f r a s t r u c t u r 3 1 f a c i l i t i e s f o r themselves .

The obvious r e s u l t s are t h a t i n v e s t n e n t c o s t s s o a r and

product ior . c o s t s becone s o a.stronomica1 t h a t t h e s e

i n d u s t r i e s a r e unable t o even, i r , t h e f a c e o f r j ross ly

d e f l a t e d n a i r a , conpe t c wi th imported s u b s t i t u t e s .

A s Otunba r i g h t l y po in t ed o u t " t h e inadequate

i n f r a s t r u c t u r a l f a c i l i t i e s such a s wate r , power,

t e l ec:o~miuniea t io r l and motorable roads c r e a t e cons idc-

r a b l e high e n v i r o n m n t a l c o s t i n t h e p roduc t i on of

qoods and s e r v i c e s . 11 9

( v) Iliqh --I-r--- Iniport - ..----- D e p e n d e n s ---- T h e impor t s u b s t i t u t i o n s t r a t e g y in t roduced i n t h e

2:ntiom:al I~evelopment p l a n s and inplemcnted in many

i n d u s t r i e s , a s w e l l a s t h e f o r e i g n exchange p o l i c y

t h a t i n e r e a s i n g l y became a f o r e i g n exchange subs idy

by governriient ir: t h e p o s t o i l boon e r a , i n f l aenced t o a

l a r q e e x t e n t , the hiqh irrlport dependericy of many SMEs.

Indccd, t h e ~k'ariufacturing sector WZIS d e s c r i b d a s a

"foreiyrs s a t e l l i t e " wi th very l i t t l e va lue added and

a s t eady d r a i n on t h e econorr:;.. High i n p o r t dependency

jeog~arrdise i n t e r s e c t o r a l and i n t r a s e c t o r a l l i n k a g e s

a s each i c d u s t r i a l s& -group r e l i e d more on ' chez+:. ' import and concen t r a t ed on doinc_l i t s own th ing .

CurrenCl y , en t cwi .~ r i s e s t h a t a r e h igh ly depcn.del?,t on

import a.re beset w i t h l i q u i d i t y problems, h igh yroduc-

t io r , c o s t s : narrow prof it margin ( i f any) and high

c a p a c i t y u n d e r - u t i l i s a t i o n .

( v i) E c o n o ~ ~ ~ i c Probler~ls : -..-- - - - - - - - - - -.----.- - I n c i d c n t i a l t o b o t h t h e SMEs and tlie count ry , i n t h c

s h o r t run , a r e f a c t o r s such as t h c h iqh /unfavc~urao le

cxchange rates and the d e a r t h of c u r r e n t s t a t i s t i c a l

d a t a t o i r t c x p r c t e acd f o r e c a s t b a s i c ecor~onuc

p~henoc.ena on which a p p r o p r i a t e investment d e c i s i o n s

cou ld bc t aken . Also t h e f r e q d e n t changes i n f i s c a l

and nionetary p o l i c i e s tena t o d e s t a b i l i s e and f r u s t r a t e

a l r e a d y c o n c e p t u a l i s e d p r o j e c t s . Th is is most p rob le -

n a t i c in the sense t h a t t h e sma l l s c a l e e n t e r p r e n e u r s

l ack t h e soph i s t i c a t i o c , t r a i n i n 7 and connec t ions

i 2 0 s s e ~ ~ a d by blue-ch ip cornpan ie s, i n a n t i c i l a t irly ,

ana ly s inu and copeing w i th a b r u p t : ~ o l i c y changes

i nhe ren t i n o u r macro economic system. Furthermore,

t h e g a l l o p i r q i n f l a t i o r , p r e s en- t ly in t h e coun t ry

cofiipounds t h e i,roblem by worsening t h e a l r e a d y inade-

q u a t e working c a p i t a l a v a i l a b l e f o r SMEs ill t h e

count ry , t h u s l e a d i n g t o t h e demise o f Inany coc~panies B

t h a t o the rwi se would have been prof i t a b l e ven tu re s .

I t is t r u e t h a t b u s i n e s s e n t e r p r i s e s t h r i v e b e s t under

a s t a b l e and p r e d i c t a b l e e c o n o m i c / ~ ~ ~ o l i t i c a l environment.

Howevcr, t h e t u r b u l e n c e i n o u r p o l i t i c a l econ0rr.y

appea r s t o be a d i s i n c e n t i v e t o f o r e i q n i n v e s t o r s who

can a c t u a l l y s t i n u l a t e t h e growth o f small s c a l e

bus ine s se s i n Niger ia .

Xver! l o c a l l y , t h e i n v e s t i n g pub l i c is y e t t o develoi .

a b ~ o l u t c conf idence i n the p o l i t i c a l economy t o such

an ex te r* t a s t o conunit l i f e long s av ings t o r i s k y

ven tures . T h e "nouveau r i che" p r e f e r s t o h o l d t h e i r

i n v e s t n e n t s abroad t han l o s e it u r d c r v a c i l i t a t i n g

g o v e r n i x r t policies and a t t i t u d e s .

~yhich qovern:,~ent 1,ol i c ies and i n c e c t iws f o r pronmtinc_c

Ll=i is car, be :-?xs::\ined. h o s t r e l e v a n t t o t h c tclpic are

;Il l ,s ' ;~roSlcl~s of unde rcap i t a l i s a t i o i . , r e s t r i c t e d access

t o ins t i t i l t io rml . i se i I c r e d i t , whather loca.1 currency o r

f o r e i g n exckanye, and import dependwlcy. I:ow~ver, all

t h e rnroble:t~s rare i n t c r r e l a t e c l a s t hey i..n'c3 a c q u i s i t i o n

and rcccdver; t e d i o u s and d i f f : ' i cu l t .

( i) Seed o r Venture c a p i t a l ;

( ii) Zqui ty c a p i t a l (mainly unquot-ed) ;

4 iii) Long Ycrm Loans ;

( i v ) i.dor!ring c a p i t a l ( s h o r t tc.rn l oans ) ,

( V) De5entures .

T y p e s (i) and. (ii) a r e f a i l y ine:cp:,ensive while

(iii) -. ( v ) a r e c o s t l y because of k b e high r a t e

of i n t e r e s t . The short-terr:i loarss i n fo rk of

work in<- c s)i tal are soce tine s r a i s e d from t h c ntoney

n a r k e t wi th i ts a t t e n d a n t h iuh cost o f funds. T h e

c a p i t a l x,nrket ?las n o t been f u l l y developed f o r t h e

r a i s i n g o f e q u i t y c a p i t a l and deben tu r e s for SMEs and

t h e s e a r c xain3.y a r ranged by t h e dev2lopment f i n a n c e

i ~ s t i t u t i o n s a s p a r t o f the f i n a n c i n ? l ) l an s ( p o r t f o l i o

n;ix) of p r o j e c t s .

Sources o f SrtIEs F i n a n c i q . ( 3 ) - - - - - ---- - - ..--- - Finance has been i d e n t i f i e d a s a p r e - r e q u i s i t e t o a

s u s t a i n e d development of a v i a b l e i n d u s t r i a l s e a t o r .

The lmin s o u r c c s of f i n a n c e t o SMEs c a n be b road ly

c a t c g o r i s e d i n t o f o u r v i z :

i) Owner's C a p i t a l o r P r i v a t e C a p i t a l ,

ii j Eon-Ins t i t . u t i ona1 o r i n fo rma l s o u r c e s ;

iii) I n s t i t u t i o n a l o r Formal. s o u r c e s ;

i v ) S u p r l i e r s o r Prade C r e d i t .

Owner's C a p i t a l . (a) -.----------- " ---.

T h i s is perhaps t h e most impor tan t sou rce o f

i n i t i a l f i n a n c e f o r most smal l and medium-scale

nanu fac tx r i nq i n d u s t r i e s . I n F igc r ia , it has been

e s t i m a t e d t h a t u p t o 36 I s r c e n t of t o t a l i n i t i a l

f i n a n c e f o r niany s r in l l - . sca le e n t e r p r i s e s a r e from

owner 's c a p i t a l . I n S i e r r a Leone it is cs t i r ca ted

between 6 CI and 75 pe r c e n t wh i l e i n some p a r t s of

India it averacres a b o u t 65 p e r c e n t .

T h i s s o u r c e o f c a p i t a l is o f t e n i n the fomn o f t h e

p e r s o n a l s a v i r q s o f a sing1.e owner o r members o f t h e

s m 1 . Only i n a few c a s e s is e q u i t y p a r t i c i p n . t i o n

al lowed ocr ts ide t h e f a m i l y c i rc le . A major r e a s o n f o r

t h i s deve1opmea:t is t h a t rest SHES l a c k a c c e s s t o t h e

o r g a n i s e d c a p i t a l raricet where o t h e r i n d i v i d u a l s rmy

o p t t o be menbers of t h e i r f i r n s . beside^, because o f

L I e srtlallr.ess o f t h e s e e n t e r p r i s e s t h e y rmy f i n d it B

d i f i i c u l t t o a t t r a c t o u t s i d e p a r t i c i p a n t s . More

im;jortarrtly, t h e r e is o f t e n a t e r d e n c y by rany s m a l l

and l;rediun:-scale i n d u s t r i a l i s t s t o keep t h e ownership

w i t h i n line fa1ni1.y a n d a r e t h e r e f o r e , u ~ w i l l i n g t o

s t r e r i g t h e n t h e i r e q u i t y b a s e t h r o z g h al. lowina p a r t ici-

p a t i o n by o u t s i d e r s .

(b) E o n - I n s t i t u t i o n a l Sources ; . .- - - - --"-- --- ------. - - * .". -----

Nan-institut i o n a l s o u r c c s o f f i n a n c e f o r imny SKEs ,

p a r t i c u l a r l y i r : G e t e l o p i n g c o u n t r i t - s i n c l u d e q i f t s,

l o a n s from f r i e n d s and r e l c i t i v e s , c l u b s , r o t a t i n g c r e d i t

contributions (eg. e susu) , and from ~ ~ r o f e s s i o n a l money

l e n d c r s . A l t h o u ~ h s t a t i s t i c a l i n f o r m a t i o n on t h e

c x t e n t of n o n - i n s t i t u t i o n a l sou rce s of f i n a n c e ire

: ; i ce r ia are n o t t o o r e l i a b l e , t h e y a r e e s t i ~ m t e d t o

account f o r a s i g n i f i c a n t pxo!)ort,ion o f f i n a n c e f o r SYZs,

p a r t i c u l a r l y i n t h e p a s t f i f t e e n years . I n S i e r r a

Leone: t h e y account f o r about 33 y e r cent of a l l sou rce

of cap i ta .1 ' , t h e bu lk be ing irt t h e forni of g i f t s ar.d

l o m s Eroci f r i e n d s o r fan5ly.. For sane o t h e r dcvzl.o>ing

cour,tries, t h e e s t i m a t e r evo lves amund 3 0 per cent.

, C) ~ . h c rol,,. of profess ional . money l c n d e r s ir, t h e p r a v i s i o n

of f i n a n c e For SijrEs is usua l?y very smal l , l a r g e l y 4

because o f thc hiqh c o s t of such a f i n a r c c ~ n c ? t h e

ur:ort.?~clJcx d e b t c o l l e c t i o n t e chn i cyes o f t h e l ende r s .

. :.hcrc a v a i l a b l e , t h e s e sou rce s of f i n a n c e a r e o f t e n

~ u . 3 l . l an2 d i f f i c u l t t o ob t a in . A s rwntioned e a r l i e r , 2

r a j o r Eactci- - impending t h e qrowth of bMEs i s t h e :macity

o.F vor:cirr c a p i t a l a v a i l a b l e t h r o u ~ h i n s t i t u t i o n a l

l e n d e r s s u c h as c o r r ~ ~ ~ r c i ~ l k i n k s . Other sou rce s of

f orr ,c.l cc r e d i t t o SMEs i n c l u d e coop and c o r p o r a t e

r> T e n t l y thc.. c a p i t a l market t h r o ~ g h the second-" L ~ C I C '

s e c d r i t i e s in-zrket. Xost of t h e s e i n s t i t u t i o n a l l e n d e r s

l i c e t o a s s e r t t h a t SiwIEs do have d i f f i c u l t y i n meetin9

s e c u r i t y r e q i l i r e m n t s f o r f i r ~ a n c i e l a s s i s t a n c e . I n

a d d i t i o n , t hc h ich c o s t of h a n d l i r q s rmJ -2 - l oans and t h e

r i s k o f d e f a u l t a r e f a c t o r s m i l i t a t i n g a r ~ a i n s t t h e

grantb iq 04: bar,!; f a c i l i t i e s t o smal l borrowers.

I n ce rtairb c i rcur,s tance s SXEs at tenipt t o c i rcunvent t h e

s t i f f requirement for o b t a i n i ~ g f i nance fron: i n s t i t u t i o n a l

l e n d e r s b y o3 ta in ing o v e r d r a f t f a c i l i t i e s a s persona l b

advances and then apply t h e proceeds towards expansion

of t h e i r business a c t i v i t i e s .

(dl C r e d i t from S u p p l i e r s . -.------- - - - -- . - - --.- Trade c r e d i t has a l s o been f a i l y s i ~ n i f i c a n t i n the-

f irlarice o f sma.11. and xed ium-scale e n t e r p r i s e s . This , i n

iuost cases i s i n t h e form of persona l and informal ar range-

m n t s i n which t h e s u p p l i e r s based on r e l a t i o n s h i l l

e s t a b l i s h e d w i t h t h e en te rp reneu r p rov ides him with

s h o r t - t e r n c r e d i t f o r goods supp l i e s . Often such

f a c i l i t i e s do n o t exceed one month and an advanced deposit

t h a t w i l l be c r e d i t e d t o t h e anount owed nay sonletir;:es

be requ i red .

I!ow~ver, t h e rtu-jority of SMEs i n X ige r i a , because of

inab ilitl t o meet the cond i t i ons of formal l end ing

i n s t i t u t i o n s , have r e s o r t e d t o a l t e r n a t i v e s o u r c e s

o f f i n a n c i n y i n t h e in fo rmal f i r i anc ia l i n s t i t u t i o n s .

According t o a s t u d y by Ojo (19C11, the s o u r c e s of

investment f i n a n c e f o r small industries a r e as

surmasized i n ~ab le .2 , The t a b l e shows t h a t alntost

a l l fclnC7s came from pe r sona l s a v i n q s (36 .4 p e r c e n t )

with abou t 3 p e r c e n t f r o n the i n f o r m 1 s e c t o r and 6 . L1

Lwr c e n t fron: t h e fo rmal f i n a n c i a 1 i n s t i.ku t i o n s . Thc

t r c n d is f u r t h e r e s t a b l i s h e d b y a 1303/34 s t u d y by

8 t h e Niyer inn I n s t i t u t e f o r S o c i a l and Tconomlc

hcscarch (NISER) (Tab le 3 ) . Table 3 shobs t h a t abou t

73 ljer c e n t of the responden ts o b t a i n e d t h e i r funds

from pe r sona l s av in7s , whi le o n l y aabodt 2 pe r c e n t

cb t a ined t h cir 5 u ~ l d s from the f o r m i f i n a n c i a l i n s ti - t u t i ~ n s.

Also i n l i n e w i t h t h i s i s the survey c a r r i e d o u t i r i

so~w p a r t s o f L a ~ o s MaS~ land ( 1 9 3 6 ) b y Ojo which

shoxs t h a t the formal s o u r c e s which i r c l u d e banks,

o t h e r f i n a n c i a l i n s t i t u t i o n s , g o v e r n m n t l o a n aqmc ics

and coope ra t i ve c r e d i t s o c i e t i e s a r e of less

irnportance t h a ~ t h e i n f o r m 1 sou rce s which i n c l u d e

owners ' s a v i n g s / r e t a i n e d e a r n i n g s , f r i e n d s and

r e l a t i o n s , c l u b s , esusu and money l e n d e r s , c o n s t i t u t e

a m j o r source morethan 6 0 % of total, as roughly

depicted in Table 4 .

~ ~ C E S 13F IP&yGTE.I%NT FDWa FOR SRAUL IK8.3USTKIES IN P;aCWa. -.----- ---- ---*-- -------------- -----.-----------..------ -------

Western I ( repdents) ! State I

E'ERCENTAGL DISTRIBU' I I ION OF IZU'DUS'I'PY

EUSINESS IF: SOMZ PARTS OF I J I G Z R I A .

S o u r c e s of Fund I I INo of ilespon- I Percentacre [der : ts o f t o t a l

I 2. F r i e n d s & I t e l a t i o n s 1 1 4 3

I

3 . C l u b s , Lsusu, I ~ l o n e y L e n d e r s , e t c 1 4 1- ,,- ,.- -.,- ... --- I

S u b - t o t a l i 1 1 0 I

6. S n a l l scale 1 n d u s . t r i e s Loan I I I

m u r c e : F r o ~ r J u e s t i o n n a i r e Survey i n some parks o f Lagos

' i L . -i GOVERN&lXNT P O L I C I E S ANn 1MCENTIVE;S FOR PROMOTING

SPIES HN NIGERIA.

In r eCa l i s a t i on s f the b e n e f i t e of pror , to t in~ ~ ~ 1 . 1

and xcdiuiwscal c e n t e r p r i s e s I SI'IEs) , t h ~ Fede ra l

Governnlcnt I lziye:? am? has ccmtinue:? t o pl ~y pioneer ing

an3 a c t i v e ro l t:c sir-ce t h e 1 9 7 Cs i r , s t i ~ n l a t i r k ; j SSMCs.

The focns or SNEs i s p red ica t ed e n t h e i r i n p a c t an&

ccn t r ihC , io r i t o a d i v e r s i f i e d productive base a s ~ ~ 1 . 1 B

as t h c i r c a t a l y t i c e f f e c t ir: ach iev inq r a c r a ob j c c t i v e s

such a s c n i ~ ~ l u y m n t gene ra t ion , d i f f u s i o n of economir

power and p r o m t i o n of incligenou .s t,erhnol.or~y. SEES a r e

prticu1a:-!y r e r e co~duc ive t o the c ~ r e a t h n of rncre

j obs per u c i t of n a i r a L r v e s t m n t , t l lnn 1.arqc e n t e r p r i s e s .

rhrodgh a network of i n t r i c a t e I.inkacjes wi th l a r q a - s c a l e

cn t c ry ) r i s e s , t hey are capable of e rhanc i rq a broad

produc t.ion base .

RccordFrigly, th c govc.r.rmer..t has enployed monetary,

f i s c a l and i rdu str i a l po l icy r!ear;ures and i n c e n t i v z s t o

achieve i t s t3csired g o a l s . As kolcwain r i c h t l y po in ted

o u t , "each country has t o work o u t a p p r o p r i a t e arrange-

ncn t s based on i t s s i z e , s o c i a l s t r u c t u r e , stage of

developncct , i d e n t i f i e d characteristics of i t s s m a l - 1

e n t e r p r i s e sector, a v a i l a b l e h u m n and f i n a n c i a l r e s o u r c e s ,

id-e p o l i t i c a l c l imte , and l e v e l o f . rrrzturity and v i s i o n

of i t s l e a d e r s h i p . I@ 1 (1 I n l i n e w i t h t h i s , the g o v c m c ~ n t

has eninc i a t c d r : o l i c i e s through K a t i o n a l Eevelop.r.ent P l a n s ,

annlial buclr;rc:ts an6 i t s a q e n c i e s to prov ide f i n a n c i a l

a s i s t a n c e , tr3 ininc; and s o r e i n I r a s L r u c t u r a 1 fac i l i t i e s

In order t o 6-0 a thorcugh review, t h e s e ~ m l i c i e s and

w i l l be c a t e g o r i z e d i n t o t w ~ : t h o s e scl+mes f o r

f inancirig and p r o v i s i o n o f other s e r v i c e s t o SMEs, and

t h o s e pi r e l y f o r trh e p r o v i s i o n of t e c h n i c a l l marmycmerL acd

othcr s u p p o r t services.

The f i l u n c i n q and development of SXEs i s s h a r e d by

ran1 i n s t i t a t i o n s i n c l u d i n g p u b l i c a r d p r i v a t e s e c t o r

ac jenci t s , t l l t l i ~ s t i z p o r t s n t of which i n c l u z e t h e f ol lowin? :

S i n a n c i a 1 p o l i c y with r e s p e c t t o S Y E s i s t h e p r o v i s i o n

of c r e d i t f a c i l i t i e s t o e n s u r e t h e i r development and

s u s t a i n a n c e . Accordingly , th€ FcderaJ. Yi . l . i tary

: ;oaernine~t set up i n 19 71, a srrlc7.17. I n d u s t r i e s

D c v e l o p n ~ n t Programme t o p rov ide t echn i c a l and

f i n a n c i a 1 s u p p o r t fo r SXEs. T h e r e a f t e r , the goOrerrirnent

set up the small I n d u s t r i e s C r e d i t Cormittc:e (SICG)

t o admin i s t e r S n a l l I n d u s t r i e s C r e d i t Fund (SICF')

t h r ~ ~ u g h o a t t21 e courl try . I r i . t h e Th i rd %a t i o n a l

Developr~&nt LJla.n, 1375-.19.30, the S I C ? was f o rma l ly

1.aufichec: a s k-he Sral.1 S c a l e Indizs t r iee C r e d i t E.chere

(SSICS) " 11

The scheme which was o p e r a t e d as a matching 'qrant

betwecn t h e F e d e r a l Governmwt arc? L l c S t a t e s was

desicyned t o r z k e c r e d i t a v a i l a b l e i n l ibarral terns t~

c n t e r l j r i ses w i t h c a ~ r i t a l . invcs tnen t ~ : - ~ C l z i y rmt exceed in7

k 1 SU , 6 ( 0 . 'i'he S C ~ em? W? 8 !mr:?%?~~rpd j 3 y th E S tn t e ~ '

b i l r l l s tr ies of I n d u s t q , Trade anc? Coorera t i v e s through

t h e Loan I%masemnt Comn~itLees (L,hPIC"n) . rhe LXCs

cordprised o f r e p r e s e n t a t i v e s of 'States X i n i s t r i e s of

I n d u s t r i e s , I D C s 'and l o c a l banks. Wc, i n d i v i d u a l

appl ic a n t c o u l d o b t a i n nore than Roi) , (20 d ( i n c l u d i r q l oan

f o r f ixec? and working c a p i t a l ) .

t o t a l i n v e s t r e n t and workin3 c a p i t a l of up t o H750, L C C

also corie u.nder i ts scope of financir,g. I i I D B ' s l o a r s

ranqe fron. a r r ~ i n i m u m of 3 5 0 , D G O t o a mximurr; of W ? 5

rrLillion o r 1 5 l~e r c e n t of N I D b ' s e q u i t y 5ase b u t not:

cxceedirq 7 5 per c e n t of t h e fixed a s s e t s of the

C;oi-~~.~any beil ly f inanced. An a t t r a c t i v e f e a t u r e of !qIDki's

f i r i a ~ ~ e i n g is its policy o f c q ~ i t y p a r t i c i p a t i o n of 11-2;

i,er cent .ir? the paid up sha re capital of s o m of the

vrojects financed. NIDB's l oans arc r c l a t i v e l y soft.

Eor n o s t projects f il;anc:cd, t h c nloratorium i s tko

ihrw years <or. working c a p i t a l l o a n s and t e n years fo r

c a p i t a l . - i n t e n s i v e projects. Tn tc rc s t p y a b l e r a n g e s

Lroid aimut: 124 l w r cent on foreiyn currency, loan, 13

the XBCI (as a s p e c i a l i s e d devel.opr-iunt bank) t o provic'te

arwncj obi er th ings , f i n a n c i a l serviccs t o indigcnou s

bus i r l c s s cor;jilgrlity, p a r t i c u l a r l y sj<zs, Co'l;i'ernrer,tv s

cor.~:i.i t~neilt: t.v ensare adequate f u n d i n 2 for S i < 2 ~ w a s

f a r t h e r tlc:nor~:;trated when it a c c e ~ t o d the recor r~r~endat ior i

of Lh T . I, m a n c i a 1 .' S y s t e ~ a Review Cor;u;;it:tee of 1 9 76 thc7.t

t ~ d 2 I o p e r a t e as the apex f i n a n c i a l . i m t i t u t i o n a l body

j J ';:)e ;\JZC'' zc".,lnJr; 2 jro~;~ Vl e Federa 1

Govcrrxnent (znd a t tines l o a n s f rom f o r e i g n Lodies l i k e

w o r l d b2rG, A3:B etc) -to assist. swa1.l businesses, &ach

w i t h ;~roject cost of rrct nore t h a n 3750, C.08. The l o a n s

so r jraztml t o SAEs are r e l a t i v e l y s o f t . I n addition to

i t s regcl EX f u r c t i o r x , the. ZrBCI also n d ~ i n i s t e r s t h e

Federa l h.,ir:iekr;7 of 1 :ndus t r i e s Special. Fund f o r sm3l.l

s c a l e e n t e r p r i s e s . The I.oafi s which are all.oca ted on a

p a r i t y ba s i s t o t h e s tates are a lso s o 5 t . .The bank is

gu ide2 11s' the I l i r : i s t r y t s g u i d e l i n e s f o r this purpose and

it receives :;ran.ts froit, t h e Federal Covcrrznent to fund

sncl l . b u s i n e s s e s .

government ' s p o l i c y o f fund ing sr\al!_ b u s i n e s s e s , t h e

C e n t r a l ;Jan'< o f I?- iyer ia s i n c e 1 3 7 C h a s b e e n i n s t r u c l e n t a l

i r z p r o m t i n q t h e development of wholly-Nigeriar: e n t e r p r i s e s

l ~ a r t i c u l a r l y i n t h e s m a l l s c a l e sub-sec to r . On o b s e r v i n g

t h a t e x 1 ~ a t r i a t . e banks which e o n t r o l l e t l u o r e t h a n J d p e r c e n t

of t h e c o u n t r y ' s banking b u s i n e s s advanced o n l y 25 p e r c e n t o E

t h c i r c r e d i t t o i n d i g e n o u s bor rowers r los t ly small b u s i n e s s e s ,

t h e C!3;4 d i r e c t e d t h a t more l o a n s be g i v e n t o SNEs. I n i t s

credi t p o l i c y p i d e l i n e s , it d i r e c t e d t h a t w i t h effect from

A p r i l 3 G , 1370, c red i t t o i n d i g e n o u s bor rowers was t o be a t

l e a s t 35 p e r c e n t o f banks' t o t a l l o a n s and advances. The

p r o p o r t i o n o f l o a n s t o ind iqenous bor rowers w a s raiseh i n

suSsec,uent :rears t o 4 G p a c e n t i n 1372173 f i s c a l y e a r , 39

p e r c e n t f o r t h e 1 ,er iod A p r i l 1973 - A p r i l 1977, 53 p e r c e n t

f r o a hay 1377 till end 1977, and t o 6 0 , 70, 8 0 and 9 0 p e r c e n t

ir~ t h ~ y e a r s 1978/1379, 1932 and 1934 r e s p e c t i v e l y . Zven

though t h e CHI4 r a i s e d t h e p r o p o r t i o n o f l o a n s t o be advanced

t o ind igenous k o r r o w e r s , t h e banks concer1.trated. o n l a r g e

scale b u s i n e s s e s and s h i e d away f rom f i n a n c i n g srnall s c a l e

! ~ u s i n e s s e s , o w i ~ 7 t o the h i g h risk invo lved and because of

1troh1e.n~ s t a t e d earlier. The C e n t r a l 3ank i n i t s rcionetary

1,ol icy c i r c u l a r 140.1 of 1379 o b s e r v ~ d t h a t " i t w a s p o s s i S l e

( f o r t h e banks) t o a c h i e v e f u l l compliance w i t h o u t n e c e s s a r i l y

e x t e n d i n g c r ed i t f a c i l i t i e s to small-s c a l e e n t e r p r i s e s which

a r e x h o l l y r.;irjerian-owned and f o r which t h e p o l i c y was

o r i g i n a l l y d e s i q n e d . "12 I n t h e f iscal y e a r 197313 0, t h e

CGN t h e r e f o r e d i r e c t e d t h a t a t l e a s t 1 G p e r c e n t of

l o a n s and advances t o ind igenoas borrowers should be

a l l o c a t e d t o smal l - - -scale i n d ~ l s t r i e s - Th i s pe r cen t ace

dab ir:c>rensed t o 16 wi th c f f ect from A p r i l 1 9 3 0 .

I n 1337, the CBN f u r t h e r d i r e c t e d t h a t a l l d e f a u l t i c 7

L a r k s r a s t deposit the u m t i l i s c d ~ a l a n c e o f t h e 1btj

.hoanahlc> .Fsarld wi th i t which shcrgld be m d c a v a i l a b l e t o

::'"...<:I f o r on-lending t o SMEs. I n 13313, t h e Cr3N i n c r e a s e d

tle pe rcen t age o f l oanab l e funds from 18% t o 20!k6which

1:iilst be i n t h e i r i d u s t r i a l s e c t o r e x c l u d i r q c e n e r a l

nerdlca.nciise. The d i r e c t i v e a l s o s t i p u l a t e d t h a t a P 1

barks cou ld p a r t i c i p a t e i n e q u i t y ownership of SivIEs.

' I ' r ~ t measare, accord ing t o t h e P i i n i s t e r o f Finance and

Developrile:~t, is des igned n o t on ly t o h e l p i n t h e

genera t i u n of new suall and niedimn s c a l e S u s i n e s s e s , b u t

a l so as a respoi?se t o t h e probl .er~s o f solre o f t h e

e x i s t i n q f i r n i s , which a l thouc~h 3 a s i c a l l y sound, need t o

r e s t r u c t u r e t h e i r c a p i t a l base f o r s u r v i v a l and c;rowth.

Ls t ab l i shed i n 13d5, t h e NDE i s ano the r channel through

which $overrixmnt h a s promoted t h e developruent o f SMEs -

Ir, January 19137, MDE launched a nurnber of p r o g r a m e s t o

gene ra t e enploy~:erat, These wme r. (1) s m a l l scale i n d u s t r i e s

(SSI ) ; ( 2 ) i i g r i c u l t n r e ; ( 3 ) Youth Employnent and Vocat ional

S k i l l s Dew 3.oyment and ( 4 ) Specia l . Pub l i c Works.

Jnder the SSI programrrie, t h e LdDd depos i t ed i n 193 7 and

1 3 3 8 , W35.1 m i l l i o n and N3,G nkillion r e s p e c t i v e l y , t o 2 0

p a r t i c i l n t i r q banks f o r on-lend in7 t o srnall-scale bus ines s cs.

An a d d i t i o n c l SUE of W15 g i i l l i on was a l l o c a t e d t o a l l s t a t e s

and Rbuja i n 1 3 3 3 t o boos t t h e f u n d i n s of s m a l l - s c a l e b

bus ines se s . The IYDE also has two scllemes -- t h e Open

Rf ~ x e n t i c c s l l i p and t h e Waste t o Kea! t h Programme. Under the

open a p p r e r r t i c e s h i ~ i schene, a p p r e n t i c e s a r e t r a i n e d i r a

v a r i e t y of s k i l l s a l l over t h e coun t ry wh i l e t h e 'waste t o

wea l th ' scheme h e l p s s iual l -scale e n t c r y r e n e u r s i n corwertincj

d i s ca rded itcrus such as ? l a s t i c s , j ewe l l e rys , shoes etc

t o v a l u a h l c i t e ~ s .

T h e W o r k i q f o r Yourself Progranxne (WFYP) i s a scherre

recent1:y in t roduced by t h e Fede ra l N i n i s t r y of I n d u s t r i e s ,

a s s i s t e d l;y t h e I r , t e r n a t i o n a l Labo:ir i7rganisation(110) and

by the l i r i t i s h Council. PJF'YI) aiiils a t d e v e l o ~ i n y e n t e r p r e -

n c u r i a l s k i l l and a t put- t in5 i nnova t ive i d e a s t o f r u i t i o n .

Jnder t h e WF'YP, a s ix-week i n t e n s i v e course is condncted a t

des igna ted c e n t r e s .to t r a i n and a s s i s t p r i v a t e smll

i ~ d u s t r i a l i s t s start ui) "r r u n their bus inesses . I t

was For~rlally launched i n Akure, Cndo S t a t e , on 23rd

1 s c%s-~ary, 136 7 . Other c e n t r e s have s i n c e beeri ~ l , e r e d

i c othcs states. Graduands o f t h i s t r a i n i n g progranux

wzs 1 x i r . y funded by NZCI with I.canab1.e funds provided

h y t h e bj.inistry of Ir ,duskries.

b 3h7inq t o problems discuss6.d e a r l i e r , SMCs f i n d it

difficult. on t h e i r own t o i;ut up' irnvestment i~ackaqes

t>.at woulZ a t t r a c t f o r e i ~ n c a ~ x i t a l . However, sonle

in.ternat:ional o r g a n i s a t i o n s such as t h e World Ban!.:, t h e

A f r i c a . ~ D~velopinent D a r k a.nd t h e I n t e r n a t i o n a l r'inance

C o r p o r s t i ~ n have cont inued t o 1-1-ay i r q o r t a n t r o l e s i11

;,roviding f o r e iqn c a p i t a l t o some sinall and medilm.

sca1.e i n d u s t r i a l i s t s i n Nicjeria. Th i s has been poss ib l e

i n nany ins tances because of Federa l Governriient's

anwavering suppor t f o r SbIEs. Usually, t h e Federal

Governnent o r any of i t s ayencies provides so= form of:

guarantee and agrees t o nnn i to r or solretinlles co-f inance

saall riediurn s c a l e p r o j e c t s r ece iv ing e x t e r n a l

f i n a n c i a l support . AE e x a ~ q i l e was t h e $4 1 n i l l i o n Norld

Bank Loan ( u s u a l l y known as SP4E 1) g r an t ed throuqh N U C I

f o r f i nanc in ( j p i l o t p r o j e c t s i n f i v z s t a t e s - Ondo

Cross Rivers , idiyer, P l a t e a u and Irr~o. Only wholly-

Nigcrii .n owned l i m i t e d l i a b i l i t y comynnies w e r e e l i q i b l e

for tti.le lroqranimes.

A s ir. 193&, t h e Af r i can Developnent Bank (ADD)

g r an t ed an expor t s t i m u l a t i o n loan o f US$ZS?. m i l l i o n t o

f i n a n c e :';AEs investment i n Niger ia . The l o a n is

repayable i n 20 yea r s and it c a r r i e d a concess ionary b

i n t e r e s t rate o f 7 . 3 pe r c e n t .

Federa l Government endorsenen t is i n v a r i a b l y

r e q u i r e d i n r ,~ost cases and t h i s i s asuaLly g iven f o r

bonaf ide smal l b u s i n e s s p r o j e c t s .

( v i i ) I'he -- ZL'ational ---- - Gconondc Recons t ruc t ion Fund (NERE'UND) -- --A- -- - - --- - - --- -- - ---

With t h e i n t r o d u c t i o n of t h e s t r u c t u r a l Adjustn ' tnt

Progranme (SAP) i n 19d L and t h e resu l . t an t s h a r p

d e p r e c i a t i o n of t h e n a i r a , coupled w i th e q u a l l y sha rp

rise i n i n t e r e s t r a t e s , many SHES were f i nd ing it ever,

more d i f f i c u l t t o o b t a i n l oans t o f i n a n c e i n v e s t n e n t s

and prov ide for working cap i ta l - . I n o rde r t o b r i d g e

t h e e v e r widening r e sou rce yaps arwng t h i s c l a s s o f

en teppr i se s , the Federal Governrent set up i n January 1939 - I

the Xa t i o n a l .i3conornic Reconstruction Fund (NERFUND) t h r o u ~ h

t h e !rlERF'U:II'D Decree No. 2 of 19d3. S p e c i f i c a l l y , the NERFUIW

is ailxed a t providing n~diura t o lonq--term funds f o r wiml.1y

bligerian owred small and mediurrl scale e n t e r p r i s e s a t

r e l a t i v e l y concessionary r a t e s af i n t e r e s t . It is a l s o

wrpcctcd t h a t under P;IERFUND, t h e St-1:::s would have e a s i e r

acces s t o fo re ign exchange which t h i s group of e n t e r p r i s e s

Eound d i f f i c u l t t o acqu i r e dnder t h e deregula ted f o r e i ~ n

exchanr;e rrarket ( F G M ) . NEWUNB i s a funding mchan i& and

n o t a bank. ",: - - 4 3 F S s wishin? t o have access to l oans

f ran NEXWJMD is e x p c t e d t o do so through h i s bank, which

w i l l he t h e p r i n a r y o b l i g o r t o NZRFIJPID. A bene f i c i a ry of

1 .", ;\i~Rli'UNi) r a y b e requi red t o source some of its i n p u t s

(ciachilser;., r a w t e r i a l s etc) i n a p a r t i c u l a r c o u n t q

depending on the or ig in . of funds being u t i l i s e d . The

provis ions f o r e l i g i b l e e n t e r p r i s e s according t o s e c t i o n

i of the NERFUND Decree a r e t h a t :

l i)

( ii)

( i.i i)

SM2s b e 1 LO p e r c e n t owned by ?T ige r i ans ,

S p i C s are regarded as those with f ixed a s s e t s 1:lus

cost of new i n v e s t ~ ~ v x l t l land excluded) no t a c c e d i n g

% I 6 ii)il.lion

Ir: t h e case o f a manufacturir-q p r o j e c t , not l e s s than

i 0 per c e n t o f the raw ina t e r i a l s a r e l o c a l l y

s3urced ; and

( i v ) A p a r t i c i p a t i n g bank (PB) ha s accepted on beha l f of

t i le SXE t o a s s u m c r e d i t r i s k .

P r i o r i t y i s t o be accorded p r o j e c t s l o c a t e d i n t h e r u r a l

areas. Accordingly, the d i s semina t ion of informa t i o n on

TJERFUND's r e sou rces and a c t i v i t i e s is expected t o be c a r r i e d

o u t a t tile l o c a l qovern~nent l e v e l , a l though t h e s t a t e s '

Conmissloners of Finance are expected t o coo rd ina t e a c t i v i t i e s

b p e r t a i n i n g t o t h e u t i l i s a t i o n of NERFUND ' s resources .

b e n e f i c i a r i e s oC ,,he funding mechanisn a r e n o t expected t.o be

c o n s i d ~ ~ e d on a quota b a s i s .

Po te r t t i a l l y , t h e resources of NZRFUiJD included a

ca t ch ing g r a n t 114' t h e Federa l Covcrnn-ent ( W 3 00 nL l l ion) and

c o u n t e r p a r t funding by t h e World Bank, t h e Af r i can Deve1oprLent

Bark, etc, p r o j e c t e d a t $29 0 mi l l i on . 'The csovernnent of

Czechoslovakia a l s o agreed t o contribute .6 50 m i l l i o n which

is t o b e u t i l i z c d i r procur ing machinery and ecquipn~nt from

C~echos lovak ie . The i n t e r e s t rate on NFRFUND' s naf r a l o a n

is exllectecl t o be s l i g h t l y lower t han t h e preva i l in r ; corLm"crcial

rates i n t h c coun t ry and s h a l l be Fixed du r ing t h e d u r a t i o n

of the loan. T h i s is supposed t o ease t h e a c c e s s of small

e n t e r p r i s e s t o c r e d i t , s i n c e NEXFUND i s n o t e s t a b l i s h e d f o r

prof it motive, fhus , NERF'UND is e x l ~ e c t c d t o charrfe t h e

p a r t i c i p a t i n g Barks ( P 3 s ) an i n t e r e s t r a t e no t

exceeding 1 per c e n t ?bow NP:Rl!'U?:Dts c o s t of

Sorrowin? t h e p a r t i c u l a r fund. The P R s , i n t d r n ,

arc supposed t o charge t h e SMEs n o t nore than 4 per

c e n t above t h e NERFUND rates. I n practflce, a s a t

end of June 1992, b e n e f i c i a r i e s ob ta ined NEFZUND

n a i r a 1-oms a t 23.5 p e r c e n t , while f o r e i g n cur rency

loans c a r r i e d v a r i a b l e i n t e r e s t r a t e s , depending or;.

the source of t h e foreiqr , loan and t h e terms of

a ~ r f e r n e n t concluded wi th NERFUPiD. P a y m n t o!

intere:>.- a d pr i r ic ipa l diue on t h e f o r e i g n currcricy

loans i s expected t o bc i n naira. e q u i v a l e n t a t t h e

;irevai.ling o f f i c i a l FEN ( S e l l i n ? ) exchange r a t e ;

with ttle SMEs hea r ing the f o r e i g n e x c l m n ~ e ris!r.s,

while t h e P Z s b e a r t h e caredit r i s k s .

Yo provide a major break-through i n rmkinr~ s r n a l l and

n ~ d i s r , ; s c a l e e n t e r p r i s e s a v e r i t a 5 l e e n g i r ~ e of growth,

the Federal. Government approached t h e World Bank f o r

f i n a n c i a l ~ s s i s t a n c e t o c o i n p l e r ~ n t i t s o t h e r f i n a n c i a l

e f f o r t s d i scussed i n the foregoin3 pa rag rams .

Encouraged by t.he Governnutnt's e f f o r t so f a r a t promoting

s11xi3.1 and rnedium s c a l e i r rdust r jalists, t h e World B a r k granted

a loan of US$Z';O mi l l ior , t o the Federa l Government of

h'igeria f o r t h e development of SXEs i n t.he p r i v a t e s e c t o r .

c3u.t of t h i , ~ anlount, a sum of US$265,7 mil l . ion is t o be rade

a v a i l a b l e f o r on-lending t o SMEs through e l i g i b l e p a r t i c i-

pa t i n g bank s ( PR s) . .. '. '1, ; .project c o s t i s $ 4 1 5.5

rni l l ion o u t o f which t h e 'P7orl.d i3ank is providing a loan of

427C ~ i d l l i o r ! o r 64.2 per cen t of t h e t o t a l . The small. and

mdiun s c a l e bus ines s en te rprencur s a r e expected t o p!oviclc

$73.7 m i l l i o n GL i 9 . 2 per c e n t of t h e p r o j e c t c o s t s , whi le

P B s a r e expected t.o supply t h e ba lance o f 6 6 6 . 1 m i l l i o n o r

15.3 per cer?t of t h e t o t a l .

T h e c r e d i t risk of sub-loans and investments are t o bc . borne by P B s whi le t h e Federa l Goverr,n.ent is expected t o ,

bea r t h e f o r e i g n exchange r i s k s . Sub-loans/ i n v e s t n ~ n t s

f inanced o u t of the. proceeds of t h e World Rank laan a r e no t

expected t o form part of the c r e d i t c e i l i n g of FBs .

T h e major o b j e c t i v e s of t h e $4 15.3 million p r o j e c t a r c

(i) Support e x i s t i n g e n t e r p r i s e s r e s t r u c t u r e and m d e r n i s e

t h e i r o p e r a t i o n s ir; rmin ta in ing t h e i r com_narativz

atlvar:ta::e and i n rega in ing cor.q~e t i t i v e n e s s , and

(ii) Help set up a new g e n e r a t i o n o f v i a b l e and produc t i ve

invzstriient a c t i v i t i e s .

Withiri t h e c o n t e x t o f t h e fo rego ing broad o b j e c t i v e s ,

tile p r o j e c t is des igned t o a s s i s t i n t h e f i n a n c i a l r e s t r u c t u r i n ?

of soire f i rn ls t o rmke t h o s e t h a t are over- leveraged, ' bankab le ' .

I t is a l s o expecte6 t o h ~ l ? i-n . t h e r e h a b i l i t a t i o n and expansion

of ShEs as w e l l as t o i n i t i a t e t h e s e t t i n g up of new ones. ,The

p ro j ~ c t which has d i f f e r e n t components invo lve a long- t e r m

f i r iancing th.rough e q u i . p n ~ n . t l e a s i n g and it is also airwcl @at

e n s u r i r q t h a t t h e (? ,? l ive ry o f t echn ica l . su fpo r t s e r v i c e s i s

r e spons ive t o t.he needs of t h e b e n e f i c i a r i e s .

l'nc Cen t r a l G a n k is expec ted t o on-lend t o e l i q i b l e

p a r t i c i p a t i n g barL?s, t h e e q u i v a l e n t i n n a i r a , o f t h e proceeds

oF t h e 41265.7 m i l l i o n , rileant f o r f i n a l on- lcnding t o SWs.

C e n t r a l ijank loan t o PT3s would be a t t h e p r e v a i l i n g r e - d i s c o . x t

r a t e . 133s are however f r e e t o determine what rates t o u se

i n t h e f i n a l on-lcndinrj t o b e n e f i c i a r y e n t e r p r i s e s . The

o v e r a l l r espons ib i l - i t y i n ensur ing t h a t s u i t a b l e p rocurenen t

Llrocedures are eoq l l - i ed wi th by TJUs 1 ies wi th t h e SME Apex Unit.

N E X I h was e s t a b l i s h e d i n January 1330 t o naanage a

runher of c r e d i t f a c i l i t i e s i n t r o d u c e d s p e c i f i c a l l y

t o a o o s t Kiqcricls non-o i l e x p o r t s c c t o r . The e s sence

of h L X I Y was based on c_rovernmentls c o n v i c t i o n t h a t

t h e economic p r o s p e r i t y o f t h e c o u n t r y w a s no t t o bc

a l lowed t o hang l ,e rnanent ly 01: t h e o i l s e c t o r but a l s o

on a !~calth;,r qrowth i n the non-oil. zx;?ort s e c t o r . rhe

cs tab i i s h n ~ n t o f NEXIP.; was a l s o i n t ended t o s u p p o r t @

fa rmers and o t h e r sma l l - s ca l e e x p o r t e r s t o have d i r e c t

z c c e s s t o i n t e r n a t i o n a l n.arkct. The f a c i l i t i e s o f Eered

by NEX1P: iincl!tde t h e Export d t i rnu la t ion Loan (ESL), t h e

Fore ign Inpu t F a c i l i t y ( F I F ) and t h e R ~ f i n a n c i n g and

W~ldiscoun t i r ig Fae il i t y (RR?:") .

The Cxpor t S t i m l a t i o n Loari s c h e r z of t h e r e d e r a 1

Covtrnlient, which ZJEXIPI nmnacjes, i s funded through a

US$>, 7 G 3 r i ~ i l l i o n l o a n frorIl t h e A f r i c a n I)eveloy?rL!ent

bank ( N I B ) . The ESL seeks t o b r i n g o u t t h e k e s t in

i g e r i a n e n t c r p r e n e u r s who do no t have t h e f a c i l i t i e s

for producing t h e i r p roduc t s f o r . the i n t e r n a t i o n a l

r z i r i e t b u t have i n i t i a t i v e s . It a l s o seeks t o

d i v e r s i f y non-oi l e x p o r t i ~ r o d u c t s . The ESL funds a r e

ucvot td main1.y t o t h e acc iu i s i t ion of c a p i t a l ecp iy rn~n t

reciuired for c x p r t product.ior r a t h e r than fo re ign raa

r ,a ter ia l . s atld spa re l a r t s . A s a r c s u l t of t he ohvious

success i n t h e d i s5u r senen t o f t h e f i r s t CSL filrid, t h e F\1>Li

has agreed i n p r i r c i p l e t o g r a n t A scxond c r e d i t l i n e of

3 1 58 rx i l l ion t o I~JZXIM t o f u r t h e r the scheme,

'i'hr: Foreisn Input. F a c i l i t y (FIT.') i s d e s i g m d t o ~ i v e

~ ~ a n u f a c t u r e r s f o r e x l ~ o r t s access t o f o r e i < p exchange

r equ i r ed t o irr-port r ach ine ry ( f u r t h e i r f a c t o r y ) and v i t a l @

r a b 1i la tcr ia .1~ which cannot h e ~xocurcc l i n N i ~ e r i a , T h e E'IF

l o a n s arc q r m t e d on ~ ~ ~ o r a t o r i a o f 2 y e x s Eor c a @ i t a l

e c i u i p ~ ~ e n t am1 l 3 iwnths f o r raw na t c r i a l s . It , a l s o a t t r a c t s

in-ierest r a t e s of 3.50 - 10.50 p e r cen t ,

The d i scoun t window r e f inanc ing a r d r ed i scoun t iny

IRRF) was f i r s t in t roduced Ly t h e C e n t r a l Bark of kic jer ia

in A p r i l 1 3 3 5 t o ennance banks ' e x ~ m r t f inanc ing operatior::;.

The anount q ran t ed under t h e f ac i1i t .y i nc reased f roal N5-5.2. -2

u i l l i o n in 1933 t o H513.5 m i l l i o n i n 133.) nnd PS1,371. Ci

i.lillicjr. i n 'I 3 Ju, when the IIIE' f u i ~ c t i o n was t r a n s f e r r e d t o

I . ?'he fac il. i t y is t o enab le e q > o r % e r s t o rece ive

f inznc ing wh i l e wa i t i ng t o c o l l e c t expor t proceeds. Thus,

1 ; W a s s i s t s e x p o r t e r s t o extend c r e d i t s t o ove r seas buyers

and I;hrougll this b o o s t t h e s c a l e of e x p o r t opera t io f i s .

':'he RKT a t t r a c t s an i n t e r c s ~ r a t e of 1 per c e n t above

C s n t r a l I:nr,:: ' s ~~iinimur;; r e d i s c o u r t rate ( X K a ) . Beforc a:]

e x p o r t e r c m b e r l e f l t froin t h e RRF' ~ c ~ 1 e r . e t o t h e t une of

k l : i i i l l ior> arid above, he n u s t ham an outstandincl, r e co rd

in cxpor t a ~ i l r i n e s s and ~ w s t have been i s sued a Cer t iSicat :2

o f ke r f o r r ance .

Eiowevcx, in t h e b i d t o f i l r th .cr i r i c rcase earriirqs

5ror.i pnon--oi I s e c t o r , XEXIP4 r e c e n t l y i ~ t r o d u c e d a ;-pckagc:

o f r;ew rodac acts s p x i f i c a l l y desi(lne2 a s i n c e n t i v e s t o

e x p o r t e r s . P i e y i nc l ade P r i e r : Guarantee F a c i l i t y (FGF)

which i s t o sable e x p o r t e r s t o e n t e r i n t o any exi,ort

c o n t r a c t (spot: o r f u t u r e ) wi thou t f e a r o f p r i c e E l i l c t u a -

t i o n , E , x p r t C r e d i t Guarantee F a c i l it>- ('ECGF) which cove r s

d e f a u 1 . t ~ a.risi119 from i n a b i l i t y t o r e c e i v e payment f o r

loans t o c x p o r t c r s d u e among o t h e r s t o d e l a y i n t r a n s f e r i r q

of payr;ients by the nlonetary a u t h o r i t i e s of t h e buyers '

coun t ry ; i\:anuEactllrinq-In-Bond G u a r a n t e c F a c i l i t y ( P B G F )

which i s r;atc.a.nt t o r e p l a c e t h e Duty :>raw Sack Schene, i s a

:Tlarantee t o be g iven t o customs a u t h o r i t i e s i n l i e d of

cash d e y o s i t i n r e s p e c t o f import d u t y on i rLxp r t ed i n p u t

of e x p o r t manufacturers , and Nutual Export Guarantee

F a c i l i t y ( X E G F ) which i s a commitnent which IJEXIFI rizakes

t o b a r k s i n r e s p e c t o f c r e d i t griven by them t o small . 3 r d

i n f a n t e:rl:larex-s who belong t o a Iviiltual Zxport Guararktee

The r u r a l '.hark irq Irogranzbc s t a r t e d i r ! Niger ia i n 19 77

k ; h e n t h e f i r s t phase (1377--1330) was introcluced. The

ixograrme seeks t o moderate t h e problem of poor acces s t o

c r e d i t by t h e m r a l s e c t o r o p e r a t o r s , inc lud ing most of the

SPA s . During t h e i n i t i a l phase of t h e scheme, a t o t a l of

260 r u r a l branches w e r e t o be est,ablished by t h e t h e 3

e x i s t i n g 21 corilrnercial hanks. By t h e end of 1984, a t o t a l

o f 183 such brarxhes had been e s t ab l i shed . The second phase

of the programme took off from January 1331 t o December 1934,

dur ing which 2 6 6 r . i r a l branches were all.ocat.ed t o t h e e x i s t i ~ r ~

cor.ui:ercial barks . Yy the end of t h e second phase 257 Sranches

here o~jened. The t h i r d phase of t h e progranirne w a s launcheii

an I st August, 193 5 and was expected t o end on 3 1 s t Ju ly , 1933

dur ing which 3010 branches were t o b e opened by a l l t h e

e x i s t i n g 23 cormercia l banks i n p ropor t ion t o t h e i r s i z e .

A s a t Decen-her 1983 a t o t a l of 533 rural . branches had been

opened under t h e t h i r d phase, br ing ing the cumulative nuxber

to 7 5 6 r u r a l bark branches. The scheme was discont inued

t h e r e a f t e r i n prefe rence f o r Con-mmnity/Unit 3anks following

wide-+spread c r i t i c i s m t h a t the r u r a l hranches of urban

- 59 .-

corms r c i a l banks w e r e : a n i napprop r i a t e s t r a t e g y f o r

~ r o v i d i n g banlcin!i f a c i l i L l e s i n t h e r u n 1 areas.

In view of t h e ar,mrphous n a t u r e o'I t h e S i i Z s t h ~

' c J a r a l 'T;overnr zr;t x l so souqht t o acet t 'x~ir r:ceds

-L.; qh a nu~cihcs of o t h e r agenc ies arc? c r n a n i s ~ t i o n s

such as the a i r ; - c to ra t e f o r Food, Roads arc! Rural

In t r a s t ruc t a r ;3 ( )F.?.r'L) known f o r t h e &?v?lo;lr ent of

r u r a l i n f r a s t r ~ c t i l r s for the growtki of Fi!?:s; t l ~ c

B f 4 e o l ~ l c s 3ank ,hi,:h s t r i v e s t o reach o u t t o the ndcro-

borrower who cannot met t h e s c r u t i n y of t h e lend ing

y u i d e l i n e s OF a forrml. 5ank ; t h e Cofirnlunity Bank which

j r ov ides f i r a n c i a 1 5,crvices f o r t h e r u r a l area as well

as ndcro-enterprises i n t h e urban c e n t r e s nn6 t h e

ijet ter L i f e f o r ??ural Women (BLJGJ) proqrpnrm whose

m i n o b j e c t i v e s i s t o c r e a t e i n women t h e a w a r e n e s s

f o r self--dependence i n t h e i r var ious coPlerl t ive

ende a v w rs .

The r o l e of tile State Governmnts has no doubt,

been con~plernentary t o t h a t of t h e Federa l Goternment ir.

the funding oZ SMEs,Xach s tate has n c r e d i t schcme

tanaged blr t h e S t a t e N i n i s t r y of Con~sierce rind I n d u s t r y

Lor tne a s s i s t a r c e of S M E s . In a d d i t i o n , ckmy s t a t e s

have paid 1:art of the eqility c o n t r i j u t i a r ~ 0 4 t h e Nork inq--

Fcr-k'ca-self P r q r a r m ~ cntcrp-eneugtep t o assist t h e n t o

iiieet t h e i r i;rc--&i sburscmen t rcr r~i re i i lent s. Also the rs are

in existen.cra s te te -.owr,d dove l o p r e n t . f i .nance i n s t i t u t i o n s

( i ; rFIs) W ~ V L ~ F ? s01c ximdatc i s t o ensure a r . ~ u l t i p l i c i t y of

e n t e r p r i s e s a . t t h e s t a t e level. through t h e p r o v i ~ i o n of

credit a t conc;csslanary r a t e s t o SMEs.,

I n s t i t u t i o n s f o r P r o v i s i o n o f Techn ica l Xanagenent and . . . - - - . - - - - ,,--, , , , ,, , , , -1 - -- -. --- - --

T h e i r i s a l s o a l a r q e nunlber o f both p u b l i c and p r i v a t e

sectcr aq emc ies involved i n p rov id inq non- f i n a n c i a l

suppor t s c r v i c e s t o SMEs. The Federal. YAnistry of

I n d u s t r i e s m i n t . ins a network of: I n d u s t r i a l Developrr.ent

Cen t res ( I D C s ) in v a r i o u s s t a t e s o f the F e d e r a t i o n f o r

p rov i s io r , o f ex t e n s i o n s e r v i c e s .

Over t h e y e a r s , a n i n c r e a s i r ~ g nunher o f o t h e r governmmt

suppor ted i n s t i t u t i o n s have beel; a c t i v e l y involved i n

providihly e x t e n s i o n s c r v i c e s i nc lud in? consu l t ancy

s e r v i c e s , xanagement and t e c h n i c a l a d v i s o r y s e r v i c e s ,

and t r a i n i n g t o t h e SIvIEs s e c t o r . These incEude t h e

I n d u s t r i a l T r a i n i n g Fund (ITF') , A d n ~ i n i s t r a t i v e S t a f f

Ccdleee of Piigesia ( A S G O V ) , Cen t re f o r Manar;ement

Developmnt (CXD) and Fede ra l I n s t i t u t e of I n d u s t r i s l

Research ( F I L E ) . Others ir:clicie t h e p r o j e c t Develop-

n e n t A ~ e n c y ((PRODA) and t h e l J iger ian Instit '11tc of

Sc i.mt i f i c and Xconorcic R F ; s e a r c k l (RISER) .

There are also numerous p r i v a t e s e c t o r o r g a n i s a t i o n s

i n . ~ o l v e d i n the p rov i s ion o f such s e r v i c e s a s dissenti- b

n a t i o n of informat ion, p roduc t s e l . e c t i on , p r o j e c t

rranagment -kra i r.ing, market ing, e q u i p r n e ~ t s e l e c t i o n and

o t h e r s e r v i c e s which a r e of irterest t o SNEs . Forermst

among t h e s e o r g a n i s a t i o n s a r e t he Manufacturers

A s s o c i a t i o r o f N ige r i a (XASJ), Ka t i ona l Assoc i a t i on of

Small bca le I n d u s t r i a l i s t s (NASSI) and t h e It 'ational

Z ~ s s o c i n t i o n o f Chamber o f C o ~ u ~ s r c e , I n d u s t r y biirnes and

Acqricul t u r e (MACCIMA) .

(iii) I n d u s t r i a l E s t a t e s . ------ - - ---- --

Federa l Government ' s l d a n t o e s t a b l i s h i n d u s t r i a l

e s t a t e s i n every states of t h e Fede ra t i on w i l l m i n i m h e

thc c o n s t r a i n t s f a c e d by SMEs i n t h e p r o v i s i o n o f b a s i c

i n f r a s t r u c t u r a l f a c i l i t i e s such as power, cor~munica t ions ,

roads and water. E f f o r t s are being made by governmerit

t o a t t r a c t 1 r i v a t e s e c t o r p a r t i c i p t i o n i n the

provis ion of i n f r a s t r ~ c t u r a l f a c i l i t i e s so as t o reduce

t h e burden on t r e a s u r y fundin?.

I t is the re fo re , the intenti011 of the researcher to f i l l

this y a p ir, o t h e r l i t e r a t u r e s by asscssinc; these sclrlenes fro::^

the S M E : s yers;)ective,

Concepts, Ay pra isa&s of sort= Goverr~~.er i t P o l i c i e s and

4 . Ocjuntaye, G.A. The place a n d Role of Smal l I n d u s t r i e s

ir: Indu s t r i a l i s a t i o n P r o c e s s : Paper p r e s e n t e d a t t h e

T r a i n i n q Course f o r Government O f f i c i a l s on S m 1 1

l n d u s t r i e s d e v e l o p r e n t . 1 1 t h - 27 th Aug1.zst~1375 P .2 .

5 . Ogantoye, O.A. I b i d EJ.3

i Stt2nl;y, E and Korse, R. hode rn Smal l I n d u s t r i e s f o r

Develollirq Cour i t r i e s . Iv~-Graw H i l l -- book Compag~y,

Kew Yor i c , 19L3 P.232.

2 I a s h a , A.R. Ibid P.35

3, Oturiba 0.k . Ibid 2 . 2

I . Cdntral Y a n k cf N i g e r i a C r e d i t Po1ic.y Guidelines f o r

1 9 7 3 f i sca l y e a r . K o n e t a r y P o l i c y C i r c u l a r b;o. 2 3 , 1 3 ; j .

This s t u d y was c e n t r e d on a s s e s s i n q the i ~ p a c t of

~;ovt:rnrnen.ts ' special iscc?fflnanci.ng sch(:~lii~:!s/inst i t u t i o n s OI:I t h e

:jrcjwt!l an6 d ~ v e l . ~ ~ . m i r t . of the sm.l.1. and me?i:?r;!-- sczle ,c.u~-.

~ e c t o r i n th.c country. I n o r d e r t o ensure adccj-mte covcxage

A: and e f f e c t i v e r e i i r e s e n + , a + i ~ ~ of views, the r e s e a r c h e r s t u d i e d

hundred and fifty SMF: s l o c a t e d i n u r b a n , s e m i --urban and r u r a l

arcas of t h r e e s t a t e s of t h e F e d e r a t i o n r!aniely Lagos, ,";rn~.(-yl

and Anaribra. These e n t e r p r i s e s c o n s i s t s of t h o s e erqa-jed i n

r ,a i lufac tur ing sca.cma3 = s !:;.anuf a c t u r e o f auto--spare.-.g'.,k*sr o f f i c e .

q u i p i i e n t , s t a t i o n e r i e s , i n d u s t r i a l c h c r n i c a . 1 ~ ~ c imdlo , d e t e r - .

k~icnt, ~;,cosnet.ics, : ~ . l a s t i z s , f u r n i t u r e etc; A y r i c u l t u r e such

as c r o p procluc tion., 1 ;oul t ry farms, f i s h e r y etc ; and Acjro-a l l ied

w~tery~r ises such a s v q e t a b l e o i 1 p r o c e s s i n g p l a n t s , t e x t i l e

C ~ ~ a r c e n t i n g ) , corn f l o u r p r o d u c t i o n , p a r m . k e r n e l o i l proce-

s s i n ? . S e a t h e r works, c o n f e c t i o n a r i e s e t c .

The r e s e a r c h e r however e x c l u d e s t h o s e SblEs en5aged in

c ; i s t r i b u t i ~ ~ e (buy ing ant1 sel l in?;) and s e r v i c e s e n t e r p r i s e s .

his c i z a i ~ t e r p r e s c n t s s o u r c e s of da ta , r,.ethoci of i n v e s t i g a t i o n

snd t h e r e s e a r c h i n s t rurnents a p p l i e d .

Data for t h i s s tud>- were c o l l e c tcd th rough secondar;7

arid p r i i .~a ry sotlrces s o a s t o oh t a i r . adequa te and

r e l e v a n t ir.':'orrnation needed f o r a qood r e s e a r c h worl;,

l 'hc r c s e a r c he r s t a r t e d t h e invcls t i g a t i o n by wra1,ii-

n i r y the secondary d a t a , whic :~ p rov i . -?d a s t a r t i n g :

; )o in t F o r t h e r e s e a r c h work. The bulk of t h e * m a t e r i a l cam from t h i s s o u r c e which j.ncl.udes :

i) Finance t e x t b o o k s

i i) C e n t r a l Bank o f N i g e r i a Annual R e p o r t s

(Var ious e d i t i o n s )

iii) C e n t r a l Rank of P!igeria Erononic

F i n a n c i a l Review ( v a r i o u s i s s u e s )

i v) Repor t s of v a r i o u s schenles and i n s t i t u t i o n s

vj l i e p o r t s of v a r i o u s conmerc i a l and merchaxt

S ank s

v i) Other j o u r n a l s , n~avaz ines , newspapers a n d

sonic govcl-wren c dccumen ts . 2 . ' I . i P r i n a r v Soilrce -----._- * - - -_ - ----

l o r : ? r i m r y d a t a , t h e r e s c a r c l l e r went i n t o the

i i e l c i i t o i n t e r v i e w some s r m l l ani medium--scale

i ~ x h s t r i a ' l i s t s ar,d managenent arid s t a f f o f s o r e

of t h e s c h e n e s / i n s t i t u t i o n s inc luding some

cormerc i a l and nerchant bank $ s t a f f . Quest io -

rinaire w a s adn~in is t e r e d on s0Iii.e s e l e c t e d S J l E s

t-ct f i n d o u t t h e i r op in ions about t h e schencs.

These r ~ u e s t i o n s were however, cons t ruc t ed

around the s p e c i f i c ohjec:.tivcs of the study.

A randon sanplir ig rizethod ~ c i s use~! ir, ~ a t h q r i n g

d z t a r ep resen t ing va r i ed sanple p p u l a t i o n c o n s i s t i r q

of' one h1:ii;dr~d and f i f t y SMEs t h ~ t -Fall-s w i t h i n the

o p ~ r i l t i o n s l . d e f i n i t i o n of SXEs as s t a t e d i n Chapter

1 0 . The snny:lc covered t h r e e s t a t e s -- Lagos, Lnusu

arid Anailbra S t a t e s . Our sample wc;s l i m i t e d t o this

popu1atior.l due t o iuainly tize and f i n a n c i a l c o n s t r a i n t s ,

Two metkocls of invest ic ;a t ior \ were eiq-?loycd. The

s u r v e y method and personal obs erva t i s n . The survey

ILK thod c o n s i s t s of qcl e s t i o n n a i r e s adminis te red t o

e n t t r p r e ~ i e u r s and/or s t a f f ( i n case of xrrivate l i m i t e d

l i a b i l i t y conqany) of some sxmll and mediun, s c a l e

e n t e r p r i s e s . T h e s u r v e y (qi les t ionnaire) was t a r g e t e d

a t anders t a rd ing t h e reva ailing views and concey)tions

of t h e SMES towards the var ious s c l ~ e ~ ~ e s / i n s t i t a t i o n s .

The findings are f a r reaching and very enlightc:ninir.

;Ii.storj.cal surveys i n the forrc of p a s t records of the

e n t e r p r i s e s (where a v a i l a b l e ) ar2d t h e schemes w e r e

ii:ade. For personal observat ion, t h e r e sea rche r mde

S G ~ J C v i s i t s t o son:e of t h e schems t o in te rv iew t h e i r

s t a f f 2nd t o ascer'cab t h e l e v e l of t h e i r a c t i v i t i e s . b

Amng t h e schenlcs v i g i t e d were National Econorrdc

Reconstruct ion F'und (hTJ?FUND) , Xigerian 3ark f o r

Cornserce arid Indus t ry (IJBCI), Nigerian I n d u s t r i a l

so1.e cordmercial and merchant banks and National

'i'abie 2 .7 shows t h e d i s t r i b u t i o n ard c .ol lect ion

of- the c;uest ionr ,oires iror;. t h e s e l e c t e d small a n d

daedilllir- s c a l e en teqbr i s e s .

Of the 1 50 ~ L I e s t i o n n a i r e s d i s t r i b u t e d , 136 r e p r e s e n t i n g

3 L. 7 p e r c e n t were a c t u a l l y c a l l e c t e d . 'fie response rate

o b t a i n e d a r e c o n s i d e r e d h i g h enough to o f f e r s i g n i f i c a n t

r e s u l t s t h a t would form b a s i s f o r t h e comprehensive a n a l y s i s

i n t ended i n t h i s r e s ea r ch work.

Eased on t h e d a t a from the c iues t ionna i re a d x i n i s t e r e d on

some selected SM3s and t h e t h e o r e t i c a l frarmwork p rov ided i n

c h a p t t r two and f a r , t h e impact. of t h e schemes on the SNEs

was a w e r t a i n e t i .

2, The c h i - s q ~ a r e ( ) method was used. Through t h i s

method we were able t o p r e s e n t t h e SLEs and. t h e i r res1:onse.s.

T h e t e s t wcs c a r r i e d o u t a t 5 p e r c e n t l e v e l o f s i g n i f i c a n c e .

The ch i - squa re test s t z t i s t i c i 6 qivm b7,' :

where Oi

( O i - Ei)' - Ei

= Observed f r e ~ ~ u e n c y

-. Expected frequency

- ~ q r e e of freedom

= level of s i y n i f i c a n c e

= Calculateci c h i - - s ? ~ a r e Value

= chi-square v a h e from ch i - square

d i s t r i b u t i o n t ab le .

4

3.5.1 Decis ion C r i t e r i o n - - ----- -"--

Decis ion i s t a k e n based on t h e r e s u l t s obta ined by t h e

chi-square ana lys i s . Y f the c a l c u l a t e d chi-square

va lue (x:) is less t h a n t h e ch i - square v a l u e from t h e

chi-square d i s t r i b u t i o n t a b l e , w e would accep t the Null

hypo thes i s , o therwise we reject the Null hypothes i s

and accep t t h e a l t e r n a t i v e hypothes i s . l 'hat i s i f

X: 4 & Accept N u l l hypothes i s

Accept A l t e r n a t i v e hypothes i s .

CHAPTER FOUR

There i s no douLt t h a t t h e Federal Coverr~i!~ent has been

a prime mover An t h e p r o l i f e r a t i o n of SPLs i n the country.

The sulport f o r S X E t kjy the government d a t e s back t o t h e

~ e t t i n g u p of the f i r s t LDC i n O w e r r i inuncdintely a f t e r t h e

countrq~ ' s independence and it has con t i r u ed s i n c e then. Su~pox-t b

f o r and r ecogn i t ion of the role o f S K E s was empl-lasised i n the

Presic1ent1 s 1938 Budget Address where h e stated t h a t "small

s c a l e i n d u s t r i e s have a vital r o l e to p l a y i n ach iev ing

sus t a ina l> le growth. N o t on ly a r e they capable of genera t ing

more employment per u n i t of c a p i t a l input , they provide the

b e s t chance of i n d u s t r i a l i s i n g o u r r u r a l a reas . " Ln h i s

1933 Budget Address, he r e - i t e r a t e d t h e i r h tpor tance i n

erriploymnt gene ra t ion and t h e i r col-1 ective importance "as

engine o f growth." r-Lccordingay, t h e p re s iden t s t a t e d t h a t i n

19.39, the Nigerian Bank f o r Comerce and Indus t ry and t h e

Cormwrcial Danks w i l l be r eq l ixed t o s e t up sf ia l l -scale

i n d u s t r i a l departments w i t h nianacjecent c a p a b i l i t i e s s.1cl.1 t h a t

SMEs woalcl have improved access t o cred i t . and rranaqerilent

advice . Aqainst t h i s background of governscent 's unf l i c c h i n g

suppor t f o r SMEs one would need .to examine t h e impact

of sonie o f these s ~ h e m s and i n s t i t u t i o n s aimed a t

promoting SFEs. The a p p r a i s a l o f t h e s e schemes, incen-

t i v e s would i n d i c a t e t o what e x t e n t , p o l i c y o b j e c t i v e s

a r e r e a l i s e d .

B a n k s (Corrmsrc i a l and Plerchant) l end in9 t o SMEs

was very n e ~ l i g i b l e , e s p e c i a l l y p r i o r t o the in t roadc-- 4

t i o n of tile mandatory minimurn quota of t o t a l c o m n ~ r c i a l

barks Loans t h a t must go t o Lhe smal l s c a l e e n t e r p r i s e s

(SSZS) . S W c e t h e i n t r o d u c t i o n o f t h e c p i d e l i m i n 1971 ,

there h a s been r e l a t i v e improvement, a l though banks

compliance with the g u i d e l i n e was most a n s a t i s f a c t o r y

b e f o r e 13a7 ( S e e T a b l e s 5 and 6 ) . For i n s t a n c e ,

c o n t r a r y t o CBN d i r e c t i v e s - that t h e p ropor t i on of l o a m

t o be a t e n d e d t o SSES should n o t be less t h a n 16 per

c e n t f o r c ~ r n n c r c i a l and m r c h a n t Sacks, the p r o p r t i o n

w a s g e n e r a l l y less than h a l f of the quota, ranging from

l . G p c r c e n t i n 1980 t o 9 . 0 pe rcen t i n 1936 f o r commrc ia l

banks and from 3.1 pe rcen t i n 1934 t o 3 . 3 pe rcen t i n

1967 f o r t h e merchant banks. Many of t h e banks

k~refe r re r l t o pay p e n a l t i e s r a t h e r than g r a n t c r e d i t

f a c i l i t i e s t o SHES. The Cen t r a l Sank t h e r e f o r e d i r e c t e d

in i t s Monetary P o l i c y C i r c u l a r No. 2 2 of 1947 t h a t

" cons ide r in9 t h e need t o give! s p e c i a l a t t e n t i o n t o t h e

promotion of sma l l scale e n t e r p r i s e s t o g e n e r a t e growth

and enlploymcnt, t h e reyuirenient t h a t con;mercial and

merchant banks s h a l l a l l o c a t e a minimum of I6 pe r c e n t of

their t o t a l 1oar.s and advances o u t s t a n d i n g t o smal l s c a l e

e n t e r p r i s e s ( S S E s ) s h a l l con t i nue , ' and t h a t banks whose

l o a n s and advances f a l l s h o r t o f the minimum requirement

~ ~ t u s t d e p o s i t t h e s h o r t f a l l t o the C e n t r a l Dank f o r *

on-lending t o sml l scale b u s i n e s s e s through the Niger ian

Bank f o r Commerce and I n d u s t r y (IJBCI) . Such d e p o s i t s are

n o t ~ a d e t o count a s p a r t o f t h e bank 's r e q u i r e d a s s e t s

n e i t h e r are t h e y t o a t t r a c t any i n t e r e s t . The r e s u l t w a s

r e n a r k a b l e i n t h a t most of t h e banks c o n p l i e d and s o m

exceeded the rtiinirwm requirement. For f i s c a l y e a r 1987,

agg rega t e l o a n s and advances to smal l s c a l e i n d u s t r i e s by

t h e banking s e c t o r amounted t o 33,587 m i l l i o n which

conqr i sed 20.46 p e r c e n t o f t o t a l l o a n s and advances. The

y e a r 13'37 t h u s rmrked t h e f i r s t tire t h a t the banks on

t h e averaye , complied w i t h CBN c r e d i t gu ide1 ines w i t h

respect t o small s c a l e i n d u s t r i e s . Th i s desirable develop-

ment w a s n a i n l y as a r e s u l t of t h e h e a v i e r s a n c t i o n s

in t roduced f o r non--compliance, i nc rea sed supe rv i s ion by

t h e CBN and t h e i n t r o d u c t f o n o f a g r i c u l t u r a l insurance .

I n 1933, t h e amount g r an t ed t o sm11 scale e n t e r p r i s e s

i nc rea sed by 1 1 .9 pe rcen t t o W5,G30.6 m i l l i o n , which

accounted f o r 20.69 per c e n t of t o t a l l oans and advances

of banks i n t h a t year. Howevcr, d e s p i t e t h i s encouraging

pxforraance, t h e r e was, n e v e r t h e l e s s , d i s c e r n i b l e degree

of r e l u c t a n c e on the p a r t o f banks t o extend c r e d d t to S $ E s

T h e r e l u c t a n c e t o extend l o a n s t o smal l - -scale i n d u s t r i e s 4

was a t t r i b u t e d ntainly t o two g r i m i p s 1 f a c t o r s , namely,

the high m o r t a l i t y rate arimnq t h i s class o f e n t e r p r i s e s and

t h e cjeneral i n a b i l i t y or, t h e p a r t o f SSEs t o p rov ide

c o l l a t e r a l s e c u r i t i e s t o back -up t h e i r loan requirements .

PROFILE OF ALL LICENSED BANKS LENDING TO :SSi";s;

1980 - 1391.

I n terms of m a t u r i t y and sectoral d i s t r i b u t i o n of

banks loans and advances, t h e commercial banks have never

ak'hieved t h e t a r g e t of 50% f o r t h e p r i o r i t y s e c t o r s due

l a r g e l y t o under--perfomlance i n r e s p e c t of mamfac tur ing

(Table 71 . Since 1983, merchant banks have exceeded t h e

rainirrui lz t a r g e t o f 1 C % arid 40% f o r a g r i c u l t u r e arAd manufac-

t u r ing r e s p e c t i v e l y (Table 3 ) . The CDN a l s o r e q u i r e s

xerc.hant b a r k s t o mainta in a n h i m u m sha re of t e r m c r e d i t

wi th n a t u r i t y o f n o t less t h a n 3 y e a r s a t 20.0 pe r c e n t b

of t o t a l c r e d i t and maximum s h a r e of s h o r t terxn c r e d i t of

not larger t han 12 iaonths ma tu r i t y a t 2(j p e r c e n t . In

earlier years , t h e n l a t a r i t j s t rc lc ture o f merchant banks '

a s s e t s has continued t o d e v i a t e widely from CBN q a i d e l i ~ e s .

During 1382 .- 3 0, s h o r t term c r e d i t m a t u r i t y less than

1 2 months averaged over 4 0 % of t o t a l . c r e d i t and w a s n o t less

than 38 p e r c e n t i n any yea r (Table 8 ) .

i z i 5 i , I xi

A I I I 3 'xi

With regard t o t h e r u r a l brar.ch bankir.q procjralrme, it

has t e e n shown t h a t i n r e c e n t yea r s , N i g e r i a ' s banking

systen; h a s expandeci r a p i d l y in terms: of nunlber of banks and

branch network. 3etween 1987 and 1390, t h e number of

c o m ~ ~ e r c i a l 'usnks doubled from 29 t o 57 whi le rrerchant banks

quadrupled from 1 2 t o 4 9 . A s a t end 1360, c o m e r c i a l and

ne rchan t banks ope ra t ed 13 76 arid 7 5 branchais r e s p e c t i v e l y .

Ava i lab le data a l s o show t h a t the progrTms'12 h a s been u e n e r a l l y

b e n e f i c i a l , i n terms of its e f f e c t s o n the o v e r a l l size of *

l end ing b y the conmerc ia l banks t o sma l l s c a l e e n t e r p r i s e s ,

e s p e c i a l l y rural based manufactur ing e n t e r p r i s e s . Neverthe-

less, most of t h e r u r a l branches exhibited l i t t l e o r no i n i t i a -

t i v e i n dealincr wi th tine mral sector, a s they are merely

o u t f i t of a r b a n - b a s 4 coi~uunercial banks n ~ o s t l y compelled by

government f i a t t o t h e r u r a l a r e a s . Hence, most of the m r a l

b ranches , be ing mere d e p o s i t c o l l e c t i n g centres f o r t h e

drban-based oo~rune r c i a l banks , made no s e r i o u s effort t o deve lop

banking habit i n the r u r a l a r e a s .

TABLE 7

TABLE 7

MATURITY AND SECTORAL DISTRIAUTIOI4 OF COL$!4SRCIAL

BANKS' LOANS AND ADVANCES 1980- 1990.

S c u m : Central i3ark of Nigeria: Stxtist ical 73ulletin Vol. 2, Nos 1,

TABLIE 8

FATURITY AND SXCTORAL DISTRIBUTION OF MJ~RCFIANT BANKS'

LOANS AND ADVANCES : 193 0 - 139 0.

GO. 5

Srxlrce: C c " 1 t n 1 Bank of N i g e r i a : S t a t i s t i c d i3ulletin IQl. 2, No. 1,

June, 1991.

The iJIDE h a s been p lay ing a g r e a t r o l e i n

f i nanc ing SMFs i n the coun t ry - Th i s cam, oe seen

from t a b l e 9 below. The Sank ' s a s s i s t a n c e c o v e r s

about Scventecn sub- s e c t o r s o f i n d u s t r y and it s

loan d i s k u r s e n ~ n t s i n 1966, 13G7 and 1933 was

Bs13.4 1 m i l l i o n , W20.37 m i l l i o n a n d PJ11.9.1 m i l l i o n

r e s p e c t i v e l y . Over the pe r iod of 1330 t o 1333,

t h e s a b s e c t o r s t h a t ob t a ined Enc l a r g e s t d i sbu r se -

nar.ts were misce l laneous ( 1 T . 2 @ % ) , chemical and

;?ctrolc.~zn p r o d u c ~ s ( 11 .36%) , g l a s s , c l q 7 snJ stone

~ x a c l u c t s ( 1 Ci. 2 0 8 ) , beverages ( 3 . 6 % ) , Food ( 7.9 (2%) ,

r e t a l f a b r i c a t i o n (7.8C;%) , I t ay~er 1)roducts (7 .13 % ) ,

Hotel ard Tourisiri (7.07;) and I 'Ex t i l es (6.96%).

The Giger ian I n d u s t r i a l Development i3ank however

concen t r a t ed i t s a s s i s t a n c e t o SEES nlainly i n the

ccnsuncr goods sub-sector . I n f a c t , over t h e

twcnty t h r e e y e a r s pe r iod f 1364 -133 7) abou t t5 C:

p r c c n t o f the bark's disbursement: was a l l o c a t e d t o

consumer goods p r o j e c t s s;.lch t h a t ir, tenns of

s t r u c t u r a l t ransforma t i o n of t h e econonty, the

a s s i s t a n c e provided could n o t be s a i d t o have made

a s u b s t a n t i a l impact on t h e i n t e r u e d i a t e o r c a p i t a l

goods industries. I n f a c t this kind of s c e n a r i o has been

t h e ria jor shortcome o f most deve l o p r e n t f i n a n c i a l i n s t i t u -

t i o n s i n the count ry . Nevertheless, ElDU's a c t i v i t i e s

s t r eng thened and broader~ed t h e base oE the consumer ~ o o d s

sub - sc~c to r such t h a t o t h e r h i r ~ h , technoloqy i n d u s t r i e s could

grow, g iven t h e a p p r o p r i a t e f i nanc ial. and t e c h n i c a l s u p p r t

required.

I n recorjnir".ion of t h e nee3 t o t r a n s f o u r t h c i ~ d a s t r i n l

s e c t o r t o a local resource-hssed one, t h e MIDB in 1333

launched a Ten-year ( 193 3 - 1 3 3 7) I n v e s t r e n t Programme of

I m d u s t r i 2 l Res t ruc tu r ing . A t o t a l of W2.4 b i l l i o r ? was

expec ted t o 5e contmittcd t o t h e procrran.mz over thc stated

perioc? o f t i m 2nd p r i o r i t y i s t o be accorded t o l oca l

resources based i n d u s t r i e s such as c h e n i c a l i n d u s t r i e s 'and

c ~ i ( ~ i n e c x i . ~ y e n t c x p r i s e o . AZso with t h e f i n a n c i a l assistance

from the F j c ~ - l d 3ank, ADB, and o t h e r i n t e r r - s t i o n a l ."inancia].

i n s t i t u t i o n s ar,d w i t 1 1 ef rective impl@n~er . ta t ion, t h c programme

i s expecteci t o achieve t h e p o l i c y qoals of einp1oyn~n.t genera-

t i o n , i n d u s t r i a l l i n k a g e and a r e s t n c t u r e d i n d u s t r i a l

s e c t o r w i th h i ~ h value 3dded.

(ii) . ' ' c e x i a n - - . Bank for Commerce -- - . and Industry- -,- INBCI)

Under the Min i s t ry .. of I n d u s t r i e s S p e c i a l Fund

fox Sinall--Scale I n d u s t r i e s , NBCI approved 3etwcen 133 1

a ~ d 1>8B, 1584 p r o j e c t s valued a t E55.4 luibl.ion. The

r r o j r c t covered t h e t h e n 1 9 s ta tes of: the Federa t ion .

Ac tua l iiisb~rscmnent as shown i n t a b l e 10 w a s W43.G

m i l l i o n o r S d . 0 p e r c e n t o f t o t a l loan s approved.

Most of the p r o j e c t s f i n a w e d under t h e scheme were of

r e l a t i v e l y lcrw technology in t h e i n c i u s t r i a l s~lb!, qroqts

l i k e food and beverages , wood and woodlm produc t s ,

I m s i c t metal p roduc t s , etc.

Eowever, under its rc.jular functions, the bark

as a t en3 of Seccmher 1933 approved f i n m c i a l assistaiice

to SLWs t o thr t u n e of N697.04 r , i l l i o x ~ f o r 660 pro jec t s .

Tablcr: 11 shows the sec tora l breaklown on state a y s t a t e

basis as a t thc: end of 1932. Like N U B , most of N t C I ' s

approvals were i n respect of thcl c o n s u e r goods sdb- scc Lor.

Yhe I a rges t a l loca t ion of N216.13 mil l i cm o r 35.3 l~er cent

went t o t h e foo>-l an9 beverage sub-sector fellowe2 by

aon-metallic ndneral: ' p r o d u c t s which o b t a i n e d W1 7 3 . 3 3 b

m i l l i o n or 17.13 per cent of the t o t a l .

As shown in T a b l e 12 12etween 1980 and 1 9 3 0 actual

d isbursements by NBCI r e p r e s e n t s on ly 3 3 . 6 per c e n t of t o t a l

apprcrvnSs f c r t h e per iod . From t h ~ t z b l e it can aiso be

seen t h a t disburse l ren t was worse d u r i n g t h e t h r c e prc-SAP

y e a r s (1334-138Gj. I n t h e y e a r s 1337, 1983, 1369 and 1936,

N B C l ap;~rctvcd 1'73, 9 7, 76 and 36 ~ > r o j e c t ~ whi.c'i. an,o;lnted to

#I l i ' . i 5 ~~. i J . i io r . , Hl4L.9L r rdl l ion, M'?, 72 n i l l i o n and

ii132.40 l n i l i i on r e s p e c t i v e l y (See Table '12 d 13 j . T o t a l

d i s 5 ~ r s e n e n ts anlounted t o on ly W21.15 n i l l i o n or 1.3 p e r c e n t 4

of total allln-ovals i r , 193 7 , S15.32 r , ~ i l l i o n o r 11.1 C pe r c e n t

i n 1 , N52.10 n t i l l i o n o r 27. S p e r c e n t i n 1939 and W37.7C.

ill ion o r 6 6 . 2 p e r c e n t i n 'I 9 9 0. D isbursemnents o v e r the

pe r iod lag9eJ f a r behind the amount approved w i th cu1;~zlat ive

d i s b u r s e m e ~ t t o t ; a l l i r q 3 2 3 1 - 6 2 r t ~ i l l i o n o r 39.6 percent of

t o t a l approva l s .

The wide d i f f e r e n t i a l s between app rova l s and disbuxse-

nmnts Wac, n o t Gcle t o v a c i l l a t i o n on the p a r t of NBCI i n

processing ioar, d isbursements bu t t o S!qE:st inability t o

meet t h e nt in imuru c a p i t a l reqai re incnt , coupled w i th t h e

poor reyeyrmnt of l o a n s a l r e a d y due, b y som SMEs whj-ch

have berief i t t e d f roc: t,JDCI loans .

TABLE 112

2. ?'he figures above cover npprovals and dlsSurserilent to

all 1 r o j e c t s e x ~ o p t those t o FMT snall--scale. E n t e r p i s e s .

- 92 -

TABLE 13

XIiC I APPROVALS ( 1 3 5 7 - 1936)

................................................ I 1

Scc t o r I No. of P r o j e c t s Approved I

I 1 I I Tauri sni , Hote l s and I I I

I 1

I I I Entert.:, innlent I I 1 I - b I - I I I 1 I I I I

I r o n and Steel Basic I I I I I I I I r -dus t r ies I d I

I I 1 7 I 1 0 1

I I 1 K on-Metal l ic Mineral 1 I I

L 7 I I Produc ts I

I I 11 I 4 I I

I I I E l e c t r o n i c & E l e c t r i c a l - 1 I 1 I - L

Transpor t I i I

7 I I Wood and Wooden Products 1 I 3 1 - 1 I I I I D

Nacninery and Basic I I I I 1

I I Ketal Produc ts I 1

I I 6 1 3

I i 1 I I

9. Pulp a n d Paper Products ; 1 I

7 I I

l 4 i

1C. T e x t i l e s "1C; I i i i i 4 3 I 1 2 I

I I I li 11. Other 14anufactured 3 I 'I I

Products 1 30 1 23 f 19 1 10 I I I I 1 1 1 I

12. Other S e r v i c e I n d u s t r i e s I 23 I t 1

8 1 5 1 4 I

Source : The Lliyerian Bank f o r Comnarce and Indus t ry .

( c ) OTHER ---.. SCHEMES/FACILITIE_S_S

i) - The - Small-Scale - --- I n d u s t r i e s C r e d i t Scheme (SSICS) --- -- _I_L - ---c---- - - Yerformaixx of t h e SSICS was u n f o r t u n a t e l y rather

poor i n the sense t h a t many u n v i a b l e p r o j e c t s w e r e

funded because the supe rv i s ion of the scheme was

c a r r i e d o u t by inadequa te ly t r a i n e d personne l , who

know l i t t l e o r no th ing about p r o j e c t a p p r a i s a l .

The implementation of t h e scheme w a s open t o

nurilerous ma lp rac t i ce s such a s c o l l u s i o n between B

the o p e r a t o r s and t h e sma l l bus ines s e n t e r p r e n e u r s

f o r l o a n d i v e r s i o n , and ranting of l o a n s s t r i c t l y

on t h e b a s i s o f p o l i t i c a l p a r t y cons ide ra t i ons .

Project . n o n i t o r i n g was l a x w i th t h e r e s u l t t h a t

the inc idence o f d e f a u l t was very high. Consequently,

what was supposed t o Se a r evo lv ing loar- scheme

became non-operat ive a s a r e s u l t o f s h o r t a g e of

funds.

ii) I'Je I n d u s t r i a l ------ Development -- Cen t r e s ( I D C s ) ----.I---

The implementat ion o f t h e I D C s w a s a t v a r i a n c e

wi th t h e o b j e c t i v e s . The process ing of loan- app l i ca -

t i o n w a s sub j ec t ed t o nurtierous abuses i nc lud ing

us ing p o l i t i c a l connec t ions as a p r e r e q u i s i t e f o r

o b t a i n i n g loans . Not a l l t h c I D C s were w e l l

equiped o r adequate ly fundad t o c a r r y o u t t h e i r

f u n c t i o n s e f f e c t i v e l y . These shortcorr,ings notwithstan-

ding, t h e IDCs forrwd t h e spring-board f o r governcent ' s

o t h e r p o l i c i e s f o r pron:oting s~~lall businesses . E s s e n t i a l l y ,

the 13Cs that were s u f f i c i e n t l y funded helped t o reduce

s i g n i f i c a n t l y , t h e overhead c o s t s of SJiEs thereby

pronrotinq f inanc is1 v i a b i l i t y . IDCs a l l over t h e

countr; are s t i l l being r e l i e d upon t o a s s i s t SMEs develop

l o c a l technology. The n e w I n d u s t r i a l Po l icy re- iterates

t h e i r r o l e i n providiny t e c h n i c a l a s s i s t a n c e , t r a h i n g ,

nr~arketing and o t h e r s e r v i c e s t o SMEs and it is expected

t h a t IDCs being n e a r e s t t o the SEES among o t h e r agenc ies ,

would con t inue t o provide ex tens ion s e r v i c e s t o rmny

sinall businesses .

iii) --- The Hat iona l D i r e c t o r a t e of Employment (NDEj) and Work-For- - You ---. r s e l f Prograrrime (WFYP) .

S t a t i s t i c a l l y , a s u b s t a n t i a l mark h a s been nlade by the

WDE in c r e a t i n g new jobs. A t o t a l of 142, GCO new jobs

and 95, (100 new jobs had been c r e a t e d as a t t h e end o f

13.37 and 193d r e spec t ive ly , by NDE. Also, its s c h e n ~ f o r

t r a i n i n g g radua te s h a s y i c lded some p o s i t i v e r e s u l t s such

t h a t by the end of 1987, a t o t a l of 5 ,500 a p p l i c a t i o n s

had h ~ e n rece ived under t h e scheme and 13 pe rcen t approved,

with h a l f of those approved a l ready ope ra t ing by t h e end

of 1937. Lack of informat ion on the s p e c i f i c s k i l l s

acqui red by those t r a i n e d and on whether they a r e s t i l l

g a i n f u l l y employed, makes it in t l~oss ib l e t o go i n t o ful ' theu

d e t a i l s .

2'ollowing L l e successf i l l t e s t - r u n s of the WFYP a t Akure,

Ondo S t a t e between March and A p r i l , 133 7 and of the #DP a t

I k e j a , Lagos S t a t e between J u l y and Augu6t, 19~37, both t h e

Federa l Min i s t ry of I n d u s t r i e s (FMI) and t h e Nigerian 3ank

f o r Conuierce and Indus t ry (NBCI) were encouraged t o c a r r y o u t

s i m i l a r workshops i n o t h e r s tates. However, funding h a s

remained a major c o n s t r a i n t o f t h e programme because a s

a t Apr i l 1338, on ly 9 of t h e approved 2 I 6 p r o j e c t s valued

a t W53 ;tiillion rece ived f i n a n c i a l support of W1.l m i l l i o n

o r 20.5 percen t of t o t a l approvals unse r t h e scheme.

In January 1391, the Federa l G i n i s t r y of Indus t ry made

a v a i l a S l e t o N D C I t h e sum of H 8 . C n i l l i o n f o r funding the

p r o j e c t s of t r a i n e d en te rpreneurs in t h e progranme i n f i v e

s t a t e s . The S t a t e P i n i s t r i e s of Commerce and Indus t ry

provided t h e appropr i a t e guarantee Eor the l oans and

disbursement h a s eonm~enced i n those sta tes . A s a t Karch

23, 19'31, twenty-two i2Ljr :FYP workshops had Seen n~our.ted

ir~ twenty two states i n c i u d i n g Abuja i nvo lv ing a t o t a l of

593 p a r t i c i p a n t s w i th cor respondinq 599 projects spreaa

throuyhout t h e l o c a l government a r ea s . A t o t a l of 4 34

p r o j e c t s worth about M67 m i l l i o n exc lud ing sponsors ' e ~ , u i t y

c o n t r i b u t i o n had been approved by NBCI as a t 31 st Decerrber

1909, w h i l e d i sbursements niade up t o t h a t t h e amounted t o

on ly about M4.2 illi ion o r abou t u p e r c e n t o f the t o t a l

loan needed t o execu t e t h e p r o j e c t s .

TABLE 14

TABLE 14

~P/~GORKIMG-FOR-YOURSELF PROGRAMPZ FOR NIGZRIA ' S BUDDING

lbom

Armbra

t3 endel Benue

borno

Cross River

Gongola

Imo

Kaduna

Kano

Katsina

Kwa ra

Lagos

Niger

Ogun

Ondo

OYO P l a t e a u

fivers

Sokoto

National Economic Reconstruct ion Fund (NERFUND) -I- - . - - - - - - - - - -

A t t h e beginning of 1990 , NERFUND ~ r o j e c t e d t h a t

it would approve f o r funding a t o t a l o f 200 p r o j e c t s .

Hut by e a r l y August 1930, only 6 1 p r o j e c t s with W315

mil l ion had been approved for funding, o u t of which

13 had begun t o draw on a v a i l a b l e funds. T o t a l

d isbursements e a r l y August 139 0 comprised U S S 7 . 5 m i l l i o n

p l u s W3.6 n ~ i l l i o n . However, judged by the a c t u a l

rlumber o f p r o j e c t s approved a s a g a i n s t what was planned

f o r , NERFUND could b e s a i d t o have performed below i t s

t a r g e t . One of the major reasons f o r t h i s is t h e

~ ' a r t i c i p a t i n g banks ' ( PBs) ro le i n NERFUND' s prosramme.

NERFUND cannot a u t h o r i s e t h e banks to accept p r o j e c t s ,

hence NERFUND i n this regard i s on the rece iv ing end.

A s a t end of May 193 1, NdRFUND's approva ls and

d i s b u r s e m n t s had increased t o 1 2 0 p r o j e c t s and :

a t o t a l value of W504.87 mil l ion . These p r o j e c t s c u t

acc ross var ious c a t e g o r i e s incl.uding food and beverages,

wood and wood products , rubber, t e x t i l e , chemical

products , g l a s s and g l a s s products , n a t u r a l minerals ,

pharmaceuticals, paper, p l a s t i c and l e a t h e r products.

The p r o j e c t s span v i r t u a l l y a l l the sta4x.s o f the

Federa t ion and Abuja, a s i n d i c a t e d i n Table 15, which

provides a sumnary of the p r o j e c t s approved on s t a t e Srlsis.

A s a l s o ind ica ted i n t a b l e 15, the p r o j e c t s approved a s

a t the end of May 1991 a r e expected t o boos t enployrent by

6 , 2 5 1 . Table 16 shows NGHFUND' s disbursements i n both

l o c a l and fo re ign currency and a l s o the s t a g e of h p l c m n -

t a t i o n of t h e var ious p r o j e c t s as a t end Nay 199 1 , As a t

this ~ e r i o d , disbursements had been made f o r o n l y 4 1 ou t

of t h e 12C p r o j e e t s approved. This i n d i c a t e s t h a t disburse--

r e n t s was only i n r e s p e c t of 34 percent of t o t a l p r o j e c t s 8

approved. Also, only 20 banks were involved i n the

disbursemner ts, However, t h e wide gap between approvals and

d i s b u r s e l ~ r i t s is a major cause f o r concern. This has been

a t t r i b u t e d rmin ly t o the i n a b i l i t y of t h e barks t o satisfy

solre o f SERFUND ' S condi t ions .

A s a t the end of June, 1392, 156 p r o j e c t s es t imated

a t E1.4 b i l l i o n rece ived loan approvals . O f t h i s nunher;

'77 were Lor ag ro -a l l i ed , 59 f o r n.anufacturing, d f o r t c x t i l - e

n d l l i n g , 4 f o r minning and q u a r r i ~ y a.nd 3 f o r i n d u s t r i a l

s u ~ p o r t berviccs (Table 1 7 ar-d Ficjure 1 ) . E f f e c t i w

comdtment 51' NERFUND i n terms of the number of p r o j e c t s

which sc t u a l l y received disburseilrent dur ing t h e same period

was, however, on ly 9 2 , r ep resen t ing about 59 per c e n t of

the nurrber of projects which received approval. The ahount

d i sbursed w a s about M390.4 mil l ion o r about 28 percent? of

the va lue of l o a n s approved. Th i s was made up of US4 27. C

m i l l i o n and W120.4 mil l ion . r i g u r e i: shows the l e v o l of

emy.loynent g e r e r a t e d by pro3qcts t h a t received funds from

13 ERFU ND,

- 106 - TABLE 1 7

i\iATIONAL ECONOMIC RECONSTRUCTION FUPTD SECTORAL D L S T R l B U T I O N

AT JULY 1932

I I

Ag r o - A l l ied I I

7 7 I

Paf iu fac tu r iny I I 53 I

T e x t i l e L I 8 I I I Minning/Quarry ing I 4 I

I I n d u s t r i a l . S u p p o r t S e r v i c e s I U

I I

- 107 -

Notes :

N u h e r of p a r t i c i p a t i n g banks = 93

Number of Sanks with p r o j e c t s ayproved = .q 2

Number of p ro j ec ts approved = 156

To ta l est i~ilated p r o j e c t c o s t (approved p r o j e c t s )

Comnlitner,t by PZRFUND t o approved p r o j e c t s

( ii) W258.9 mil l ion .

Nunher o f p r o j e c t d i sbu r sed

&mount d i sbursed as a t June 1 9 9 2

(i) US$27.0 n i l l i o n

( ii) W120.4 mil l ion .

SOURCd : NERFUMD.

The r e l a t i v e l y poor performance of NERE'UWD a s shown

above w a s due mainly t o t h e r e s t r i c t i v e e l i g i b i l i t y cond i t ions

f o r SMEs b i sh ing t o b e n e f i t from t h e scheme. Der iva t ion of

~ n a x i ~ u n ~ b e n e f i t s from t h e sc;henze i s cons t r a ined by the

problen, exper ienced by SMEs t he r~~se lves . Wany of them a r e

unable t o pu t forwar6 t h e miniinurn requirement of twenty-f in

percent o f t h e c o s t of t h e p r o j e c t s . A l s o the r e luc t ance

of the p a r t i c i p a t i n g banks t o Sear a l l t h e credi t r i s k

involved i n f i n a x i n g the SPIES uncier NERFUMD, corist ra i n s

the s c h e n . ~ ' s p r f o r ~ ~ ~ a n e e . 'Yhe Sanks r e luc t ancy w a s r[,ani-

f e s t e d i n t h e i r r a ther cau t ious a t t i t u d e i n dealing with

t h e S r G s . A t h i r d c o n s t r h i n t i s the level of i n t e r e s t

rate on P.XRF'Uhl3 loans which is r e l a t i v e l y high for the SEE'S

t o bear.

F i g u r e 1 r: 2

vj The World f3am SHE AEX Loan Scheme. ----- - .-- __C%"_ - I ---.- . -"r -- -- -*.'.-.-- A s at Jurie 1392, a t o t a l of Z);S$rjO r :dll ion or 22

percent of t h e $ 2 7 0 m i l l i o n provided under t h e scheliie

had been committed t o va r ious p r o j e c t s . A s i n the case

o f hTCRFUI':D scheme, on ly $ 3 0 m i l l i o n o r 1 1 . I pe rcen t of

the t o t a l hacl been disbursed . J u s t as most Federa l

Governnerrt sohems, t h e World Bank SHE Apex Loan Scheme

i s bcset with such p r o b l e m a s t h e r e luc t ance of the

p a r t i c i p a t i n g banks t o bear t h e c r e d i t r i s k and t h e b

i n a b i l i t y of the SMEs t o provide the requi red mininun

personal s t a k e of one- th i rd 02 the p r o j e c t cos t .

A s a t end December 1 9 9 I a t o t a l l oan of about

l4769.2 illillion had been d isbursed by N I X I M under t h e E-xport

r e f inanc ing ar,d rediscoufit ing f a c i l i t y . The Export

s t in iu la t ion loan, funded through t h e US8270 mil l ion ADU

F a c i l i t y , had by end of 1931 been f u l l y d i sbursed and

arrangenlents w e r e be ing made t o o b t a i n a replenishment.

Also under t h e FIF , H E X I X had d isbursed #I 18.6 m i l l i o n

dur ing t h e sane per iod .

However, d e s p i t e t h i s improssivo perforrr~ance, MFXIi4

loan c o n d i t i o n s are considered r e l a t i v e l y s t r i n g e n t on

SiJiEs. For in s t ance , t h e g race per iods allowed for t h e

bcnef i c iar ies o f Export S t i m u l a t i o n Loan scheme is

cons ide r ad s h o r t , given t h e delays encountered by t h e

S K E s i r i t h e p roce s s ing o f e x p o r t / i ~ r ~ p o r t t r a n s a c t i o n s i n

the coun t ry . f h e r e i s a l s o the prolslem of r e l u c t a n c y

orA the p a r t o f the p a r t i c i p a t i n g banks. T h i s is Secasse

t h ey (PHs) a r e cons ide r ed t o be j o i . n t l y . l iable wi th t h e

cus to~r ie r s and nay be c a l l e d upon t o repay i f t h e i r

C U S ~ O ~ ~ E ~ S d e f a u l t . Another c o n s t r a i n t also is t h c

c r i t i c a l condition o f repayment w h i c h p rov ide s t h a t t h e

l o a n w i l l n o t on ly be r e p a i d i n f o r e i g n exchange b u t

f rom t h e f o r e i g n exchange proceeds o f t h e e x p o r t o f goods

produced front t h e prof e c t f i nanced from t h e Export

S t i m u l a t i o n Loan Scheme.

lo l e t s B a n k o f N i g e r i a (PBN) v i i ) E --.------.----- - - - - - - - .

As a t June 1992, 169 b ranches o f t h e P e o p l e ' s bank

were e s t a b l i s h e d i n v a r i o u s l o c a t i o n s throughout t h e

coun t ry . A s a t t h e same p e r i o d t h e number oE l o a n

b e n e f i c i a r i e s :were pu t a t 161,OG 1 w h i l e t h e t o t a l

l o a n o u t s t a n d i n g was M102.6 m i l l i o n . Reports however

shows t h a t one of the major reasons f o r t h i s impress ive

performance by t h e bank, w i t h i n S a r c l y three y e a r s from

i n c e p t i o n i s t h e s t r a t e g y of u s i n g t h e so - ca l l ed "peer

groilp" as a b ~ s i s f o r grant ing loans to groups of

individuals. Such arranger;ent s e r v e s as a v i a b l e o p t i o n

to t hc conven t iona l c o l l a t e r a l security rcquirenrent which

most S N E s app l i ca r i t s f o r PBX l o a n s on their own cou ld

hardly afford. Despite this, t h e PBN on the other hand

encounter sone problcnls among which a r e the ir:i t i a l

log is tic d i f f i c u l t i e s , i n a d e q u a t e f i n a n c i a l resources,

r e l . a t i v e l y low 1-ending r a t e s which c o n s t r a i n s i t s access

t o t h e c a p i t a l ntarket and i t s a b i l i t y to rnobilise saul.ngs. *

-- 4'13 -

3 iiAPTii R FGU R 140 T 3 S .

1. .RnrLual 3udge t s i 9 d 3 and I . JGf3 . P.21 and 25.

CIIAPTEF. F XVE -

DATA PRES ZB?ThTION AN9 ANALYSIS

I n t h i s c h a p t e r , t h e r e s e a r c h e r i n t e n d s t o p r e s e n t t h e

q u e s t i o n n a i r e , the responses and thcn t h e a n a l y s i s of t h e

v a r i o u s responses . f'rom t h e i n f o r m t i o n gathered from the

q u e s t i o n n ~ ~ i r e , i2ie v a r i o u s nypothes i s p o s t x l a t e d w i l l be

t e s t e d u s i n g t h e ch i - square methods and d e c i s i o n s w i l l be

t a k e n based o n t h e r e s u l t s from t h e s t a t i s t i c s . 1 test. The

r e s e a r c h e r b i l l a l s o make recoirunendations a s how to intr 6

the r e l a t i o n s h i p hetween t h e SMEs and t h e Schemes based on

the reel11 cs Zron l the h y p o t h e s i s t e s t i n g and o ther f i n d i n y s

du r ing t h e course of t h e r e s e a r c h work. F i n a l l y , cones the

sunnary of f i n d i n g s and t h e n conc lu s ions .

2.1 Khat is t h e nature o f your b u s i n e s s 3

hanuf ac tu r i n g

IVknt is yonr t o t a l c a p f t ~ l i n v e s t r e n t (excluding land) ? No 'I*

WLbO, 03 G - B9800, 060 5 5 40.44%

I . i l n - N2. 5 m i l l i o n 30 22 . Cd

l o - W3.5 m i l l i o n

i a a l - y s i s : &%a j o r i t y of t.he respondent e n t e r p r i s e s

( 4 0 . 4 4 8 ) h a s c a p i t a l investment of between #250,00C t o

&3CC, O C C . About 31 .G2% has c a 2 i t a l of W900, [ iGC to b

El. 5s,, whi le 22. G6% and 5 -33% has c a p i t a l i n v e s t l e n t

of M 1 . h to #2.5m and W2.5rn to W3.5m respectively.

' P h i s xevea ls that SKEs are not r e a l l y c a p i t a l i n t e n s i v e

e n t c r ~ x i se s .

Q . 3 How many people do you ernploy i n your business?

No.

1 - 20 persons 110

2 1 -- ,i (-j 21

4 1 -- G O 5

Over 6 G - Analysis: Major i ty of the respondent e n t e r p r i s e s (80.9 %)

ham erq~loymnt. capac i ty of between one t o twenty persons.

0.4 What p rob lems/obs tac les do you encounter i n carrying

your b u s i n e s s ?

Fu ncli ng 753

I n f r a s t r u c t u r e 35%

Kaw B a t e r i a l s 2 6%

Government P o l i c i e s 2 C%

L+:achinery/Cquipment ti%

Managment/Humn Resources 5%

Fore ign Competi t ion G 2%

b Analysis : From t h e above r e s u l t , n a j o r f t y of t h e

respondents (75%) c i t e d lack of funding as the major

o b s t a c l e t o t h e i r b u s i n e s s growth. Foreign compet i t ion ,

f r equen t changes in government policies, poor

lnf r a s t r u c t u r e s and l ack of raw m a t e r i a l s among others

a l s o c o n s t i l x t c major o b s t a c l e s t o the success of

i n d i g enous sixall i L ~ d x.edium- s c a l e real produc t ion

enterprises.

5 A r e you &v,are oL t h e existence OF governments'

various t p e c i a l l s a ~ ~ i inanc ing scherracs / ins t i tu t ions and

their rai-~qe c-E services'?

[ I C ~ ] r ; ~ [2': 1

AnalyAs: About seventy n i n e p r c e r i t of the respondent

e n t e r p r i s e s c l a i m d dwareness t o t h e e x i s t e n c e of the

v a r i o u s s c h e m s and their range of s e r v j c e s wh i l e

a h o u t twenty-one p e r c e n t d e c l i n e d awareness t o bo th

tl-,e existence and range of s e r v i c e s of.: t h e v a r i o u s

sche~res.

12.b I f yes , which or~e ( s ) do you know?

1;1'Df;, NBCI, PJACB, Corcmrcia l and idlerchant Banks , State

owned development Finance I n s t i t u t i o n s , N'IERFUKD,

Peop les and Coxrmunity Ba,nks.

b

Analys i s : Xust r e s p o n d e n t s listed d e v e l o p m n t bank E

and i n s t i t u t i o n s . The focus on t h e s e i n s t i t u t i o n s and

banks was m a i n l y because of time factor. 'The

i n s t i t u t i o n s a r e a l l long e s t a b l i s h e d and so have t i m

advantag E . Also l i s t c d were t h e ~C",orrdricrcFal, Xercfiant,

Peop les and Community Banks. This may 5c hccause of

nearness to the r l~ral SMEs and a l s o branc:~ nctwork

advan tagcs.

;?. 7 L o yocl csnskder t h e speciaiised f inanc ing schenes/

i n s t ~ . t u t i o n o as mpor t ixn t sources of c r e d i t i n nakinrg

your Xnanc ia l+ i n w u ti lent dec i s i o n s ?

Yes [ 9 ] NO [I271

Analys i s : A great number o f t h e respondents

( 9 3 . 3 3 8 ) c l a i r e d t h a t t hey do n o t c o n s i d e r t h e schemes

a s impor tan t sources of credit i n taking t h e i r /

investment d e c i s i o n s . Only 6.62% of the r e sponden t s

claimed t o consider the s c h e x r e s / i n s t i t u t i o n s i n 1

nlak ing such dcc is ions .

l' 0.6 If No, how do you f i nance your business?

1 . Owner's Sav inqs /Con t r i bu t i ons 1 2 5 /

b

2. F r i e n d s and R e l a t i o n s 6 1 / i'

3 . Trade Credits 4i) ,

4. Clubs,Zsusu,Nonq- lenders etc 23 l

5. Con-imercial e :ilercilant Banks 20

O. COOT. G C o r p r a t e Credit Societies 3 r \\

7, Gr,mnall. -Scale industries Loan Schemes

and o t h e r cgowrmient A g c x i c s 2% r\

Arm1.ys j . s : q ' h ~ f i.rs t irain observation from the sources

a n a l y ~ c d I n t h c t a b l e above is t h e relatively h igh i

iifiporeafice a t t a c h e d t o the infontla1 sources e s p e c i a l l y

pc3rsona 3- ssrvb.? s/conf;xibui: i o c s , f r i e r ~ d s and relations

?.r,d tralle crcGits irL Pmancing S.1Es. Also t h e s m a l l

r e l a t i v e i n p o r t a n c e o f banks, governmnt l o a n agenc i e s

a s w e l l a s ~ t h c x f o r m l sou rce s car, be 1~otc3.

Q.9 Have you ever a p p l i e d f o r loal-i f r m any of the scherres,

i n s t i t u t i o n s ?

Yes 1311 XG [27]

Analys i s : From the above r e s u l t , 59.56% of t h e total

respondent e n t e r p r i s e s and 55% of those t h a t are aware

of t h e e x i s t e n c e of the s c h e m s and t h e i r range o f

s e r v i c e s , have appl i e C f o r f i n a n c i a l a s s i s t a n c e from one

o r more of t h e schemes whi le 13.858 of the t o t a l respon-

d e n t s have never a p p l i e d f o r l o a m from any of t h e

scherms . 4

Q. 10 I f No, why have you n o t applied'?

I . I n a b i l i t y t o provide c o l l a t e r a l s e c u r i t i e s

2 . CEacriix3xatAng lenclina a t t i t u d e of banks.

3 . S t r i n g e n t lendinq cond i t ions

4. I n a b i l i t y t o provide t h e e q u i t y c o n t r i b u t i o n

r equ i r ed b y t h e scheres / i n s t i t u t i o n s .

5. Cctrbersorce loan g r a n t i n g process of the loan schcmes

5 . Unawareness.

Analysis: : Post of t h e SlllEs have never app l i ed f o r l oan

frori, any of these scher'ss because they f i n d it d i f f i c u l t

to 1 .cct t h e recjuirermnts f o r ob ta in ing l o a n s f ror,' the

schemes. Sore of the o t h e r reasons i nc lude t h e lack o f ,

o r irxiiieyuccy oi: assets t o be pledc~ed by t h e p r o j e c t

promoters a s c o l l a t e r a l , h i gh e q u i t y c o n t r i b u t i o n

r equ i r emen t s by some of t h e schemes, unawareness,

cuinbessorre l o a n g r a n t i n g procedures , d i s c r f minatory

l end ing a t t i t u d e s o f banks and other s t r i n g e n t condi-

t i o n a l i t i e s imposed by banks.

9.11 I f y e s , which of t h e s c h e ~ n e s / i r , s t i t u t i o n s have you

a ~ ~ p l i e d t o ?

Analysis: Most o f t h e responden ts l i s t e d the TGBCP,

N I D U , Co l imrc i a l Barks, Merchant banlrs, ETERFUND, gtate

owned development companies, Peoples banks and EJDE.

. I Was t h e l oan a p p l i e d f o r g r a n t e d t o you?

Yes 1 221 No 1591

Ana lys i s : 27.16% of t hose r e sponden t s who have e v e r

a p p l i e d f o r l o a n from any o f t h e s c h e m e s / i n s t i t u t i o n s

r e c e i v e d t h e a s s i s t a n c e a p p l i e d f o r w h i l e 72.84 did not .

1 If y e s , were you g r a n t e d t h e amount of l o a n you a p p l i e d

f o r ?

Yes 131 NO [I71

Ana lys i s : Only about 13 .649 of t h o s e who g o t l o a n

f r o & t h e schemes were g r a n t e d t h e amount t hey applied

f o r .

y.14 I f rro, w a s t h e amouirt q r an t ed t o you enough f o r your

inves t m n t needs?

Y e s ( - 1 NO ( 2 2 )

Analysis : S u r p r i s i n g l y , none of t h e respondents

accep ted adequacy of the a~ilount of l o a n g ran ted t o them

f o r t h e i r i n v e s t r i n t / p r o j e c t needs. Even those who w e r e

g ran ted t h e amount they app l i ed f o r lamented on the

time lac between loan a p p l i c a t i o n approval and a c t u a l

d isbursement of funds by t h e schemes. They claimed t h a t

b b e f o r e t hey could g e t the money, cost of the i n p u t s which

they want t o use t h e money t o purchase had gone-up due

t o i n f l a t i o n and deva lua t ion of the na t ion ' c; currency.

This , t hey said, led t o p r o j e c t c o s t overrun.

Q.15 D o you th ink t h e Lending cond i t i ons of t h e s e schemes/

i n s t i t u t i o n s c o n s t i t u t e a nmjor hinderance t o t h e i r

a c c e s s i b i l i t y t o SMEs?

yes [ i o a NO 5 - 1

Analys i s : It i s only those resyondents who claimed

awareness to t h e schemes arid t h e i r v a r i o u s s e r v i c e s t h a t

answered t h i s quest ion. From t h e above r e s u l t , t hey

a l l . s t r o n g l y b e l i e v e t h a t t h ~ s t r i n g e n t lending c o n d i t i o n s

o f t h e s c h e n t e s / i n s t i t u t i o n s ( w h i c h a r e d i f f i c u l t f o r

the SEES t o meet) are t h e nlajor causes of poor

-. -1 2; ."

a c c e s s i b i l i t y t o their f a c i l i t i e s by t h e C;XSs.

Ana l i - s i s ; A l l tnc! responden t e n t e r 2 r i s e s c l a i r L e J t h a t

c o n s i d e r i n g t h e number of S h Z s i n t h e coun t ry

prt :scnt ly, t h e h i g h rate of e r s r g e n c e of riew one3 + ar2 t h e ~ ~ o v r r t y r a t e o f Nigerians, t h e govcrr,nerit

s t i l ? . need t o set up ir.ar,q. more schemes t o c a t e r for

t h e ne rd s (esy jec ia l ly f i nanc i a l . needs) of t h e sub-

s e c t o r . 2ven t h o s e r e s p o ~ c i e n t s who sre unaware of

t h e e x i s t e r x e of t h e schenes clairaed t h a t i f .to say

t h e s c h e r ~ ~ o / i n s t i t u t i o n s a r e rnany, t h e y would have

LOW at l e a s t some.

b.'17 Woillu you l i k e t o app ly f o r f r e s h l oan fron, any of

t h e Sclieraes?

(a) I an now aware of such s c h c m e s / i n s t i t u t i o n s

(b) Have l i m i t e d soi l rces of funds

(q) Having b e n e f i t t e d S e f o r e , wants t o app ly 3 ~ a i n .

(ii) If Ko, Why?

(a) Havc a p p l i e d before and d i d n o t succeed

( 3 ) Lack adequa te c o l l a t e r a l s e c u r i t i e s t o o f f e r

(c) Lack t h c r equ i r ed nrini~um e q u i t y c o n t r i b u t i o n

( 6 ) WLscouraqenzent 2ror;; those who have app l i ed ' ;

b u t .did n o t succc:ed .

R n a l y ~ i s ; About 51.476 O L t h e respondents wants t o

a p ~ l l - f o r f r e s h l o a n s fror,~ t h e schemes wh i l e 43.53:d *

do n o t have i n t e r e s t . Both qroups oE respondents have

t h e i r r ea sons as s t a t e d above.

Q. 1 3 Can :,QU say t h e s e schemes have had a g r e a t irt?pact on

t h e ]tronlotion of S h E s i n XicJeria?

Tina l y s i s : About 4 8 of t \ e t o t a l respondents b e l i e v e

t izat t h e s c h e m s have had a p o s i t i v e i n p a c t on t h e

SiEs. They sa id that apart from the prov i s ion of

f i n a ~ c e , t h e s e scher,es have r;ide t h e SltlCs t o be very

lIidch aware of t h e need f o r a c c u r a t e and proper accoun-

t i n g in bus iness . On t h ~ o t h e r hand, about 3G-oE t h e

r e spo rdan t s b e l i e v e s t h a t since t h e s e s c h e m s have

n o t hecn a b l e t o provide enough c r e d i t s to the SXEs

( ah ich w a s t h e riain reason for s e t t i n g them), t h e i r

- 124 -

imlmct on tihe sub-sec to r h a s n o t h e h much.

v.19 h3a t i n p r o v ~ m n t s would you like t o sugges t a s t o

t h e l end inq and o p e r a t i o n a l p o l i c i e s o f the Schemes,

I n s t i t u t i o n s ?

A r ! a . l y s i s : The respondents rade v a r i o u s s u g g e s t i o n s

a s a r e s t a t e d below:

( i ) Lie-emphasis on c o l l a t e r a l s e c u r i t i e s

(ii) Reduction of the(. r e q u i r e d minimum equ i ty *

c o n t r i b u t i o n

l iii) Prov i s ion o f working c a p i t a l

( i v ) I nc r ea sed pub1 ic i t y

(v) Relaxa t ion o f o t h e r s t r i n g e n t c o n d l t i o n a l i t i e s

( v i ) I 3 o u y k ~ t of c o n z e r c i a l banks by those schexes

t h a t use t h e banks a s on-lending channels .

~ . 2 0 D o you t h i n k t h e r e is a b r i g h t p ro spec t for both t h e

scluxies and t h e SbiEs irL E i y e r i a ?

3 n a l y s i s ; Y a j o r i t y o f t h e respondents ( "3 .59%) a r e

o p t r l i s t i c as t o t h e f u t u r e of tile schones and t h e

snwll and mli iu~l i -scale r e a l ~ x o d u c t i o n e n t c r p r ises

in t h e country . Iiowever, aSout 4 . 4 1% of the respon-

dents d e c r i e d h a r d s h i p i n f u t u r e for t h e S M E s i f t h e

p r e s e n t economic and p l i t i c a l environments i n t h e

c o u n t r y persist.

2 . 2 HYPOTHESIS TESTIEG -.- . --.--.---

!:ere, tlzc hypo thes i s a s s o c i a t e d w i th t h e s t u d y

w i l l . . ae t e s t e d usirrcj the chi--square : ~e thod . 'Yo test

t h e hypo thes i s , it i s i r+or tan t t o f i n d o u t ~he-ther

t h e differences i n op in ion is s i t ~ n i f i c a n t enough t o

Ilrati a cncc l a s ion . The n u l l hyyo thes i s tvilI be ac.ce;;tsil

or rejected b a a c i on t;ze f i n d i n g of Lhe test .

It w a s hypothcsi zcd t h a t inadequate awareness 05

the o p e r a t i o n s of the schemes by the SXI:s i s t h e ~ i a j o r

c o n s t r 3 i n t s t o t h z i r u t i l i z a t i o n . Data provided i n

quest.ior: 5 w i l l . he used t o t es t t h i s hl -pothcs i s . Thc

h y p t h e s i s are a s follotis :

110. Inadec~ua te awareness of t h e o p e r a t i o ~ s 02 t h c

schcrms by t n e SKEs is t h e tajor c o r , s t r a h t t o

t h e i r u t i l i z a t i o r , .

ri 1. Inadec~ucte avarenes s of he o! e r a t i o n s of t h e

schemes b:,- the SKEs i s not rmjor c o r i s t r a i n t t o

t h e i r d t i l i z a t i o n .

2c;ncLusion .-- -,.--.--.---. -. : Inadequate a w a r e n e s s of t2,.e o p e r a t i o n s o f

tile scner r i s b y :;$"is i s n o t a major cons t r a i f i t t o t h e i r

, u t i l i z a . t i o n .

S Y 1 I 1 TWO. - -- in^. The s~eciaEisee3 f i n a n c i n g s c h e m e s / i n s t i t u t i o n s

c o n s t i t u t e i n ; - a r t a n t soilrces of c r e d i t s t o S14Es.

r i 1 . Tl ic special.ised f i n a ~ c i n g s c h e m e s / i n s t i i x t i o n s do n o t

corns t i t u t e impor tan t s o u r c e s of c r e d i t s t o SPIES.

Decis ion : 'Xe t h e r e f o r e r e j e c t the n u l l kypothesis and - . --,- -.. ----...--

accept the a l t e r n a t i v e hypothes i s .

do not c o n s t i t u t e rzijor sources of credits t o t h e SL"Ls.

9 c c . i s i s n ; . .- -. .- - ..-. . . -, F : . e j e c t the null h y ~ o t h e s i s and a c c e p t the

r i v e hypo the s i s .

Conclus ion -&-"-....-.-.-"-. .-,,-.- : The s t r i n q e n t lending coricli t i m of t n e spec iali,.-

s eCi -' E i n a m i n g s c h c r n e s / i n s t i t u t i o n s c o n s t i t u t e r a j o r hindcrance

to t h e SiWs @aaccessiS i l i t y to their facilities.

1 FOUR . -.---.----------

,lo . There i s adequate n u r d x r o f f i n a n c i n g s c b e m ~ s / i n s t i t u -

t i o n s ?milable to the SIviEs.

Dccisior: .--. - .-- I Rejec t t h e n u l l hypo thes i s and a c c e p t t h e

a l t e r n a t i v e hypothesis .

Conclusf ----- -- on -- : The nunber of s p e c i a l i s e d f i n a m i n 9 scherues,

i n s t i t u t i o n s for SNEs i n the c o u n t r y is no t adequate f o r t h e

scb -sec t o r .

I t was the i n t e n t i o n of governren t that these s p e c i a l i s e d

f inaricir.g schel:es/ i n s t i t i l t . i ons act as c a t a l y s t s towards t h e

s p ~ n t a r ~ e o u s rise of small and n . ~ i u m - - s c a l e real product ion

e c t e r p r i ses , which according t o records , c o n s t i k ~ t e s about

scvent.1:--five p e r c e n t of the manufactur ing s ec t . o r i n t h e

ecmnoriil.. k t h a v i n c j a c r y s t a l b a l l , t h e p r o s p e c t s of these

s c h c n ~ s / i . n s t i ~ t u t i o n s can o n l y b e based or, t h c i r peses.t

achicvcr.r?ri.ts: and w h a t one 1-erceiver; as t'leir a b i l i t i e s t o

seach m n y S I G s i n t h e f u t u r e . 'i'lwir achievzr;.znts as

i . r esen tud irr .the preecd inq chapter demostra te t h a t t t e

schams h a w a ?!reat p o t e n t i a l f o r a c c e l l e r a t i n y the

i n t i u s t r i a l is ztlor? process through Sil:?s. Althou?h, soae of

these s c i l e r ~ . c ~ ~ / i n s t i t u t i o n s are constrained bv c e r t a i n l i : : i i - * Ling fac tors as irlaclequate f u n d f q , coh!:l.icts cf p r i o r i t i s a -

t i o r i cjL j c?ct.ivea occasior:ed by the i l i c t a t e s of r:iovernrt~n.t, l ack

of cor id i t - rwnt on part of t h e Sarks, there i s ever;. ?lo?%

that wi th t : ~ e cormi tnwnts o f t h e present Ac1ministrat.ion nnd

a ~ u n i ' o e r of i n t e r n a t i o n a l financial i . . n s t i t u t i ons (who h a w

i n d i c a t e d t ' h e i r suppo r t f o r sane of t h e schenes / ins t i tu t j -cs l? .~

a r d nay ~ o n t ~ i r i u e t o p rov ide such s u g p r t u n t i l t h e econoi.:y7

f u l l y rebounds) t.o G X E s f i n n n c i y t h e fc l tu re of t h e s e

special.ised financir ig s c h c r i ~ s / i r . s t i t u t i o n s look v e r y b r &;ht.

A s rezards t h e r r o s p e c t s of t h e SYEs, a l l hope i s r.st

l o s t as w e l l , despite a l l the ne~ative f a c t c r s ( ~ ~ ~ O ~ ~ P I A I S ard

c o n s t r a i r t s the:' excoun te r ) r.rovidincy the a v a i k b l c p o s i t i w

resources are w e 3 1 harnessed .

??ut therr .ore , t!1 E St ruc b r a 1 Acljust~rerit Brcsyrarnhie ( SAE')

;1a :. 1;rougkl.t kiitl? it rational econamic thirJ:ir:~. klc are

,:;rac~ii 21 l~i Licm lol.ing c:or,f idcnce in our don;es.kical.ly ~iroduced

cpo8.a~ -- a1Scit 3 J tong-:llsior. of economic f o r c e s ! Blso, t h e

accorc.~an>inq p r i w a t i a t i ~ r t of government i n t e r e s t s , will

brirq sanity and c f f icienc: t o those s e c t o r s o f tll e econ.omy

th3.t; dircc tl)? o r i rd i rcc t l y have impact on srrzLl. 1. scale b a s i n e s s

oilti-it e.

L'ir ,al l~, . , thc developrent of Lhe f i n a n c i a l sys tem -

.J) tlmc enleqence of new Snnks and nor,--bank f innncia.1.

su&s ir; recent ti:nes are other sources of hare. L,y

ii ai . .. .ic, soost t h e l eve l 01 s a v i n q s , which is n stro~:;

- ., tiowever, bearsing i n mind t h e ir iportance of SMEs i r r the

&%re 1 opi- i~nt L- x o c e s s m d accep t in7 t h a t many of t h e problems ,

f x e d b y thcr~ must be e l imina ted t o uake them respond ef fec-

t i v e l y t o gowrnrmnt ' s p o l i c i e s and incen t ives , a few sugges t ions

are p ro fe r r ed here t o boos t government's active and pioneer ing

r o l e i n a s s e s t i n g theni.

The i n s t i t u t i o n a l . a r r a n g s ~ e n t s f o r c r e d i t d e l i v e r y n.ecds

t e be stream1 ined and s strengthened t o ensure loan e f f e c t iw-

.- . .,r-Q Ti l e r o l e s of c r e d i t i n s t i t u t i o n s and t h e t a r g e t cjroup

to be served L v e x h i n t h e c o n t e x t of E'eGeral Governrent of

Ki~eria 's 1 .o l icy shonlG be c l e a r l y a r t i c u l a t e d . I n t h i s

connection, the va r ious c a t e g o r i e s o f t h e SEES sub-sector

should Ijt c l e a r l y clef iried, based e i t h e r on turn-over o r on

t o t a l a ~ s e t s and invest . rwnt excluding lam?. Th i s c l a s s i f i c a -

t i o n is necessary because each ca t egory exhi5 i t . s i ts own

z m x l i a r charac t c r i s t i c s and needs d i f f e r e c t p o l i c y fbixs.

yhe ;~7;31_;, ~;$c;I, S t a t e h3evelopmnt iTina,nce Companies, N'DE arid

the Peoples C a n k shoul..d Concentrate on each s e g r ~ e n t 02 t h e

S P L s s ec to r . T h i s clear d e l i n e a t i o n w i l l f a c i l i t a t e p r o j e c t

mr : i to r inq arid coord ina t ion as w e l l as yumvicle t h e Federa l

Soverrment ui t h c o n t r o l of a ranee of i n s t i t u t i o n s cover ing

t h e eritire SNE s e c t o r and. a l s o a basis for cos~par i son arionc;

different acrcm ies Irr:r:lcmentiria crovernmn t n o l i c i e s on 8NE.s.

3ased on t h e above c l a s s i f i c a t i o r . , the e l i g i k i l i t y

c r i t e r i a f o r NEKFUND and SbE I1 Loan w i l l have t o be rec ' e ived

t c t ~ k c f n t o account t h e p e c u l i a r r equ i r emen t s of each

imdustr ia .1 :;roup. ??he a l l o c a t i o r ; of credit shoulc? f o l l o w

s t r i c t l y t h e i n d u s t r i a l grou;) c l a s s i f i c a t . i o n i n o r d e r n o t t o

s t a r v c the w e a k segrrents i n the system of funcls. The e l i g i -

h i l i t q ; c r i ter ia f o r p a r t i c i p a t i o n i n t h e N!:iF.FLlND and SNE 11

Loan adn l in i s t r a t i a n as w e l l a s . the on-lcndinc? terms and

c o n d i t i o n s ur.der 50 th l o a n schemes shou ld be k e p t under c o r i s t a ~ t

review t o i d e n t i f y chanqes, i f needed, t o a c c e l e r a t e l & n

di o:~urser&mt.

The. clef i r i i t i o r o f e l ig ib3.e p a r t i c i p a t i ~ q banks f o r 50 th

i';lERF)J:GD and SfiiZ I1 l o a c scl?er!les shou ld be expariled t o i nc lude

f i n a n c i e J l y v i a b l e s t a t e d c v c l o p e n t f i n a n c e i n s t i t u . t i o n s w i t h

1.roven e x p r i e n c e i r : p l r o j e c t a p p r a i s a l and fo l low-up. Additions-

I l y , t h e 133PWUN1) schcrr~e can be s t r e n c ; t k n e d hy t h e p o v i . s i o n

of working c a p i t a l f i n a n c i n g and t h e t r a n s f e r o f Sore ign

exckhan.7~: risk f r o & t h e p r o j e c t t o t!ae Federal. Government.

C r e a t i r q g r e a t e r l u b l i c awareness of itti a t t r a c t i v e de s ign

?en t u r e s w i l l ir~~provt-: Sf.,?< 11 disbursenicn t.

T h e t o t a l dependence by d e v e l o p r L ~ n t 5ank s on ~ o v e r n n n n t

l o r t h e : i ioS i l i sa t ion of r e s o u r c z s i n t e r n a l l y and e x t e r n a l l y

na6 t v charge. As t5r ;%:I03 h a s S l a z e d t h e t r a i l . 54' r a i s i n g

p a r t oZ i t s r e q u i r e d fi

L k ~ u l d endeavour t o do

mils from t h e c s p l t a l market , t h e 1&CX

t h e sane. Ea i s ing Eunds from t h e

cc?:Ltal t a r k e t tonck t o enhance i n s t i t u t i o n a l irrdey~endence

i . k i . 1 ~ ;it r~roniotes r : r ea tc r ~ f z i c i e n c y i r ? t h e u se of funds.

B,oreovcr, the enahl in : laws e s t a b l i s h i n t j t h e tlev@lop!ent

banks have t o b t ~ reviewed t o n l l cw them a a i r , t a i n c u r r e ~ t

accomts and a t t r a c t d c p o s i t s Zresni t h e puo l i c . This a i l1

tc t h e i r l o a r c l i e n t s , rLtonitor more clao4lj.l their r e c o r - ? ~ ~rc l *

cal~zc i t . t o s e r v i c e t h e i r r epaymr- t s. Also, r e ~ a r d i Ce:- t r : i l

..iar,jc ~ ; u i d e l i n e s on the s c c t o r a l a l l o c a t i o n o f co rmerc i a l and

~ c r c h a a t banks' credit to nanuf acturir.cr smal l - sca le e n t e r p r i -

ses and a q r i c u l t u r e , t h e o u t s t a n d i n g s h o r t f a l l 2 e p o s i . t ~ mde

by i i eZau l t i rq banks should be r e l e a s e d t o 'VIDE, XHCI ar,d NACI3

r e s p c t i v e l y a s s t i p e l a t e d i n Eke Eionetary Pol-icy C i r c u l a r .

Uo~e rnn t e r~ t p o l i c y r e q u i r i n g banks t o hold e q u i t y m

& J u s t r i e s , i n c l - ~ d i r i g snall-scale e n t e r p r i s e s , should he rmre

v igo rous ly enforced. stat^ deve lop ren t finance i ~ s t i t u t f o n s

should 1 a r t i c i :,ate more a c t i v e l y ir. f u r d i n g SMEs through

e r iu i ty l . a r t i c i l ? a t i on .

Givestr.ent p o l i c y should 3c worked o u t and w i l l

i n c lude n bu_t -back arranr;ernent f o r e n t e r p r i s e owners t o

purchase the e ~ u i t y aXter a g iven pe r iod a t i ts e s t i m t o d o r

k . redcter~.dned value .

'The v a r i o u s s o u r c e s of f i n a n c e f o r SMEE s!~ould he

h r t h e r broaciened t o ensu re a more r e g u l a r f low of r e sou rce s .

A syndieateC? l o a n c~.;~proiich i nvo lv ing conumrcial , m r c h a n t ,

d e v e l ~ p m e r ~ t ' S a ~ k s and s ta te developrrant finance i n s t i t u t i o n s

should be encouraged i n o r g a ~ i s i n q t h e f i r a n c i n y and i~i iple-

ti en tat ion of i n d u s t r i a l p r o j e c t s . S i l ~ h an agproach w i l l

ruinircise 1 endinq r i s k s and enhance project monitor inp a ~ d

s u p e r v i s i o n through co-ord ina ted e i f orts of co- lenders . T k

'"ccleral Covcrnnent s3oul.d also set up nore loan schemes t o

ter t o r t h e S&xEso

There is need for theg e s t s b l i s h ~ a n t of r uxe r e sea rch

i ~ s t i t u t c s , arid irrip?roverrcnt of e x i s t i n g ones. I t is n o t

sinl:!ly adequate t c set g u i d e l i n e s or t a r g e t s f o r l o c a l c o n t e n t

w i t h o a t rl zrilrpsefu!. r e s e a r c h i n t o t h e Kiqer ian substitutes.

On a r e l a t e d no te , a po l i cy s h i f t is d e s i r a b l e i n t h e

i x o v i s i o n of i n d u s t r i a l i i a f r a s t r u c t u r e , p a r t i c u l a r l y access

roacis a.nd s t a b l e e l . c c t r i c i t y . The constar!.t ; - a w e r f a i l u r e

i s s e r i o u s l y iiff e c t i n q yrod.uc t i v i t l 7 and t h e .hn.ge inves t m n t

by i n d u s t r i e s rin t h e purchase o f electric g e n e r a t e r s

in.creases produc t ion costs en.ormously.

The c o r i l i t i s n s governing u t i l . i s a t i o n of sonic of L\c

f,c%er;ca (especially 2:KRFUND a r d Si4Es I1 l oan schemes) woi l l r i - have t o ?x r e l a x e d isoth :Erori: t h e p i n t of v i m o E the

p a r t i c i p a t i n g harks and t h e en t e rp reneu r s . ;;i;:?e questions of

c r e d i t - rislr-;:.sharinq Ihy 16ERF'UF;D part iei1.a t i r t ~ h r k s nas now

acen addressed by XCI'.; insurance and it i s 5cLievcd t h a t if

t h e : coxiter;ia.rt Euncling coulcl be reduced t o an affordc&le

Prvcl ( s a y 26" a riiizxh.mn~) b u t emugh t o ensare deep e o ~ ~ i t m n t

ii!= the owners of the ~ x o j e c t , i l t i l i s a t f o n would g r e a t l y be

ia,;roved. Also, t ,he re is n o d t o de-en~i.hasis on c o l l a t e r a l

r e : j u r i r e r~mt A S well a s r e l a x a t i o n of o t h e r s t r i r : ? en t c o n d i t i o n s

for l end ing by these schafies and i n s t i t u t i o n s .

'?aid; n.~magers ' i m b il i t ies t o assess whether p ro jcc t

i.ror.~c.jtcrs, have er:.tt;ry!rer;eurial and rrianaqerial c a p a b i l ities

c o n t r i'3u ts t o t h e i r r e l u c t a n c e t o lexld t? iex rizoney. Tra in inq

i9 r sg ranses Tor c r e d i t o f f i c e r s need t o move awnqp fron:

i ~ m k ing %undcr:ientals towards i n e u l c a t i r q a devdoprrenk barking

o r i e n t a t i o n - t r a i n i n g star5 to assess t h e s t r e n g t h s and

weaknesses of new, snail- scale en te rp reneu r s . Cjarker s ' con2 idcnce i n r,ew er ; terpreneurs w i l l increase once t hey know

how t o n ssess the p o t e n t i a l of ar. en te rpreneur .

To r ' u r t h e r r educe t h e r i s k of l e n d i n g t o SHES, ti?e

F e d e r a l Governnent s h o u l d e s t a b l i s h a w e 1 l -funded c r e d i t

yuaramtce and ; insurance Schonle f o r SMGs. These schencs

have s u c c e s s f u l l y o p e r a tea i n Fany develo2;scd and develop-

ing c ~ m t r i e s , sach a s USA, I n d i a , Piexico etc, nrl:. even i n

the 1 ; iqe r i an a y r i c u l t u r a l s e c t o r . These s c h e n e s w i l l

indemnify f i n a r c i a l i n s t i t u t i o n s a ~ a i n s t t51e h a z a r d s o f

I ~ r i d i n ~ ; t o S X C E ir: ? : iger fa and in t h i s way, i n s t i t u t i o n a l

l e n d e r s w i l l i r ' c r e a s e t h e i r p a r t i c i l l a t i o r , ir: t h e p r o v i s i o n

of i z i ~ f i r i s k f i n a n c e , o t h e r w i s e known a8 v e n t u r e g a p i t a l .

F i n a l l y , it is i n p o r t s n t t o s t r e s s t h a t g o v e r n r e n t

a s s i s t a n c e t o SsiZ;:c r e q u i r e s t h e coopcrat . ion of t h e S%Es

t h e ~ s e l v e s , p a r t i c u l a r l y i n t h e a r e a s of f i n a n c i a l -

d i s c i p l i n e and compl iance with s t a t e d y u i d e l ines . Consi - derkng t h e p l e t h o r a s f lneasures aimed a t encouratknc: thelit,

SXEs c a n no l o n g e r c l a i m t o be g r o p i n g i n t h e da rk w i t h

no beacons t o gn ide them. G o v e r n r ~ e n t ' s avid s u p p o r t s

for W E s s h o u l d t a k e .ilS many steps n e a r e r tot:arcls

i s o l . a t i n g ollr dr?veloy:siental ~ : roblerns , Fnm1.at.ing then..

and f i n a l l y el i r c ina t ing them.

The paper ha s appra ised the various spec i a l i s@d

f inancirq c h e m u s and i n s t i t u t i o n s which government iias

in t roduced sirce t h e e a r l y 1 9 7 0 s i r i a bid t o b o o s t t h e

glow of c r e d i t t o SMGs i n t h e cour.try. These

i n s t i t g k i o n o and scher~es are t h e sr.lall.--scale i n d u s t r i e s

c r e d i t scheme (SICS) , the Xigcriarl il,ank for Cormerce

and Iridustrrp (NZiCI ) ; t h e C e n t r a l Bank cf Zligeria ' s B

Credit G a i d e l i ~ e s f o r Small- scale I . ;nterprises under the

Uari!cls b iune t aq P o l i c y Guide l ines . O t h . e r r e l a t i v e l y

n w schel.~es and i n s t i t u t i o n s covered i n c l u d e t h e

La t i u n a l Lconorikic f cconstruc t i o ~ Fund ( 16~RrUl :D) ; the

h u r l d dar;k SKI: I1 Loan Schete; t h e N i ~ c r i a r Txpor t

arid inq>ort 3anli: ( i \K:XIM) ; t h e pco;Ac's Cant, of N i g e r i a

';he p a p a cxardned t h e o S j e c t i v e s o f t h e v a r i o u s

scheries and i r : . o t i t u t i ons , the problems i n implement in?;

t h e scheces , t h e i r achievcmes;ts so far arid t h e i r

p ro E~+C t ~ . More i n p r t a l ; . t l y , the paper examined,

iron t h e SkA 6' p x s p e c t i v e s , t h e deg ree o f awareness,

the extcrr t of a c c e s s i b i l i t y , the adequacy and. t h e

i q o r t n l c c of t h e schemes and i n s t i . t u t i o n s as rria-jor

sou rce s of i n s t i t u t i o n a l c r e d i t t o the SLi9s i n t h e count ry .

A v a i l . a L l c ev idence shows t h a t i n s2ite of t h e c r u c i a l

r o l t t h a t S:Wc a r e expected t o p l a y i n t h e g r a s s r o o t

deve1cpn1en.t a.sci t h e n u l t i p l i c i t y o f i r : ~ t i t u t i o n s and schemes

c a t e r i n g for t h e needs of S K F s ir, Kigeria, s h o r t a g e o f

e q u i t y cspi t&l_ and term c r e d i t s on s u i t a S l e terms and

techn%cal assistance s t i l l c o n s t i t u t e b inding c o n s t r a i n t s

t

Apart froi:, t h e d e x t h of f i n a n c i a l r e s o u r c e s anorq

s p t x i a l i s e c l r;ovcrnr:ent c r e d i t i n s t i t u t i o n s mch a s FXCI and

stake--ohnud fia.nlzcc c o r p o r a t i o n s , t h e f m d a ~ t e n t a l prob1ei.s

which c o ~ s t r a i n s SPIS's access t o c r e d i t are the low c r e d i t

rnt incj of M I s as a. r e s u l t of t h e i r h iyh- r i sk na tu r e , Tkic

r e la t io - r l sh i l : between S M X s acd banks has n o t b t c n c o r d i a l

aecnuse 05 t h e L o w p r i o r i t y t h e ba&s acco rds sma l l - s ca l e

e n t e r ~ r i s e s i n t h e i r o p e r a t i o n s . nanks have c i t e d a nurrbor

of cons t ra i n b s i n h i b i t i r g t h e i r perforrmnces which an;ong

ot;?tcrs i n c l z d e the h igh mortalit!, r a t e aswnc SMCs, l a c k of

i a 1 i t i t , i r i a ? ~ ili t y t o provide t.hc neccs s x y

c o l l a t c r a l s t o s e c u r e l o a n s and nirvnrces, loan d i v e r s i o n ,

low i ) roduc t iv i . t !~ i r ~ d t h e ih!!ilit: t o compete ef Fect i v e l y

w i t h o t h e r c r t c r p r i s e s i r ~ b o t h f a c t o r ard produc t i n a r k ~ k s

as well a s l oo r mrlnar,.ment.

3n t h e o t h e r band, SXEs cla imed t h a t n o s t banks i n

?iicjesria arc a p t h e t i c , i n a c t i v e , r-on-,enterprising and to

a large e x t e n t , q e n e r a l l y i g n o r a n t 05 t h e ~ r o b l . e m s of S X E s .

I n r:kost cases, banks l a c k adecpatc nun!xrs of ~ ~ a l . i i i e d 1 :+aCtssior- \ .a l r t a f f who can evn1uz.t.c l o a n a;?pl i c a t i o n s w i t h .

the ;mo*Fessigsnalism and o b j e c t i v i t y required. The cle l ivery

sl steiii l a c k s l.!ropc.r i n t e r j r a t i o n and comprehensiveness. Often

t in .es , even t h e t .echnica1 de ta i l s recjuired by l e r d i n q

i r ! s t f . tu t ions are w e l l beyond t h e s c o p of riost SMLs.

b

A q a h s t the background of these p r o ? ~ l e r s , which seems

t o have q r ~ a t l y reduced t h e g:*owth p o t e n t i a l s of the S::Es,

tile f u t u r e ~ r o e p c c t 0 . E t h e sub - sec to r wlas e x a ~ i n e d . Tkerc

ap:,;Ear t o be c7, qerieral belief axrioncj f i r mc id arialy s ts that,

fcr t h e SAEE t o a c h i e v e i r q : r ~ m d aceens t o c r e d i t f o r

u i s c h a r g i n g t h e i r v i t a l r o l e a s f a c i l i t a t o r s of ind i l s t r i a .1

developrwnt , it would be neces sa ry t o c : ~ v ~ ~ v E . a mre p r q -

niatic l e n d b g s t r a t e g y t h a t w i l l sl:ecif i c a l l y a d d r e s s t h e

basic problerz of the i n a b i l i t y of S ? X s t o raise t h e mch

needed c o l l a t e r a l s e c u r i t i e s t o Sack t h e i r demand f o r

c r c d i t fron; f o r m 1 sources . Base?? on this, the researcher

recormendcd a r , cngs t o t h e r s , t h e es taS1ishn;ent of a c r e d i t -

gua r an t ee and i n su rance scheme, j u s t a s w a s done i n the

&iaericnl? k ~ r i c a l t u r a l Sec to r .

Conclusion. - .. . --...-

Over t h e year's, t h e Pligerian govc.rn~:scr~t hss reeogniced

t h e v i t a l roles ';rigs can p l a y i n en5urir.g m a n i n q f u l and

s u s t a i n a b l e in& strial ~ r o w t h o f the cconan~y. Towards t h i s

ad, t h c Fede ra l i 'overnrent has ~ u t i n place a . nurrber of

~ m l i c i e ~ an4 i n c e n t i v e s p r i m a r i l y t o essist the growth of

t i n i s cl-ass of enterprises. One major area o f a s s i s t a n c e is

t n z t oT i q x o v i n q t h e access o f SMLs t o credit through the

e ~ t a i ~ l i s h n e r s t of a nuirjer o f s p e c i a l i s e u c r e d i t scherrec and B

i r s t i t u t i o n s t o c a t e r f o r SMEs. Thou::?\ thcse schemes and

i ~ s t i k u t i o r i s have had varviraq degree of srncccss, t h e i r

i ~ n p a c t haw n o t r e a l l v been f e l t b17 t ? re S'.:T;;s 33e t o c e r t a i n

problans and c o n s t r a i n t s i n h e r e n t i n both the SMEG ard t h e

scnenles therrrsc.l ves. On t h i s qround, t h e sr.t t ir .g-up of a

and progranu:es w a s yjroposed. I t is 5el . ieved t h a t i h e

m i s t e n c e of t h i s scheme which has success.fuk1.y operated

i n t h e X ige r i an a . r ;x icul tura l s m t o r would h e l p to r e c o n c i l e

t he ~ ~ c c u l i a r l i m i t a t i o n s of the SMCs reqard ing c o l l a t e r a l

s e c u r i t i e s w i th the c o m e r c i a 1 ~r ,o t ives of r x i v a t c l end ing

i n s t i t u t i o n s which presuppose t h a t t h e y shou le cover t h e i r

cost of o l e r a t i on and a l s o sa feguard their funds.

Davenport, Kotsc?rt :.I. Financ i nu t h e S m l l Pianuf acturer irk ---..---r_-- -.- ---- - -..-.-.- -- -

Co~iq~any, Massachuscts, C a l i f o r n i a , 13-74.

Ltanly , E and Zlorse V. P -- _.__ll_.._.L_ ~'iodern Srnnl l __ knimst .I _. ___ rie ._ _ s ____.-_- f o r

3evelo_a;ky Countries. .p.%-~T;raw !ill. 'fook ---..-- - Con.;nnlp.

I n L u s t r i ~ l Deve lopk. r l t " , Taper prescntc>d

at sefirinar on I n d u s t r i a l 3evelopnlent i l i

Aovc r rment G% t h e Aprroved Budgets 1303 and 1953 F i s c a l

1 o d e r a l RepuSlic of Years : P r i n t e d by I.'edcra& G o v ~ . r n m n f : - ---- ---- -. - *-- : . A < ~ ~.ria : 1 r i n t e r , Lagos, ------

Lirjcr ian Bard: f c r ";ey',ort on t h e Federal. & . i n i s t r y of Cop' ,:I= rce arid Indust r y Special. Fund f o r Small-Sca1.e

I n d u s t r y ( 1 3 3 4 ) : E n t e r p r i s e s Loan Sclume", 13t3 1 - 1 3 3 3 ,

Lagos.

~ ~ 3 n t o y e o . ~ , " he Place and Role 05 S ~ n l l I n d ~ s t r i e s

i n i n d u s t r i a l i s a t i o n l .~rocessql , Paper

? r e sen t ed a t t h e T r a i n i n q Course f o r

Covcrnmnt O f f i c i a l s on mall indu s t r i e c

clevelopncnt, August 1375.

o l e of Coracrcj.al. 3anL.s in Financing

51ta11 ar-d fiLediur,, E n t e r p r i s e s i n E:i.qerial' ;

"rhc Niger ian Accountantl- Vol .X\ II1,lio. 3

Leyt., 1985,

Olot;u , I.,?,, " ~ a i s i n g of Capital, A constra int to

5~:all:-Scale i n d u s t r i e s D c v e l o p ~ e n t i n a ' Paper d e l i w r e d a t a Xa t ions l

Collf e rencc oxganised by T..i;iSSI I ,Tos, June, 1.333.

, o r National. Economic F ' ~ o i - s t r u c : t j . ~ ~ Fund B

C ~ i i l c l i n e s , Venture-FinanceI J u l y 13-7C. - --

" 1:ailli S c a l e E n t e r p r i s e s Deve lopmntWt

Thc C a t w t , NRCI Q u a r t e r l y ifouce J o u r n a l -..-.- -*.. -- D c x . 1921.

Ven t u r t : E'ina~ce, ", 1COI.i-NE£?Fl?hLdl Cred i t Innurance Schemes ;

Set to accelerate Pace of P n d u s t r i a l i s a -

t i o n " .uqus t 1392.

C'enture F i n a n c . ~ , "fie :JERFUND D r e a n ; . Contcs '?rue - 2 s

pro jccts comnence m n u f a c t u r i r q " , Oct, 1991.

APPENDIX 1 ---

1 ari; l ! r esen t ly involved i n ar, NZA wscarch i ~ . t h e * aeprtntent of !.;ar,i:r in!? $& IE'irLance of t h e a5ovz Unive r s i t y . LLry

research is concerned w i t h appr-a is inq t h e i ~ i i ~ . . ~ c t of govern--

r ~ e n t s v a r i o u s speci.al.ised C i n a n c i n ~ ; schcms and i n s t i t u t i o : i s

The encl.osed t p c s t i o n n a i s c i s sr. a t t e m p t t o ascertain

your opiriion as t o t h e e x t e n t of i n m l w r ~ c n t of thcse scherres

and i n s c i t u t i o r s i n sol.vinq t h e Einan.cirg p r o b l c ~ s of S X E s

ark< i r i the p roce s s identify t h e problems be in? encountered

by t h e SdEc i n accessirq loans from t h e s ch@r :~s .

I. lease ,)c: kind cmough t o c o r ~ q l e t e the q u t s t i o n n a i r e r'or Il~e,

1 &auld eniphasis that. y o u r r e s p o n s e s t o t h 6 q u c s t i o n n a i r c

1411 1. u 6 t r e a t e d in s t : r i c t c o n f i d e n c e and i i n d iv idual f irri:)

LO^ , 1 a r y w i l l not !-je c.e;.mrately ident-if i e d i n the n n n l y s i s of

dai:a.

S o u r s E a i t h f u l l . y ,

;-. I k h a t i s t h e n a t u r e of y o u r Susiness?

Aanu fac t u r i n g e I A y r i c u l t u r c [ 1 Agro - A1 I.ie(1 1

. A r e yo2 aware of t h e e x i s t e n c e of qovermlent varfous

specialised f inancir ig schems and i n s t i t a t i o n s and

their rarne of services ?

- !.I . i bo you cons idc r the spec i n l i s e d f i n m c ir:q schemes.

i n s t i t u t i o r ~ s as ir..;. o r t a n t sources of credit in bL9k iziy

140iir Eiranc ia I./ irivcstrrent decisions?

12.9 h v c you cver app l i ed for l o a n fron. any of the sche~aes

i n s t i t u ti on s?

-,' I. C S I ji :do ( 1

. I 2 If Yes, which of the scklen.es/insti~a'cio~ls have vou 3

applied to?

,>. 1 3 If Ycs, were l;ou gran ted the ardount oE loan you

applied for?

Y c s ( 1

I If w a s t h c n xuxnt ?ranted t o you ~ r o w ' 2 for your

i nves tnen t nec2s?

i j . 1 5 Do you t h i n k t h e l e n d i n q c o n d i t i o n s o f t h e s e schemes/

i n s k i t a t i o n s c o n s t i t u t e a major hinclerance t o t h e i r

a c c e s s i b i l i t y t.a 5 h : d s?

Yes ( 1 NO ( j

b

2. I 7 Would you l i k e t o a p p l y f o r a f r e s h loan $ran; any

ot- the scherr~ s/ i n s t i t u t i o n s ?

I Can 1-ou say t h e s e s c h e m e c / i n s t i t u t i o n n have had a

g r e a t i r~pac t on the p r o m t i o n o f S ? F s i r ? N i q c r i a ?

yes ( 1 P;O a I

. 1 What i r q r o w men t ( s) would l7ou l i k e t o ollrj ~ e : i t as . -

t o the lendinr; an4 o p e r a t i o n a l p l i c i e s o E these

schemes and i n stitlit i o n s ?

. u Uo you t h i n k t h e r e is a b r i ~ h t p r o s p e c t f o r b o t h t h e

s c h a r e s and t-hr. S::it.s i n N i g e r i a ? - 7 r c ? s I f KO ( 1