Description
TABLE OF CONTENT
Title page
Certification
Dedication
Acknowledgement
Table of content
CHAPTER ONE: BACKGROUND OF THE STUDY
- Introduction
- Statement of problem
- Aims and Objectives of the study
- Significance of the study
- Scope of the study
- Limitations and constraints to the study.
CHAPTER TWO: LITERATURE REVIEW
- Concept of small – scale business
- Characteristics of small – scale businesses.
- Concept of finance
- Types of finance
- Financial needs of small-scale business
CHAPTER THREE: RESEARCH METHODOLOGY
- Research population and sample
- Research design
- Instrument of data collection
- Administration of instruments
- Method of data analysis
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
- Brief History of Diamond Bank, plc
- Functions of diamond Bank
- Requirements for small business finance by diamond bank.
- Types of finance given to small business by the bank.
- Advantages of the Loans to the businesses
- Problems associated with the loans
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of findings
5.2 Conclusions
5.3 Recommendations
References
CHAPTER ONE
1.1 INTRODUCTION
Nigeria has always been a strategic country in Africa with their enormous economic and political power. Unfortunately, a history of prolong military rule left the nations civil institutions in run. The economy grossly mismanaged, and individual values completely misplaced thus preventing Nigeria from attaining it’s full potential. Consequently, due to this uncertainty, quite a number of investors have been way of doing business in Nigeria and with Nigerians. With the successful transition to civil rule in 1999, the cloud of uncertainty cleared up a bit and in 2003 when the sustainability of it’s democracy was tested, a significant number of investors are expected to be interested in investing in the Nigeria economy.
As a part of its strategies to revive the economy and uplift the standard of living of Nigerians, the government has identified sector within the economy with potential for rapid growth. One of such sectoral strategies in the development of small scale business (SSB) are known to encourage people centered development, which helps in alleviating poverty, vereating wealth and employment, and stemming rural – urban drift. However, without finance, SSB cannot be a reality. To alleviate this problem of finance the federal government of Nigeria – set up a number of development Banks.
1.2 STATEMENT OF THE PROBLEM
The purpose of this research is related to the financing SSB S.S.B is a global concept that can be seen from different points of view depending on the angle from where it is been considered, either from the developed or developing countries. The problems that are inherent with S.S.B depends mainly either in the government of such a country where it is been managed or the entrepreneur that a country where it is been managed or the entrepreneur that is managing such an enterprise.
For the growth and development SSB, it can be enhanced by the government through the schemes that has been put in place as it had been in Nigeria in general and in delta state in particular. But there are some problems that equally hinder this growth and development of SSB, especially with reference to finance, and these among where are the reason for this research. These problems include.
1.3 AIMS AND OBJECTIVES OF THE STUDY
The objective of these study is to acquaint and potential SSB with the sources of funds available and problems arising from the establishment and growth of SSB in Nigeria and particularly in rural areas and to offer possible means of ensuring efficient use of these funds so that SSB can grow rapidly.
Some of objectives of this research are:
- To help those already in business to expand through better means of financing.
- To appraising that efforts of Diamond Bank in terms of financing.
- To examine the ways and manners through which working capital funds are raised and managed for the operation of the enterprise.
- To appraise the effort of diamond Bank in term of financing.
1.4 SIGNIFICANCE OF THE STUDY
The outlay of this study is important because, at this state of development, the government of Nigeria is currently placing emphasis on the development of SSB, since it has been discovered to posses the likely solution to the rural – urban drift of her citizens.
The study shall particularly probe into sources of fund to SSB in Delta state with Isoko North Local Government in View.
1.5 SCOPE OF THE STUDY
Small scale business is fairly wide in scope, but in this study, we will take a look at it from the Nigerian perspective and how it affects the populace area of study.
The study also covers the activities of diamond bank plc regarding SSB expansion in Nigeria (Take a look at various form and sources of business finance including the procedures for obtaining loans and in the future prospect of finding SSB in our society despite the associated problem).
1.6 LIMITATIONS AND CONSTRAINTS TO THE STUDY
It is assumed that this research work has been carried out before. As a result, website were consulted, textbooks, annual reports, seminars, workshops and conference materials which discussed the relevance of financing small and medium enterprises were also consulted.
Because this study was done intermittently with lecturers, examination and private study limited time was at my disposal for carrying but this study.
However, as the researcher I will put in the best of my knowledge and understanding to capture and unravel the main purpose and objectives of this study.
CHAPTER TWO
2.1 CONCEPT OF SMALL – SCALE BUSINESS
As a dynamic concept, the definition of small – scale business have been found to vary with culture and industry and the peculiar circumstances of the person attempting the definition.
According to Casson (1993), an entrepreneur is some one who is specializes in taking judgment, decision about coo-ordination, of scarce resources”.
Ekpanyons and Onyons (1992), noted that there is hardly and unique, universally accepted definition of SSB because the classification of business into small-scale business is a subjective and qualitative judgement. Rather each country tends to define this category of enterprises based usually on the peculiar needs of public policies. There are how ever, some common indicators in most definitions, namely the size of capital investment (fixed asset), value of annual turnover (gross output) and number of paid employees.
Afonja, (1999) reported that the three variables generally used to define the concept were number of employees, capital investment and annual turnover.
Ajakaye (1999) defined and classified enterprise in terms of being either formal or informal.
According to Bauback (1980), the U.S chamber of commerce consider a business as small, if it employs fewer than 500 persons. He adds that to qualify as small a business not only should employ fewer than 500 person but, firstly should be independently owned. That is, it should not be part of another business. Secondly, it should be independently managed. That is the owner should be free to run the business as he or she pleases.
The small – scale business and Equity investment scheme (SSBEIS) defined small – scale business are any enterprise with a maximum asset base of N200 million excluding land and working capital and with the number of staff employed not less than 10 or more than 3000. Industrial Research unit of the Obafemi Awolowo university, Ile-Ife described “small scale business, as one whose total assets in capital equipment land and working capital are less than N25,000 and employ fewer than 50 full – time workers. It includes factory or non – factory establishment. It may be a household, a cottage a craft or a factory industry (Lewis 1972. 427-444).
The Nigeria Industrial Development Bank (NDB) defined small scale business as not exceeding N75,000 while it defines small – scale as those business in the range of N750,000 to N3 million.
Elumilade, Asaolu and Oladele (2004) discussed the concept from two folds, meritoriously and structurally:
On a material level, small enterprise, in Nigeria currently, possess any or all of the following features.
- A maximum of is paid employees
- Maximum total assets (Excluding land) of N250,000.
In the same vein, on a structural level, a small enterprise, in Nigeria currently possess any or all of the following.
- Operations as a large rural – based enterprise
- Producing putty commodities or providing personal services or engaging in low technology agricultural ventures etc.
- Unregistered (operations outside government corporate affairs although engaged in lawful productive activities.
2.2 CHARACTERISTICS OF SMALL – SCALE BUSINESS
SSB are variously defined in Nigeria, as in other economics, on the basis of one or all of the following.
- The size of amount of investment in assets, excluding real estate.
- Their total annual turnover, and
- The number of employers.
Within this framework, the characterization or the classification of enterprises as “Medium” and “small” naturally varies from one economy to another. And one period to another in the same economy. In Nigeria, the National Council industry, under the federal ministry of industry, Association of small – scale business (NASSB), adopt classification that vary from those of the federal ministry of industries. There is however, greater, than the impact of turnover and the number of people employed is greater than the impact on assets of value. For instance, during a depression, there is a tendency for turnover to fall substantially and the number of employees to drop, but assets values may remain unchanged.
From table 2 bellow. SSB are divided into medium scale (MSE) small. Scale (SSE) and micro enterprise (ME). The federal ministry of industries defines small scale business as “any company with operating assets less than 200 million, and employing less than 300 persons”.
A small scale business, on the other hand is one that has total assets less than 500 million with less than 100 employees, Annual turnover is not considered in its definition of an SSB. The national economy reconstruction fund (NERFUND) defines a SSB as one whose total assets is less than 10 million, but made no reference either to its annual turnover on the number of employees. These and other definition of NASS’ the National Association of small – scale business (NASSB), the central Bank of Nigeria (CBN) and other institutions are indicated in table 2.
Table 2.2 definition of SSB by Nigerian Institutions
| Asset value M | Asset turnover M | No of employees | |||||||
| Institutions | MSE | SSE | ME | MSE | SSE | ME | MSE | SSE | ME |
| Fed. Mm of industry | <200 | <50 | n.a | n.a | n.a | n.a | <300 | <100 | <10 |
| Central Bank | <150 | <1 | n.a | <150 | <1 | n.a | <100 | <50 | n.a |
| Nerfund | n.a | <10 | n.a | n.a | n.a | n.a | n.a | n.a | n.a |
| NASSI | n.a | <40 | <1 | n.a | <40 | n.a | n.a | 3.35 | n.a |
| NASSB | <150 | <50 | <1 | <500 | <100 | <100 | <100 | <50 | <10 |
Source: World Bank, SSB country Mapins 2001
For ease of definition in other to coverall classes of SSB, this research will adopt the federal ministry of Judustries definition.
In addition to these definitions, the SSB sector can also be categorized in terms of cluster classification summarized in table 3.
Table 2.3
SSB DUSTER CLASSIFICATION
| Size of firms | Micro | Small scale | Medium scale |
| Skills | Low | Medium | High |
| Technology | None | Low | Medium to high |
| Innovative | Little | Medium | Medium |
| Competition | High | High | Medium to high |
| Products | Retail, arts and crafts, textiles services, e.g. saloons, tailors | Manufacturing, chemicals and pharmaceutical of organized retail | Telecom, it specialized retail services e.g. restaurant entertainment |
| Markets | Local | Local National West Africa | Local and National |
| Links with consulting, organizational and support institutions | Non | Limited in House technical training and some routine functions e.g. legal, management and technical consultancy | Extensive |
| Characteristics | Uneducated but dynamic sole owner | Have technological competence, engage in training and invest in apprenticeship system. Basic education at the very least, high scool various certificate or table technical certificate | Undertake technology upgrading designed adaptations high educated often with a university degree or higher |
2.3 CONCEPT OF FINANCE
The word finance has the some connotation where ever it is used it means liquid funds or cash reserves to be utilized for various purposes.
Finance means reserves to be spend on the development of other essential sectors. But in all situations, the essence of the word remains the same. Its only the degree and magnitude that changes.
Bank and other financial institutions are the back box of any economy and they serve the financial needs of the people by making available loans and other mortgages to let them carry on with their project like buying a car, electronics, home or any other thing. Banks even provide finances to let a person complete his higher education.
- GREATER RETURN REQUIRES GREATER RISK
This is one of the oldest financial concept in the books. It is simple relation between risk and return. Risk and return is one of the most correlated relationships in finance. For return to increase, you absolutely must take or more risk. If there are securities where this is not true, then the one with the better risk return relationship will be bought, and the other will not.
- EFFICIENT MARKET
This is also known as the “good deals disappear fast” phenomenon chance are that if you think you see a good deal because of a news release, it has already been bid up to reflect the news. Other items include arbitrage opportunities. Arbitrage is when an investor can perform a series of transaction and receive a profit without any risk.
Risk free arbitrage some time happens because of market inefficiencies. However, once these opportunities are identified by analysts, they are quick taken advantages of until they disappear,
- TIME VALUE OF MONEY
Money is more valuable the earlier no time you receive the payment. Every moment you wait to receive payment, could have been spent investing that money into the market and earning a return. This applies to small business, negations, payment schedules and other cash flow arrangements.
Getting the money sooner is always a better option than receiving later. Receiving the money also queviates the risk that the paying party will not come through on their side of the contract. Delinquency of accounts can really add some costs to a small business.
- CASH IS KING
Cash in king in finance. Net income, revenue and other forms of measurement for businesses are not nearly as important as the operating cash flows of firm. Cash cannot be manipulated by accounting procedures, and represents an biased bench ark for where the firm stands cash is also the most liquid form of payment and represent only inflations and depreciation. Other forms of payment can possess delinquency risks among other things. When dealing with schedules, remember that cash is the best option for your firm when accepting payment.
ASYMMETRIC INFORMATION
This is the basic theory of asymmetric information. There is difference in knowledge for every security out there. Inside trading, industry expertise and experience generally, lend themselves to a greater wealth of knowledge for analysts. If you think a deal is too good to be true, It generally is. There is no such thing a free lunch in these market, so be careful how much you buy into seemingly incredible deals.
2.4 TYPES OF FINANCE
Types of finance can either be internal or external. The former refers to personal saving where as the latter are the saving of others.
In Nigeria and many other developing countries of the word, capital for investment is generally requirements such as funding workings capital.
BANK TERM LOANS
These provide fixed term finance for longer periods they are often secured by a charge against company assets and require you assign legally binding convenient. However, owning to government” policies of rapid government and industrialization, the bank have been increasingly pressurized to lend long – term loans to small – scale business.
ASSET – BASED FINANCE
This describes financing an asset over its estimated life span using the asset as security for the loan. It can be structured so that the borrower has the sole right to the end of the loan period.
VENTURE OF CAPITAL
There are organization, that specialize in investing in unquoted compare which they believe will offer with offer high returns to investors.
There is strong competition for this type of finance and you should only consider it after assessing all the alternatives
PERSONAL RESOURCES
These include personal savings, money borrowed from family and friends or profits generated by the business
INVOICE DISCOUNTING
Similar to receivables finance, this is usually only offend to larger companies with strong credit management system.
ANGLE FUNDING
An individual invests in a company in return for share in the company
2.5 FINANCIAL NEEDS OF SMALL – SCALE BUSINESS
The first task in business financing is to access the financial requirement of the business both in terms of the amount and in terms of the structure of fund needed.
The typical business requires two types of funds. They are:
- CAPITAL INVESTMENT FUND: These are required for the acquisition of fixed assets life lands, buildings, plants, machinery, and other equipment.
- WORKING CAPITAL FUND: These are short term funds required to finance the routine operation of business to buy new materials, to pay salaries and wages to procure office supplies. Adequate arrangements must be made for both types of funds, it project implementation difficulties are to be avoided.
Many businesses suffer in Delta state because of inadequate provision of working capital. Working capital is the blood stream, which sustains life in business operations. It the flow of that blood is not maintained at optimum, levels, corporate operations with grows an anemic and become vulnerable to all forms of avoidable difficulties.
CHAPTER THREE
- RESEARCH POPULATION AND SAMPLE
For the purpose of this study, the population is defined as all operators of small – scale business (S.S.B) in Diamond Bank Plc.
3.2 RESEARCH DESIGN
The research methodology focuses on the methods adopted in collecting and analyzing data in the course of the study.
This chapter presents the research population and sample, instrument of data collection, administration of instruments and method of data analysis.
3.3 INSTRUMENTS OF DATA COLLECTION
Questionnaire are usually designed in two folds, comprisms of open ended and close – ended questions. In close ended questions, the response called for all limited, this is because the question has been structured and called for specific answers which must be chosen from the alternatives that respondents are provide with chosen from the alternatives questions, respondents are at liberty, to structural their responses to the questions as they choose.
3.4 ADMINISTRATION OF INSTRUMENTS
We can have administration of findings instruments. The two shall be made use of, especially the latter; thus ensures adequate coverage by the instrument as well as designing questionnaire.
On the issue of reliability data that is collected for research, both primary and secondary must provide findings that will be consistent and that can provide similar result when reproduced. The measuring instrument must be stable, dependable and predictable, for it to be reliable
3.5 METHOD OF DATA ANALYSIS
For the purpose of this research, in the analysis of the data collected, the rank correlation method will be used. This is a measure of the correlation that exists between, the two sets of ranks, a measure of the degree of association between the variables that we would not have been able to calculate otherwise.
CHAPTER FOUR
4.1 BRIEF HISTORY OF DIAMOND BANK, PLC
Diamond Bank plc began as a private limited liability company on March 21. 1991 (The company was incorporated on December 20, 1990). Ten years later, in February 2001, it becomes a universal bank in January 2005, following a highly successful private placement share offer which substantially raised the Bank’s equity base. Diamond Bank becomes a public limited company in May 2005, the bank was listed on the Nigerian stock exchange. Moreover, in January 2008. Diamond Bank’s Global depositary Receipts (GDR) was listed on the professional, securities market of the London stock exchange. The first bank in Africa to record that feat.
Today, Diamond Bank is one of the leading Banks in Nigeria respected for its excellent service delivery, driven by innovation and operating on the most advanced banking technology plant form in the market. Diamond bank has over the years leveraged on its underlying residence to grow its asset base and to successfully retain its key business relationships. And like diamond, our strength makes us even more valued and valuable.
Diamond Bank has won several award including the prestigious “Nigerian Bank of the year 2008” the “most improved, Bank of the year, 2007” and “best bank in Mersers & Acquisition, 2006” all by the this day Annual award. We have retained excellent banking relationships with a number of well – known international banks, allowing us to provide a bouquet of world class banking services to suit the business needs of our clients. These international banking partners include city bank, HSBC Bank; ANZ Banking Group; ING BHF Bank AG standard Chartered Bank; Bolognaise Bank S.A; Deutsche Bank; Commerce bank; and Nordea Bank plc.
4.2 FUNCTIONS OF DIAMOND BANK
Diamond bank is a universal bank, offers a full range of banking products and services in retails, commercial, corporate and investment banking. The business is based on strong, enduinis relationships and is driven by innovation and leading else technology. The marketing/ Business, development function of the bank is organized in aw ay that enables us service our circuits in the various market segments optimally.
- RETAIL BANKING
The retail services group has been established mainly to facilitate the provision of services that address some essential service needs of the banks various clients. The Group’s responsibilities include the decision and management, of very strong electronic services delivery channels, and consumer banking products/ services. The group focuses on the provision of superior range of value adding financial products and services that promote the banking and provision of electronic banking services.
- CORPORATE BANKING
The world corporate banking division focuses on the development and management of business relationship, with multinational and local large corporations in the manufacturing, oil and gas, and specialized industries.
The division is to building its innovative thinking to guarantee the provision of creative solutions to its circuit’s business problems.
The objective is to establish strong and enduring relationship.
III. DIAMOND CAPITAL
The division works intimately with our circuits in providing creative and customized solutions to their business and financial requirements.
Our dedicated and skilled professionals work in the teams under corporate finance. Asset management, and project, specialized finance groups to provide the relevant services.
Whether you are a multinational or large local company, institutional investor or a private individual located in Nigeria or abroad our broad. Based financial advisory, financial engineering, investment management and specialized finance services are available to you.
IV PUBLIC SECTOR
Our public sector services are directed mainly at meeting specific needs of federal and state government and their institutions and agencies.
We have a dedicated team banker with specialized skills in public sector finance includes current (expenditure) account services, revenue collection and management services, privatization, project management, management and payment of pensions, letters of credit for public enterprise ministries and government contract finances.
GENERAL SERVICES
The basic strategy of general services is the use of distinct competences in support of diamond bank’s business, there by facilitating the achievement of competitiveness, sustained growth and continued profitability. The main objective of the groups and units is the development of a distinct capability that uniquely leverages a combination of talented people processes, and information technology to deliver sustainable customers service and productivity improvements.
- REQUIREMENTS FOR SMALL BUSINESS FINANCE BY DIAMOND BANK
In line with its tradition of playing a leading role in engineering the growth and development of the micro, small – scale business in the country, Diamond bank plc has finalized plans to lend out the sum of N300 million to this sector before end of April 2009.
In a statement by the bank, it stated that in the knowledge that the economy may be showings some sign of slowing down and understanding the fact that small business are the catalysts for the growth of the Nigerian economy. Diamonds Bank has announced the launch of a new lending product specifically designed to help micro, small – scale businesses.
It is important to not that diamond bank had before now partnered with shell petroleum development company and Grofin of south Africa to float a 39m fund branded ASPIRE NIGERIA to serve as catalyst for the development and growth of Nigeria small scale business (S.S.B). The fund is expected to enhance the operations of indigenous small – scale business through the provision of much needed business development assistance and appropriate finance. The fund demonstrated the interests of the partners in contributions, t the development of S.S.B as a means of enhancing wealth creation in the economy.
- TYPES OF FINANCE GIVEN TO SMALL BUSINESS IN THE BANK
A small business is defined as one which is privately owned, has only a few employees and low sales volumes enough, the number of employees and the capital invested in a business.
- EXTERNAL FINANCING OF A SMALL BUSINESS
There are two types of external financing available for the entrepreneur – debt financing and equity financing. The amount of financing possible is linked to the company’s debt. Equity financing. This ratio reveals that percentage of own funds and those taken as loan. It is easier to get financing for the business is a larger amount of personal funds have been used.
- DEBT FINANCING
Is possible by borrowers from banks, financial institutions, or government agencies like the U.S small business.
Administration all of them are able to provide larger sum for investment .informal channels of financing include family, friends or associates, but they can only provide limited amount of funds.
Debts financing can be in this form short term loans or demand loans that are granted for a defined period, through they can be used for asset purchases. Banks often agree to open a dime of credit which can be used to make multiple payments. Small businesses can even avail of a bank credit card to pay their dues though it is one of the most expensive financing method.
iii. EQUITY FINANCING
Is used on a limited manner for financials small businesses. Equality funding from informal sources include family and friends, while formal channels for equity financing includes venture capitalists, who have large pool of resources in a professionally managed fund.
Equity financing can also be received from angel investors’ Angel investors are rich individual with abundant funds that they willing to invest in a business in exchange for ownership equity. They fall in a category that is between family and friends, and venture capitalists. Angel investors invest heavily in high growth small business.
All types of small business financing increase the chances of the venture to succeed, and ensure there is adequate cash flow for the company to function efficiently.
4.5 ADVANTAGES OF THE LOANS TO THE BUSINESSES
A business loan is a loan that is given out to an incorporated business by a bank. Credit union or other financial, institution. Rather than you being liable for the loan, as you would be with a bank line of credit.
There are many advantages inherent to the use of business loans for your company and some of these advantages are discussed below.
- LIABILITY
Perhaps the most obvious advantages of a business loan is that quite often you will not be held liable for paying the loan back. Because of business loan is made to a corporate entity, if the corporate entity goes being up and is unable to pay the loan, then the corporation will be liquidated in order to help pay part of it back. The corporation is the one that goes bankrupt rather than you personally.
The lack of personal liability with business loans giver you a lot of freedom when it come to managing your business. The minding which no personal liability is present is completely different and that is definitely the most powerful advantage of a business loan.
- SIZE
Another important advantage to business, loan is that size of the loan is often going to be large. IT you have good credit, chances are that you can get a line of credit from a bank worth around &10, 000. While this is a large amount of money there are some businesses that require loans far in excess that amount. If you incorporate your business and so after a business loan however, you can set loans that are easily 10 to 25 times that amount. Business loans are serious and if you go after them you will get serious money in return.
iii. MOTIVATION
There are many people in the world today that love to take about motivation. They love to point to the different things that motivate someone and how a positive motivation of good feeling can lead to hire energy levels and motivation. Well, something else that leads to motivation is the feeling, of self – confidence that comes from knowing that other people believe in your ability to succeed.
Then are few things in the world that can provide as a good a motivating factor as a successfully obtained business loan.
4.6 PROBLEM ASSOCIATED WITH THE LOANS
A loan in terms of small business finance is a sum of money advanced to a business that must be rapid, with interest at some point in the future.
There are some problems associated with loans they are discussed below:
- UNSOUND LENDING PRACTICE
Unsound banking practices have contributed for malting credit administration to S.S.B ineffective. In some cases, credit delivery operations are seen first and foremost as mechanisms for implementing government policy and have not been permitted to operate on stick banking procedures. Often, due regard is no paid to proper to evaluation of feasibility reports expected to demonstrate, the viability or otherwise of projects. Project with high prospects for survival, growth and profitability an sponsored, perhaps because the promoter one well known to be very senior bank officials or sound judgment of appraising officers have, been compromised. Granting of loans to unviable project has translated into non-performing loans, which have played a major role in the distress saga that has plagued the banking industry is recent years.
- SHORT TERM LENDING TENDENCY
Experience has shown that banks in Nigeria engage mainly in short term lending operations to trading and contracting enterprises as against long-term credit to the productive sectors. They argue that since their liabilities are largely composed of short – term deposits. It would be a mismatch of portfolio to grant long – term loans as depositors could call without notice for withdrawal. This attitude tends to deprive SSIS the resources needed for establishment and operation.
CHAPTER FIVE
5.1 SUMMARY OF THE FINDINGS
This research is summarized in five chapters. Chapter one focused on the introductory part of the research, which includes introduction, statement of problem, Aims and objectives of the study, significance of the study, scope of the study and limitations and constraints to the study, The second chapter focused on a review if related literature, concept of small – scale business SSB, characteristics of small – scale business, concept of finance, types of finance and financial needs of small – scale business chapter three focused on the research methodology. Chapter four focused on the data presentation and analysis, Brief history of Diamond bank plc, functions of diamond bank, requirements for small business finance by diamond bank, types of finance seven to small business by the bank, advantages of the bank loans to the business and bank, advantages of the bank loans to the business and problems associated with the loans.
Chapter five contains the summary of the whole research conclusions and recommendation.
5.2 CONCLUSION
The research was on financing small – scale businesses, in Nigeria with particular reference to operators of S.S.B in Nigeria.
S.S.B in general is found to be operated as sole proprietorship in this research, and some others as partnership and this does, not give room for expansion as the death of the owner in most cases as the end of such business.
Furthermore, because of the nature in which they are operated, their source of finance is usually very small and usually from personal saving and loans obtained from fruits and relatives.
The research also discovered that though the operators of S.S.B in Nigeria has felt the need to expand, they on intend to do so through the plugging back of profit made from borrowings. Though they are aware of bank loans and other government schemes, they do not give it much evidence, chiefly because of the negative outcome they have experienced t one time or the other.
A handful of the operators of S.S.B in Nigeria are also un-educated and uniformed and as result, still experience the problem of how S.S.B can be financed from maximum production. Based on the above stated conclusion, the researcher will want to make the following recommendation.
5.3 RECOMMENDATIONS
The researcher strongly believes that if the outlined recommendations are worked upon by the government agencies, banks institutions and the operators of S.S.B, financing S.S.B in Nigeria, will be lot easier and more productivity will be achieved.
- The government, stock exchange and financial institutions should be actively involved in educating S.S.B promoters of the various sources of finance (especially equity type) and benefits accruable from these sources through seminars, conferences and workshops.
- Banks should be involved in providing venture capital to S.S.B they should also be involved in building such enterprises from “Cradle to consiomerates”.
Contemporary framework whereby banks exercise non challant attitude to trouble enterprises and are only interested, in appointing, receiver when such business failed should be modified. Rather banks should be interested in bailing out such enterprises by injecting capital to help restore management, problems.
- The classification of S.S.B by type, viz: manufacturing, commercial, and services should be made use of as a form of ranking in credit allocation. For instance, the manufacturing section should be given priority in credit allocation. This could be followed by services (technical artisans and others) and commercial activities.
- Existing S.S.B and indigenous small manufacturing concerns, with high growth potential (soap making, paper, cello phone bases, kernel crusting firm etc) should break away from present egocentric oviculation of smallness by seeking quotation on the second tier security market thereby requiring potential benefits arising from increased capital and listing. Entrepreneurs of small firm with slow growth rate would have to improve their performance before seeking to be listed.
- Financial institution that deals with S.S.B should re-assess the variable by which they attempt to judge the credit worthiness of the enterprises. These institutions must reorganize that rigid organizational structure in S.S.B of about 100 employees could be handicap rather than an asset.
- Industrial development which was originally, set in 1961 for the purpose of the promotion of S.S.B in Nigeria should organize special follow – up training programme for entrepreneurs that will enhance performance.
- Small and medium industrial development agency, (SMIDA) which was formed to coordinate the development of the S.S.B sectors should map out relevant training for S.S.B along technical accounting, legal, managerial and marketing line.
The government should give a wider publicity or the small scale industrial credit scheme. More so, all the bureaucratic laws surrounding the scheme should be uplifted to encourage patronage by S.S.B operators.
REFERENCES
Casson (1993). The entrepreneurs: An economics Theory, Oxford, London Martin Robinson.
Ekponyong and onyong (1992) “Problem of small business and why they failed”.
Journal of general studies, Bayero University Vol. 3, No. (1995) Financing constraints and prospect” a paper presented at the West Africa substisional seminar on entrepreneur credit, Aera, Ghana: March 15 – 17.
Afonja A. (1999) “The roles of small scale business in Economic development” journal of economic management Vol. 2 No 4.
Ajakaye O. (1998) Conceptualization of poverty in Nigeria seventh annual conference of Zonal conference Zonal research unit or CBN
Bauback (1980) the survey on the status and Needs of small scale business (S.S.B), Report Prospective, college of engineering and technology. Dare Sallam Tangaria
Asaolu D.O (2004) “The National poverty eradication strategy.
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