BANKS PARTICIPATION IN INDUSTRIAL DEVELOPMENT IN NIGERIA THE NEED FOR INDUSTRIALIZATION
The mounting faith of the future of economic couple with over expanding population of the requires different attitude and plans from these filled to be a stable economy.
This situation is however, not unconnected with the atomically rise in our nation development plans (i.e from 1 billion in the period of 1962 to N82 billion in the fourth plan period of 1985 or a cumulative of N120 billion between these year and the notice development of industrial concern located in different parts of the country. It is against this background that it becomes necessary at this explicably manifest the important role of industrialization could play in the economic development and stability of this great nation Nigeria.
The need for industrialization could be viewed from the following perspective:-
Diversification of the nations economy
Acceleration of economic development
Ensures expert expansion development
Stimulation of foreign exchange earning and international recognition with this international recognition, awareness and respect other countries will like to come in and invest in these countries since the investment will take the form of acquisition. Bill financing do banks use a method or any other related financing house for the purpose of providing cash to exporter and importers. A bill of exchange may be thought of as like a post-dated cheque which can be sold for cash at a discount.
It enable the seller after an exporter of good to be obtain cash from then as possible after their dispatch and yet allows the buyer (importer) to differ payment until the goods reaches him or until he had time to process and market the goods. Factory as a method of finance in continuing company (usually banks) purchases all they arises providing a ledger sales accounting services and relieving the business or the firm from debt collection and in this way providing cash for this day today needs. Easily payment by the factor to the firm of a substantial percentage of the value of his trade credit to his customers from his own resources. Invoice discounting on the other hand is a means of generating cash by the seller to invoice discounting house or company (usually banks) wither a selection of invoice on the firm’s ledger debtor or an entire sales ledge. The client agrees his requirement with discounting.
Company and which debts obligations are to be discounting, after which he get his cash instantly his discounts. Most often borrowers are more especially illiterate industrialist do not know the actual amount they required to make them reach their target. This is a dangerous situation because if the actual find required is not known, the amount invested may not lead to expected result thereby making the loan a problem bank, have devise a mathematical means used for determination firm with the help of firm balance sheet and given the projected revenue from sales using his formulas, the external required can be ascertained. A leased is a means by which a firm can acquire the economic use of an asset for buying industrial equipment for the benefit of enjoying their capital allowance and reduced taxes.
2.1 THE ROLE OF INDUSTRIALIZATION
Before I will go in enumerating the roles of industrialization, it will be extremely good for us to know that “Industrialization” means According to ALAM B. Mant. Joy, in his book titled industrialization and development of countries. It define industrialization as the means of developing the manufacturing industries apply services and technology in order to provide work for the growing population and to raise the standard of giving of increasing for capital income and to improve balance of payment.
Industrialization also, aimed at import restriction and increase export. Thus, Nigeria was very much unlike the colonial master because she did not have to develop her human and material resources.
While Britain through research and scientific discoveries developed her industrial base. Undoustly, most developing economic like Nigeria, are characterized by a high degree of subsistence production with very limit technology as a result of which her manufacturing industries is relatively low and agricultural industry paramount. To this and all the sector of economy, as to raise labour productivity and ensure optimal utilization of available resources for development.
Moreover, according to oritiechanbalg in his work, banks participation is industrial development of Nigeria. It should be noted that there is no dust ceiling to the degree of possible industrial development but once the resources in a given economy are still under utilized.
From the view of the above and in the general position of things, industrialization contributes immensely towards the development of any country or state. It also identified with and evaluates the services rendered by banks as to ascertain the adequacy of industrialization in Nigeria. To achieve this, we (researcher) will undertake the project work by making a case of Enugu State where industrialization has to developed the State and as well her citizens. In pursuance of Primary and Secondary Technical know how of data collection. It was observed that some of the industrial these service rendered the industries only exist in theory short coming in the services of their banks in the state.
- THE NEED FOR BANK’S INVOLVEMENT IN INDUSTRIALIZATION
Some advantage, Nigeria will enjoy if industrialization is intensive pursuer have been outlined. However it should be borne in mind for these wish or dream to be realistic, all hand most be on deck government polices and programs have to be remold and directed to accommodate intensive industrialization. To achieve these great emphasis must be placed a theories, study group that recommendation and the ultimate government polices has been postulated to look very appealing but sooner than late it is realized that policies could not be translated into action due to its, inconsistence with Nigeria environment with the effect that the ultimate result becomes zero.
In Nigeria, some of the polices which the government should propounded to sound very active if industrialization and other business activities will grow are private property ownership a system of rewards and incentives, freedom of people and market while down playing hindrances such as sectionalism and political bigotry. Nigeria bankers will contribute their quota of market activities of their policy of banks involvement in industrial sector because of their importance in the economic development of the country.
A vital necessary ingredient for industrial establishment and growth is capital formation. Capital formation is basically of two phased process that is saving and investment. These have been a monopoly of banking in Nigeria. Savings are often associated with other commercial banks whose function is to collect the saving of many individuals and put them to productive life. Similarly, this means channeling the funds (money collected through savings). There can be no good without capital goods. It is basically against background that an attempts should be indispensable employed for the benefit of industrial growth of the economy.
The first services rendered by these banks to the industrial. Sector is the allocation of capital. This is important because an industry to be established an unturned to maturity it needs capital formation and as monopolist in saving and investment (ie capital formation) this becomes the only source from which this very much need could be raised capital here refers to short medium or long-term money loaned for long period of time for the aim developing the economic industry of the nation.
Another important services which bank render to the development of industrialization in Nigeria is the monitoring of credit advance to customers.
- THE PROBLEM OF INDUSTRIALIZATION AND INDUSTRIALIST IN NIGERIA
In pursing industrialization industrialist often encounter certain fundamentals which militates general against their effort to establish and attain result have been discovered but their solution still pose a problems in the economic circle and research units the country, basically, because of the dictates of the environment which these industries operates.
Recently the director of research, central bank of Nigeria identities the problem confronting industrialization in the country as financial managerial, technical and commercial problem. These problems limit their (industrialist) potentials contribution to the development of the Nigeria economy. It out that the financial problem have been well articulated in past and arise primarily form the small entrepreneur own limited capital and resources of organizational financial sector.
He said that the management is due to the entrepreneur limited in education and training as well as the inability to purchase expert advice. Technically, problem as said arises from the limited access to modern equipment and lack of the knowledge of project appraisal while the commercial problem consist of their inability to organized market surveys and distribution channel of the products.
Based on the above, and for the benefit clarity and down to earth explanation, the problem of industrialization can be discussed under the following headings as follows:-
- Lack of collection restricting for intending borrowers
- Lack of conservation attitude of people concentration of banks in the urban areas.
- Fraud among workers and customers of bank
- Factor that affect credit creation thus central bank controls the amount of cash available to a bank credit worthy borrowers.
- Establishment finance
- Operation problem.
- Level of man power requirement
- The industrial knowledge of industrialist.
The prospective industrialist need fund in the form of capital required to set up the industry. In Nigeria, this has been the problem of industrialist wishing to comment plan into action rather persistence planning without action. To raise these capitals the industrialist has three main sources of funds. He could invest the money over the years borrow from the public through the issuance of shares, debenture and bond. He can equally borrow from the banks directly and banks include all financial institution that undertakes their business of lending. The bank however is the most acceptable source of finance basically due to their monopolist business of the capital form motion (saving and investment). To the there industrialist turn for capital, this capital or finance is granted to him in the form of loan, which could be short medium and long-term loan but normally medium term loan. To get loan, the prospective industrialist have to convince the bank he has super project in view of the fact that the banker has a duly to protects depositor fund and ensure that they are invest will digested viable project that will be able to guarantee the repayment of the loan and interest.
The predicament of the financial problem which the industrialist faces at this stage is caused by the policy of banks has led to the introduction of management style similarly to that obtained from the government department.
One of the problems bending industrialization in Nigeria has that of operation circulation operates. These problem, though could look insignificant, but it is not taken care of will devastatingly militate against management of these fund obtained from the banks and as granted, they considered before a loan is granted they will seriously affect the general performance of the business and could lead to their inability to repay the loan. The problem which ranges from industrial location problem also prohibition clustered on him by the country legal system. In many situations, the problem which the knowledge required for establishment and profitable running of an industrial venture.
Also, the background of entrepreneur engaged in small-scale industries is varied. Some have considerable experience in distributive trade and have only move into producing those goods, which are therefore their stock in trade. Others however, has adopted completely new lives and has only lazy knowledge of the production, which they produce. They are yet others who graduated from being small craftsmen to small-scale industrialist by increasing their equipment achieving a higher level of mechanization and as the same time increasing their labour force.
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