INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Banking activities came to Nigeria for the first time in the year 1892 when the Africa Banking cooperation was established. Development in Nigeria can be divided into five phases namely:
1. The free banking era
2. The pre central era
3. The era of banking legislation
4. The era of indigenization
5. The post Okigbo era
The Nigeria small and medium enterprises (SMES) and bank was incorporated in the 1970s and fall within the era of indigenization with the aim of financing small and medium enterprises in Nigeria economy. The Nigeria small and medium enterprises and bank is a development finance institution specifically set up to deliver credit to small and medium enterprises in Nigeria. This is carried out through the provision of loans to individuals, limited liability companies cooperative organization etc. in addition, banks provide financing by directing investment in the equity capital of major small and medium industries. The activities of banks also geared towards assisting in improving the income and welfare of small and medium industries owners in Nigeria promoting rural development as well as increasing the nation output of goods and cost to meet the needs of rapidly increasing population in Nigeria. The banks policy was modified to embrace the challenges of small and medium industries owners, green revolution programme, the small holders direct loan scheme and on lending scheme for the river basin development authorities. The bankers committee is a body constituted by representation of banks in Nigeria. The scheme was approved at their 246thmeeting held December 21, 1999. According to them, this was a response to federal government’s concern and policy measure for the promotion of small and medium industries (SMES) as a vehicle for rapid industrialization, sustainable economic development, poverty alleviation and employment generation. The scheme requires all banks in Nigeria to set aside 10% for their profit tax (PBT) for equity investment in small and medium scale industries which commenced on June 19th 2001.
1.2 STATEMENT OF PROBLEMS
The Nigeria small and medium scale industries (NSMSI) have important role to play in the development of the economy. Despite the roles, small and medium enterprises are faced with problems regarding from the inadequate resources to finance their projects and inability or perhaps the unwillingness of recipient of loans to services or repay their loans.
1.3 PURPOSE OF THE STUDY
The purpose of the study is to find out the roles of banks in the development of small and medium industries in Nigeria and further find out the roles of small and medium enterprises SMES in the development of the economy. The study will also find out the problems encountered in the process of securing loans and possible ways of solving the problems.
1.4 SIGNIFICANCE OF THE STUDY
The result of the study will show the functions and the roles of Nigeria small and medium enterprises and banks to the development of small and medium industries in Nigeria. Also, the result of this will inform the management of small and medium industries and banks to improve on the proportion of loans granted to the owners of small and medium industries and individuals. Furthermore, it will enable Nigerian small and medium industries and banks to adopt another strategy which enable them to better the release of loan able funds in order to achieve greater efficiency in the management of small and medium industries in Nigeria.
1.5 RESEARCH QUESTION
The following research questions shall be the primary focus to this research work:
a. Do small and medium enterprises SMES have important role to play in the development in the economy?
b. Are banks faced with difficult in recovery ofloan from recipient (SMES) in Nigeria?
c. Do small and medium enterprises faced with inadequate resources to finance their project?
