CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Commercial Banks and industries synonymous as the growth of one is enhanced by the other. Precisely, Banking is an accent business. There were banks already in the accent Babylon during the Classical Civilization particularly in Rome. But modern banking started in Italy where bankers apart from buying and selling of foreign Currencies also took demand time deposits. This banking habit remained in Italy and other developed nations until in 1894 when British Bank of west African (BBWA) now called first Bank of Nigeria Plc was established in Lagos. Then in 1917, Barleys bankLtd. Now know as Union Bank Plc was established to challenge the monopoly of BBWA, Union Bank has the largest number of branches located all over the country Onitsha metropolitan is enjoying five healthy branches of \union Bank.
In the same vein the industry is as old as Man on earth. Eventhough the inception of industrial revolution which scattered industries to all nooks and corners of the World claimed to be the originator. Onitsha as the World industrial and commercial heart of the nation was not left out in this regard. With good communication and banking networks, a lot of industrialists potential ones are attracted from all work of life to locate their indutrice here in Onitsha, consequently, it will be understood in the subsequent chapters that the abundant assistance rendered to the industrialists by the commercial banks to a large extent helped in the development of Onitsha at large. Though both Bankers and Industrialist are a time faced with problems. And this thesis made honest attempts to expose some of the problems and recommend possible way of arresting those problems.
The ancient Commercial and Industrial City called Onitsha and her inhabitants were noted for their commerce, prior to the advent of the colonial master (Britain) grafting and farming were the major occupations of Onitsha. Onitsha since that period was rural area until late 40s when the glorious wind of Nigeria independence started to blow. Interested readers may like to know where Onitsha was originated. But for the purpose of this research work, the situation, does not occur for such. The present Onitsha which is made up of Onitsha North and South Local government Areas was carved out of old Onitsha division with headquarters at Onitsha the current Onitsha South Local Government area where the bank in question is located was with .its headquarters at Fegge in 1993. While Onitsha North local government area still maintains its original headquarter at Awka Road Onitsha. However, for the purpose of this thesis, the two autonomous local governments that made up Onitsha should be treated as a single entity Onitsha is situated about 60km South West of Awka the Capital City of Anambra State. A city with a population of over one million has about the biggest market in the West Africa known as Onitsha Main Market.
In the first stage of this thesis, we did say that banking is an ancient business. Even before the outbreak of industrial revolution, there were banks in the ancient city of Babylon. But the system of their operations were very crude. At that time, the procedure was that the demand deposits were usually transferred ovally by the owner visiting the bankers, who sat behind his bench or table though cheques were not yet known. Thus the current term “bankruptcy” comes from the Italian custom of breaking the bench of the banker who could not pay off his creditors. The most famous of these grew at of the customer of Goldsmiths, who took gold and silver from customers for self-keeping. They later discovered that they could lend such coin out and a certain proportion as revenue since not all customers came in for reportion as revenue since not all customers came in for repayment at the same time. To make this transferable, Goldsmith issued the receipts in round number forms. Thus serving as primitive bank note, but repayable on demand by the bankers in gold or silver. Hence, we can say that goldsmith note becomes the precursor of modern bank note and goldsmith becomes the forerunner of modern banking.
Banking in Nigeria dates back to 1894 when the British bank lof West African (BBWA) was established by taking over corporation itself established two years earlier in 1892 since that time; the foreign banks dominated Nigeria banking scene until 1913 when the national bank of Nigeria enraged to becomes the first indigenous bank in Nigeria, however the origin of British bank of west Africa (BBWA) which later changed its name to standard bank of Nigeria Ltd. and currently to first bank of Nigeria, plc cannot be treated in an isolation of elder dempster. Elder demposter line which name as become synonymous with shipping and maritime trade in west Africa subregion was named after Alexander elder and john dempster.
In 1899, Anglo- African Bank was established at Calabar by the Royal Niger Company. The bank changed its name to Nigeria Ltd. But was later bought over in 1912 by BBWA. In 1917, Barleys bank Ltd. now knows as union bank Plc was established to change the monopoly of (BBWA) it was remarkable that between 1929 – 1952 many indigenous banks were established but most of them collapsed under misadministration.
BRIEF HISTORY OF UNION BANK OF NIGERIA PLC ONITSHA.
The bank was incorporated as barleys bank of Nigeria limited on March 14th 1969 it was changed to union bank of Nigeria Ltd. Union bank Onitsha branch was established on March 1979 with about seven staff. Through dint of expand. Today the branch has a total of staff of about fifty-three with Mr. M.E. Ezeigbo as the branch manager. Moreso, the recent problem of distress facing some of our commercial banks especially our new generation banks, there is every tendency that the banks number of customer continue to increase infact, union banks stated no as a chance phenomenon rather for the basic social and economic needs of society. The needs especially as concern industrialists in no small measure will be seriouly looked into in the next stage of this thesis
1.2 STATEMENT OF THE PROBLEM
Commercial banking is in the service industry. The quality of service rendered by our banks have been attracting criticisms from people in all works of life. The government functionaries, industries, the media and the general public are all very critical of banking services. The complaints range from those of long delays in cashing cheques, tan. Diness in granting loan and or credits unfriendly attitude of banks workers. As early as 1943, Dr. Nnadi Azikwe said that I was frustrated because of the shoddy way and manner the manager of the Marine branch of the bank of British West African Limited treated me with rebuff. Not only did he keep me standing in this office for some minutes, he was curt and condescending as if I was seeking for favour. Naturally my pride was hurt and it downed on me that the struggle for Nigeria freedom had many fronts, and that political freedom was not enough, economic freedom must be won also, most banks do not put their customers in the prime place as they \are supposed to be.
1.3 PURPOSE OF THE STUDY
From the little explanation made above, there is no doubt whether Onitsha is the home pride of technology, but there is every need to trace the extent the bank in question has contributed to the development of industries in the Onitsha. Before we proceed, we shall explain to the interested readers the two concepts development and “modernization” for purpose of charity. In this sense, for a society to be said to have developed, it must first and foremost be seen to have inherent potentials development hence development process synonymous with the potentials that bound in the society. But in modernization we talk of mere artificial decoration of towns and states with usually two rapid in native. Having taken a radical look at the two. Confusing concepts that is “modernization” and “development” attempts made to analysed the expressions that will enable us to know.
i whether Onitsha industrial Layout has developed.
ii What factors are responsible for that ?
iii And to what extent has the bank gone in industrial development in
Onitsha ?
iv what are the problems facing the industrialists as regard finance ?
v how does industrialist obtain loan from the banks ?
vi And what are the problems facing them in paying back the loan ?
vii He default in loan repayment had any adverse effect(s) in the banking
business ?
viii And if so, what are the problems and the best solution to that ?
Attempts to answer all these questions will enable use to actualize whether union bank has helped in development of industries in Onitsha. For the purpose of charity and simplicity, the above questions in (i) – (vii) will be answered in detail in subsequent chapters.
1.4 SCOPE AND LIMITATION OF THE STUDY
The topic the role of commercial banks in the industrial development of Onitsha, is aimed at liberalizing the minds of the industries on the best means to organize and utilize loan granted to them by banks judiciously baside, the need for the industrialists to adhere strictly to the credit terms credit period cannot be over emphasized as loan funding services as till that lubricates the industries. On the other hand, banks should carry out heavy enlightenment campaign to educate some of illiterate industrialists on how best channel their request to the banks for easy handling. This could be done by organizing seminar, workshops, visitors e.t.c. to the industrialist and potential ones. Also, this thesis mounted an intensive research on common features of commercial banks, function and activities of commercial bank. Types of loan and measures for security such loans will also be treated in detail sources of fund and loan advantage will be discussed.
Finally, some problems facing both commercial bankers and industrialist regarding loan were also focused.
1.5 SIGNIFICANCE OF THE STUDY.
When we talk of the significance of the study, we mean the benefits to be derived in researching the case. To this end, on completion of this work, industrialists and potential ones will take advantages or the research exercise to know the simplest and cheapest means of fund sourcing through the banks for rapid development of heir industrial. Moreso, they will benefit from the expert ideas and advice of the banks to obtain greater height in their business.
1.6 DEFINITION OF TERMS
For the purpose of clarity and simplicity, there is every need to define some of the terms included in this topic. For easy understanding. Such term as “Role”, commercial bank; industry, and development. According to universal English Dictionary, Role is defined as part or function assumed by a person in any action or proceeding, world book dictionary volume two see ‘Role’ as a part played on real life or function assumed by any person or things, the above definition enable us to conclude that ‘Role’ is a function or part played. By any person in any form.
The banking decree in 1960 sees commercial bank as acceptance house and finance institution, it further states that any person who transacts banking business and whose include the deposits and withdrawals by cheque, these definitions help us to define commercial banks as acceptance houses and deposits and withdrawals by cheques. Dr. L Ocho in his work defines industries to mean diligence and habitual employment in useful work, branch, or manufacture.
WEBSTERS New Collegiate define industry as a habitual employment in a useful work involving a skill that is mostly concerned in a particular business. According to Ronald fletchers ‘development’ can mean the actualization of an implicit potentiality the simplest example being the patterned growth and maturation of seed, or an initial germ-cell, to the full adult form of individual plant or animal or human being without stipulating at this point, any thing too weight or too prices this can also certainly seen top apply to man and his social situation. Development according to universal English dictionary is defined as the act or process of causing to develop, engaged in the development ones business, state or process of developing, growth, evolution, gradual process and expansion from these, we define development as a gradual means of advancement especially in our day today activities. However, in our next chapter, we are going to have a classical review on what people have said about this topic (Literature Review) common features or commercial banks in Nigeria, functions of funds to commercial banks, sources of funds to commercial banks types of loan and how such loans could be applied. Moreso, the importance and problems associated with loans should be discussed.
