CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Financing is always very important issue in investment decision. A ready question that always proceeds project concernment is “How do we finance the project” even an impressive viable and feasible project can only achieve the business virility expected of if after the issues of financing haws been firmly and adequately resolved.
The need tom make finance available to small-scale industrialist cannot be over emphasized to reduce the problems faced by this sector: it has become imperative to link item to all known sources of funds. Finance is very vital to any organization and small-scale entrepreneurs are not left out.
This type of study has become necessary now that renewed interest is being shown in the development of small scale industries in the development of small scale industries in economic development, particularly in a developing economic like Nigeria where efforts are being made4 at indigenization of the Economy. This vital role of the small-scale industries, which include the creation of employment opportunities, the mobilization of local resources, mitigation or rural urban migration and the achievement of a more even distribution of industries enterprises in different parts of the country. This makes it important to make finance available to small-scale industries.
Among these available sources of funds are government agencies of which NACRDS (Nigeria Agricultural co-operation and Rural Development Bank) is one.
It would be interesting to find out the extend to which NACRDB has gone to achieve its objective.
NACRDB was set up by the federal government of Nigeria in 1989, legalized by decree No. 2 of 1989. The fund was to provide both local and foregn currencies, inform of loans to entrepreneurs through participating banks. The fund came into being to address some problems of financing faced by the small and medium scale enterprise in sourcing for funds through banks such as difficulty in passing through stringent selection process of banks since the banks are only willing to commit a small amount to medium, long term loans
To correct these observed inadequacies in medium and long term financing and sourcing of foreign currencies. NACRDB according to its bulletin is set up to mobilize financial resources that would enable small and medium scale enterprise eligible industrial and Allied enterprises have better access to medium and long term loan facilities to help them acquire their fixed assets such as machinery and equipment.
These objectives of NACRDB are laudable if really implemented as planned.
1.2 STATEMENT OF THE PROBLEM
As we all know, finance is a very vital resources and serious constraint to development in any establishment or organization. Capital is needed to improve the position of any firm since it is used to purchase the needed raw materials machines, to pay for qualified personnel and to carryout other necessary transformation.
Indeed studies here shown that most small scale enterprises start their line without any institution help. The entrepreneur usually obtains the small amount of money he needs from his own savings or from his family or friends.
1.3 purpose o the study
The purpose of this study is to this study is to critically examine the sources and management of funds available to various small-scale entrepreneur, if so that to find out if any is lacking behind in its duty to utilize the various sources o fund by way of comparing them.
The study will also examine the debts on revenue allocation as it affects small-scale enterprise.
1.4 RESEARCH QUESTION
i. What kind of business are you engage in?
ii. How much loan did you ask for?
iii. What collateral did you provide for the loan?
iv. Did you attach a feasibility study to the application?
v. Was your application for loan approved?
vi. If it was not, what was the reason stated?
vii. What was your view of the application being corned down?
viii. Do you keep financial record?
x. If yes, how many financial records do you keep out of the following requested banks?
xi. How many professionals do you have, who are working in your organization?
1.5 SIGNIFICANCE OF THE STUDY
The study on financing of small-scale enterprises based on NACRDB as an alternative source is significant to the promoters of the industry generators (banks and to NACRDB is an institution, also the general public and government). At a time like this when the country is trying to fund the path to join the enviable. However small-scale enterprises find it difficult to grow with the opportunity to borrow from financial institution: especially in financing long-term projects.
An industrial project has a long-term maturity period and to finance such enterprises or fund firms require long-term source of funds instead of short-term funds often provided by commercial banks. The commercial banks by their nature have loan able short term basis create a deposit loan maturity gap a the owner of such deposit can call for their money at short notice.
1.7 DEFINITION OF TERMS
Some technical works and terms here been inevitably used in this research work.
The need to explain them in order to enhance the understanding of the whole texts arose some of these terms are as follows.
- SOURCES:- This mans a way through which information can be gotten or obtain from.
- BUSINESS:- Business is any organized activity or scheme undertaken by a person or persons with a view to earn a living.
- CAPITAL:- This is the money needed to set up a business
- MANAGEMENT:- This means getting things done through with people management is the accomplishment of desired objectives by establishing an environment favourable for performance by people operating in organized group.
- GOVERNMENT:- This means a group of people who govers a country or state it also means the set or process or governing.
- INVESTMENT ADVICER:- Financial professional who specializes in making portfolio recommendations for clients.
- NACRDB:- Nigeria Agricultural Co-operation and Rural development bank.
- MANAGER:- A person who makes things happen with an organization through the effect of other people.
- INDUSTRY:- Is the collection of various firms to form a unit.
CHAPTER TWO
LITERATURE REVIEW
2.1 BUSINESS FINANCE
Finance has always been an important issue in management decision making as such, it is important that we have a clear picture of what business financing is to do this we shall consider in a broaden perspective with constitutes financial management. Business financing can be taken from various dimensions, but form any angle we look at it two basic points always stand out.
Kreps and Waett (1996) defined a financial administrator as a management personnel whose major role is planning and measuring a business firms needs for fund raising the necessary funds and then putting the funds acquired into effective use.
Pandy 92001) on his part defined financial management as a managerial activity which is concerned with planning and controlling of the firms financial resources” he regard the finance function as consisting of acquisition of funds generation of returns with these fund and the payment of returns or dividend to the suppliers of funds.
In an almost similar vein, Hargreaves and Smith (1981-2) posted that “financial management is concerned with the overall planning, control and allocation of money” which they considered as the common commodity necessary for all commercial transactions. From the view of the various authors, we can say that financial management includes the management of the total financial resources available to the business the management of the business within these resources and all aspects of decision whether to invest or not.
It is evident that financial functions one of the major functions of the firm. Authors like Osaze and Anao 91990) regard financial function as aspiring to cooperate with the other functions of marketing, production, personnel and accounting in the pursuit of organizational goals.
Business financial can therefore be regarded as the sourcing acquisition and utilization of fund for successful running of business enterprises. However in practices, this may include all the activities involved in ensuring that the secured finances yield the desired returns.
2.2 SMALL SCALE BUSINESS
Size is relative depending on the individual’s point of view. A company may be big when taken by it and yet be small when compared with the other companies in the same industry such as a company would therefore can constitute or be categorized as a small business.
There is hardly any unique, universal accepted definition of small-scale business because the classification of business into small and large scale is a subjective and qualitative judgment (Ekpenyoung and Nyong, 1992) rather, each country tends to define this category of enterprises based usually on the peculiar needs of public policies. Even within a country the definition changes over time depending on circumstances and specific objectives of institutions. There are however, s ome common indication in most definitions. Namely, the size of capital investment (fixed assets). Values of annual turn over (gross output) and number of paid employees. The popularity of the three indications derives largely from their ease of measurement.
SOURCES OF FUNDS FOR SMALL SCALE BUSINESS. A CASE STUDY OF NIGERIA AGRICULTURAL CO-OPERATIVE AND RURAL DEVELOPMENT BANK
