Full Project – The role of commercial banks in development of small scale business in Nigeria

Full Project – The role of commercial banks in development of small scale business in Nigeria

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It is a known fact that every organization needed funds for it operations. This means that funds is an integral aspect of business, one of the major problems facing business enterprise is inadequate funding for its operation. This is where commercial bank comes in the goldsmiths the fore runners of the modern banking were instrumental in the increase of the money supply. The most important features of commercial banks is the facility they provide for the customer of transferring deposit by cheque the great power of the banks stems from this facility. Banking according to the act of 1960’s section 4 defined “banking” as the business of receiving monies from outside sources is deposited irrespective of the payment of interest and the granting of money loans and acceptance of credit on the purchase and sale of securities for the account of other maturity of the obligation to acquire claims in respect of loans prior to their maturity of the assumption of guarantees and other transaction as the commissioner on the recommendation up the central bank and commercial bank.


Banking activities started in Nigeria in 1982 when the African banking cooperation (ABC) which was essentially an arm of bank note from British treasury since Nigeria was a colony of the British established in 1984 which was later changed to standard bank and now first bank following government indigenization schemes the history of the earliest banking operation continued with the establishment of the Barclay Bank of Columbia now (Union Bank) in 1971. These major foreign banks with branches Nigeria was essentially oriented to provided banking service to the colonial administration and their commercial activities like the royal Nigeria companies among others.


First bank of Nigeria Plc. is the biggest and largest bank in Nigeria (commercial) the bank was established in 1894. The Bank has played the role of granting great facilities to the development of small scale business in Nigeria. The bank has made its policy before the directions Central Bank of Nigeria that some part of the profit of the bank should be set aside for the development of small scale business which the bank has been doing. The bank has financed so many small scale business into “mega business” with the assistance the bank has render small scale business the Nigeria economy has witnessed some level of growth. The bank also provides service that aid small scale business to strive, with wealth of experience from its professional advice are given to young business on how to make head way in Nigeria economy. The bank over the years has been leading in the area of human capital development in order to serve the Nigeria economy efficiently.

The role of commercial banks to the growth of small scale business cannot be over emphasized due to the cardinal role commercial bank play in the development of small scale business. The main reason why commercial bank are involved in small scale business development is the ability to provide tailor made service to small scale enterprises. Commercial Banking in Nigeria started in the 1992 with the establishment of the African banking corporation. Between 1929 and 1952 could be described as the era of banking boom in Nigeria during this period not less than 30 commercial bank were established.

By 1960, there were 12 serving banks operating in the country with a total 160 branches scattered across the nation. The number of banks increased to 19 while branch network continued into the 980s and as at 30th September, 1992, there were 68 commercial banks operating in the country with well over 2,000 branches. Being the oldest unit of the Nigeria financial system, it has been one of the most advanced of the financial institutions. The other financial intermediaries are restricted; both in their capital resources and in their scope of activity, most of them are new development. This gives the commercial bank edge over the other particularly saving banks, merchant banks and mortgage banks in collecting deposit and extending credit to the customers.


It is known that the banking sector play a vital role in Zamfara State economy. However, there are particular problem which made us study the role of commercial banks as our major areas of project. Some of these can be mentioned in under to find possible solution to them. The inefficiency of commercial bank have been attributed to some problems such as:

  1. There is a shortage of experience and highly skilled local personnel in most states. This makes it difficult for some state in Nigeria to have most of the control of banking in Nigeria hands.
  2. Another major problems is that many businessmen cannot offer collateral security when they wish to borrow from banks. Very few Nigerians can offer as securing a life insurance policy stock and shares. Those Nigerians with land often do not have title deed to it. Sometime land which jointly owned create problems.
  3. Many banks do not lead freely because borrowers often do not make repayment in time. This is partly due to the fact that borrowers do not keep accurate financial record and item this budget properly.
  4. The need to enhance the profitability and liquidity of the rural bank branch.
  5. Commercial banks have nearly all their branches, in town and cities. The country side has few or no banks, thus the saving of many people cannot be put in a bank loans,
  6. The effect of government policies in the growth of commercial banks.

To enable us have basis guide for carrying out this study, we have chosen to operate within frame work of a few predictions.

  • There is a positive relationship between a strategically managed organization and its level of performance.
  • That insufficient knowledge of some manager about strategic theories usually hinders organizational efforts.
  • Commercial banks always avoid lending money
  • Lending in commercial bank is only for the big time businessmen
  • Desire to lending in commercial bank base in favoritism

The study is mainly concerned with an investigation into factors that are responsible for the initially of most small scale business in Nigeria to realize what they initially started in their original plans particularly in an unsuitable Nigeria business environment. The problem of the researcher encountered in the course of carrying out this research work limit the study and this is as a result of response given to the question and other information requested for by the researcher. In carrying out this research work the researcher were faced with a lot of obstacles or limitations. Some of these obstacles are international while other were not. The limitation are briefly discussed below.


The researcher was faced with lack of money the research traveled far and near to obtain the material needed for this work this entitled a lot or form of money.


Days set aside for carrying out this research work too slim and the researcher are also faced with other academic work.


The materials use are not enough for the research work since libraries contacted are not well equipped.


In any research work there must be some significance which the society will derive at the end of the whole work.

The following are some of the significance of the research work.

  • The research work will bring increasing the existing knowledge of the people in society.
  • Through the research of the people of the society will of course know the right time to operate with organization
  • As a result of the research work, people tend to know whether the organization that there is unlined or not. As the case study makes us to understand that there is unlined then people will have the access of sending and transferring money from of its branch to the other branch of the bank.
  • It will act as a reference for the incoming student
  • Without it one cannot finish his/her national diploma
  • Through this research work, people can be able to know the organizational structure of First Bank Plc.
  • Through the research work the society will be able to know the historical background of the case study.
  • This research will give or prepares the student concerned for possible employment. One can be employed into a job because of this topic.

ROLE: Oxford advanced learner’s dictionary defined role as the function or position that somebody has or is expected to have in an organization, in society or in a relationship

COMMERCIAL BANK: P. Oladenfe Ojo defined commercial bank as any person who transact banking business in Nigeria and who business includes the acceptance house of deposit withdrawal by cheque.

  • Areoye Oyebola (1978) commercial bank accepting depot and lending money to the public.
  • Ewa Non in (1978) also define commercial bank as financial institution that accept deposit of money and repay cash in demand.

DEVELOPMENT: development can be defined as a process of producing or creating something or more advance.

SMALL SCALE BUSINESS: John Hunter defined small scale business as a business with little capital that is owned and managed by an individuals.


SMALL SCALE ENTERPRISE: It can be seen as a business which is independently owned and operated by one person, and is not dominant in it field of operated in local area.

COMMERCIAL BANK: It can be seen as “a Financial Institution set up for keeping and lending money to people, owned by individuals, organization or governments, for the main purpose of making profit.”

BUSINESS: All profit seeking enterprises that produce goods and service necessary for economic growth.

MANAGEMENT: The activity of controlling and organizing the work that a company or organization does.

ENTREPRENEUR: An individual who conceives an idea for a new product or service and finds some ways of raising capital to form a business.

MANAGER: Officer who supervises and is responsible for the functioning of business all the time.

CAPITAL: It could be fund, goods, or money needed to start and operate a business. Capital could include the equipment’s used to manufacture goods

BANK: It can be seen as an institution set up purposely for safe keeping of money, valuable goods and documents like wills and others. It’s could be seen as a places where money is until the owners requires it.

DEVELOPMENT: it can be seen as an increase in income per capital and financial side of people, social and administrative structures as well as social behaviour and attitude of people’s including sometimes the people’s customs and beliefs.


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Full Project – The role of commercial banks in development of small scale business in Nigeria