The Role Of Bank Of Industry Towards The Development Of Small Scale Enterprises In Nigeria




This research work is conducted on the role of bank of industry in the development of small and medium enterprises (SMEs). The aims and objectives of the study is to analyze the various role played by bank of industry in developing small and medium enterprises as well as the activities of government policies, such as provision of infrastructural facilities provision of local finance facilities, funding of industries and institutions like SSICS, CIRD and FIIRO. The researcher uses the questionnaire and interview method to collect the data from the respondents. The analysis and crossed tabulation of data gathered were done using the mean statistical method with the 1-5 Likert rating scale for proper accuracy in arriving at a dependable decision rule. Lastly the researcher concluded that, the bank of industry was able to maintain its customer because they do welcome whatever kind of financial assistance, therefore, he finally recommended that, the government should also endeavour to appoint the workers to teach the entrepreneur who does not have the advantage of attending seminar or workshops especially the illiterate ones and keep supervising them in right way.



Title page    -        -        -        -        -        -        -        -        -        i

Declaration  -        -        -        -        -        -        -        -        -        ii

Approval page       -        -        -        -        -        -        -        -        iii

Dedication   -        -        -        -        -        -        -        -        -        iv

Acknowledgement -        -        -        -        -        -        -        -        v

Abstract       -        -        -        -        -        -        -        -        -        vi

Table of contents   -        -        -        -        -        -        -        -        vii

CHAPTER ONE: Introduction

1.0             Background of the study -        -        -        -        -        -        1

1.1             Statement of the problem          -        -        -        -        -        -        3

1.2             Objectives of the study    -        -        -        -        -        -        4

1.3             Significance of the study -        -        -        -        -        -        5

1.4             Research questions          -        -        -        -        -        -        -        8

1.5             Scope of the study -        -        -        -        -        -        -        8

1.6             Limitation of the study   -        -        -        -        -        -        8

1.7             Definition of terms          -        -        -        -        -        -        -        9

CHAPTER TWO: Literature Review

2.0     Introduction -        -        -        -        -        -        -        -        11

2.1     Conceptual Framework of small and medium  enterprises -        12

2.2     Definition    of small and medium enterprises        -        -        -        14

2.3     Reasons for small and medium  enterprises   -        -        -        20

2.4     Reward for entrepreneurs -        -        -        -        -        -        21

2.5     Bank of Industry   -        -                  -        -        -        -        27

2.6     Government and small and medium  enterprises     -        -        29

2.7     Summary of Review        -        -        -        -        -        -        36

CHAPTER THREE: Research Methodology

3.0             Introduction -        -        -        -        -        -        -        -        38

3.1             Research design     -        -        -        -        -        -        -        38

3.2             Area of study         -        -        -        -        -        -        -        39

3.3             Population of the study   -        -        -        -        -        -        39

3.4             Sample size and sampling technique   -        -        -        -        39

3.5             Instruments for data collection  -        -        -        -        -        40

3.6             Validation of the instrument     -        -        -        -        -        40

3.7             Reliability of the instrument     -        -        -        -        -        41

3.8             Methods of data collection        -        -        -        -        -        41

3.9             Method of data analysis   -        -        -        -        -        -        42

CHAPTER FOUR: Data presentation and analysis

4.0             Introduction -        -        -        -        -        -        -        -        44

4.1             Characteristics of the respondents       -        -        -        -        45

4.2             Presentation of data and analysis in table      -        -        -        48

4.3             Summary of findings       -        -        -        -        -        -        52

4.4             Research finding    -        -        -        -        -        -        -        53

4.5             Discussion of findings     -        -        -        -        -        -        54


Summary, Conclusions and Recommendations

5.0             Introduction -        -        -        -        -        -        -        -        56

5.1             Summary     -        -        -        -        -        -        -        -        56

5.2             Conclusion  -        -        -        -        -        -        -        -        58

5.3             Recommendations-         -        -        -        -        -        -        -        58

References  -        -        -        -        -        -        -        -        -        62

Appendix     -        -        -        -        -        -        -        -        -        63






The dynamic role of government agencies in the development of small and medium enterprises is an engine through which the growth and development objectives of developing nations can be achieved which has been recognized and stated in the literature is quite interesting. These enterprises have a very important impact on the life of everybody in the society. The small independence business are everywhere and in every line of work, they can also be seen in every community. This business is as old as man. So virtually everything is done in life involved the element of business. Small  and medium  enterprise constitutes an importance in todays business activities or system. The role of small and medium enterprise in our economic history however, has been one of the distribution and contribution.

Although its relative importance has decline with the growth of the big business, small and medium business is till major contribution to the countries economy. Business in Nigeria today is made up of both large and small business. Today small scale enterprise have to enjoy more prestige than ever before because of its vital contribution to the nations economy. So vital is small scale business. There are successful small scale enterprise operating like the manufacturing plants, retails, stores, wholesales, drugs, computers, construction firms and hundred of other type of business.

Nigeria population was estimated to be 167 million in 2012 with about 75% of this made up of small scale enterprise operators. Lack of full study of government agencies in the development of these enterprises especially, the financial institution made it impossible to   know the size, structure and function of these small and medium business to the development of the economy of Nigeria.

Government agencies are charged with the responsibilities among others to carryout duties and deliver utilities as it may be regulated from time to time on behalf of the government for the purpose of uplifting the standard of living. Government agencies such as bank of industry (BOI) is charged with the responsibility like provision of medium and long term finances by way of equity funding, loan and lease financing, guarantees, investment in corporate bonds business development services, co-financing, working capital finance and    promotion of small and medium  enterprises and industries project, co-sponsoring financial institutions and small and medium  enterprises.

This bank of industry was formerly originated from Nigerian industrial development bank limited was established in 1964 following the reconstruction of the investment company of Nigeria limited (ICON) NIDB was set up primarily to accelerate Nigerian industrialization.

The bank was to conceive shortly after Nigerian attains independence in 1960. The idea was to set up development of financial institution to serve as a dedicated window for channeling fund from within and outside the country to the young nation states industrial sector. Economic reconstruction fund (NERFUND) in the last regime of Obasanjo administration is renamed as BOI.


Several studies have indentified financial constraints as the major obstacle to good small and medium enterprise development in developing countries including Nigeria. Most government agencies have undergone numbers of re-organization especially bank of industry (BOI) which affect their forces and activities that leads to effective performance and lack of proper control on their activities.

The most obvious problems facing the society  is the most basic economic problem such as what to produce, how much to produce, for whom to produce, How efficient of resources use or providing efficient financial resources technical assistance, how much to consume and to save and problem of unemployed resources etc, security on loan given out to  customer SMEs evaluating of project that are financed which may take more time than stated at the beginning.  Also the finance project time table, which depends on nature and complexity of the project, it may take one to two years sometimes longer from when project was identified to when it was commissioned.

The project financing involves giving loan to a new entity established specifically to own or operate project. On the part of small and medium enterprises (SMEs) how effective are they utilizing the services rendered to them by the bank of industry (BOI). Also are they able to cope with the policies adopted by these agencies (BOI) in obtaining loan and other services rendered such as interest rate on capital collateral facilities and the role of government.


The aims and objectives of the study is to identify and consequently analyze the most effective and efficient way through which bank of industry is  developing of small and medium enterprises as well as the activities of government policies such as provision of infrastructural facilities, provision for local finance facilitaties and funding of industries and funding institutions like small scale industrial credit scheme (SSICS), center for industrial research and development  (CIRD),  and Federal Institute of industrial research, Oshodi (FIIRO) etc are they to what does the policies of government are achieved towards developing SMEs by so doing that, the researcher intends giving an in-depth information and analysis on the various strategies thorough which SMEs can be financed by BOI.

1.2.1                  General Objective

i.                   To find suitable strategies that will improve the financing growth and development and survival of SMEs in Nigeria

ii.                 To investigate and identify the constraints confronting financing of SMES in Nigeria

iii.              To investigate and examine the effects of corporate governance of BIO on the performance and contribution of SMEs to the economy of Nigeria.

iv.               To investigate and examine the trend of financial support given to small and medium  enterprises in Nigeria.

v.                 To appraise the contribution of bank of industry to the funding of small and medium enterprises in Nigeria.

1.2.2                   Specific Objectives

i.                   To evaluate the services and dissemination of the results or contributions of the SMEs

ii.                 To introduce these services in the daily activities of the institutions, industries or operators and partners of SMEs

iii.              To update and redefine the tasks of the operators responsible for providing the services to SMEs.

iv.               To identify the differences between services and current demand of find innovative services and related tools that will be used by SMEs in order to improve the use of the instrument of intellectual property and promoting the research and development (R and D) of new products in project areas.


The study is to serve as a reference material to other students or researchers such as scholars, the management, the prospective investors, the general public, researchers and academic and banking professional body and banking and finance students etc who might be interested to write on or make research on similar topic and serve as recommendation to the bank of industry (BOI) in discharging its functions to their customers as well as mode of rendering services to the customers SMEs. Since the SMES in Africa rely largely on own savings, not only to grow but also to innovates, firms often need real services sup[port and formal finance assistance, failing which under investment in long term capabilities training and research and development (R & D) may result to evaluate the operations of a vital segment of the industrial sector-small and medium scale enterprises which shall be done with special focus on their financing thereby adding to the existing literature on the subject matter. The following can benefit from this studies.

1.     The management: Managers and the operators of the bank of industry will find this study very great benefit as it will give rise to the confidence of the banking public in the BOI thereby repositioning them to play their vital intermediation roles in the economy of Nigeria.

2.     The prospective Investors: Investors or entrepreneurs and bank of industry customers will further be enlightened on the beneficial service maintaining and offered by the bank of industry from the results of this study. If the investors or customer comply with the efficiency of the management in terms of customer relations and some other activities that will determine the reputations of the corporate which will encourage more investors to invest more and by developed an orientation devoid of financial indiscipline the investors will use this study in repositioning their business for easy access to BOI’s credit facilities.

3.     The general public: Public can benefit from this study through by devoting a research and development (R & D) initiatives.

i.                        Regulatory Bodies: The regulatory bodies will find this study very useful, such body are central bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC). The study will serve as a guide in the review of monetary policies guidelines on the operations of Bank of industry by the CBN. The study will also assist the NDIC in granting the extension of deposit insurance cover to bank of industry.

ii.                      Policy makers: The government and other relevant agencies should utilize the knowledge gained from this study in assisting the bank of industry by designing appropriate policies and training programmes for the operators of banking sector.

4.             Banking professional Body: The chartered institute of bankers of Nigeria (CIBN) will find this study useful toward building and implementing the baking industries been competency framework by supporting the variety of career path ways for banking professionals in enriching their syllabus and accreditation criteria as well as review of licensing criteria for practicing bankers.

5.     Research and Academics: The researchers and academic can use the result of this study by using juggling process such as step by step self-regulated problem solving format with automatic reinforcement at every level of accomplishment and stay on task, screen out distractions, manage their energy to act appropriately and with the desired results using successive approximations, persevere through a series of minor failure (drops), analyzed final results of the process and incorporate the newly learned activities that can be demonstrated and through to others as a basis for conducting further research studies like for student of banking and finance.

Student of banking and finance         

This study will be useful to students who is studying in this field by also using that of juggling process format such as step by step self-regulated problem solving. The juggling process format provides a series of sequential problems solving which might require the researchers (Students) to calm down and settled by paying attention, listen analytically, observe critically focus on one activity at a time and plan a learning strategy by using that of juggling process format. The study will make empirical contribution to the field of banking sectors to the bank of industry and the student who are yet upgrade of working in bank and other industries, who seek to pursue a career in banking sector as well as to help bank professionals in order to keep pace with the development of banking.

1.4             RESEARCH QUESTION

Based on the subject matter, the researcher prefers to use the following questions for research findings;

1.                 What are the problems of small  and medium scale enterprises business?

2.                 What are the roles of small and medium enterprises?

3.       Are banks of industry the sole financier of small and medium  enterprise?

4.       Does government have favourable policies towards development of small and medium enterprise?

5.       Does government policies have an impact on small and medium enterprise?