BANKS PARTICIPATION IN INDUSTRIAL DEVELOPMENT OF NIGERIA A CASE STUDY OF UNION BANK NIG PLC

CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND TO THE STUDY
Nigeria since the oil boom in the early 70’s has been a victim of a monolithic economy and since then has been enjoying the so called ‘Petro Naira’ without adequately evolving a sound policy that will keep the nation’s economy in a firm foundation for steady growth.  Though the country recognized the importance of Industrialization as far back as 1964, yet when the ‘Petro Naira’ started flowing in, they were blindfolded as to ignore the importance of establishing industries to ensure a diversified economy.  Now the ‘Petro Naira’ is no more, and the future outlook is bleak, the need for a diversified economy became the subject matter of many governmental policies and actions.  This leads us to one of the ways for solving this problem and that is industrialization.
Apart from ensuring a diversified economy, industrialization also accelerates the industrial development of a country; in fact the basic premise is that if a country wishes to accelerate the overall rate of industrial development, the country must have manufacturing production rising much faster than the overall rate of growth of the G.N.P. and this has to be reflected in an increasingly dominating role of manufacturing industry in the total economy. Also, industrialization ensures export expansion and import contraction coupled with the fact that it stimulates foreign exchange earnings, international recognition and the provision of employment opportunities for the teeming population.
Nigeria, since the oil boom in the early 80’s has been a victim of a monolithic economy and since then has been enjoying the so-called petrol Naira without adequately evolving a sound policy that will keep the nation’s economy in a firm foundation of steady growth.
Though the country recognized the importance of industrialization as far back as 1982 yet when the petrol naira started flowing in, we were blind folded as to ignore the importance of establishing industries to diversify the economy. Now the petrol naira is no more and the future outlook is bleak, the need for a diversified economy became the subject matter of many government policies and action.
This leads us to one for the ways for solving the problem, and that is industrialization. Apart from ensuring a diversified economy, industrialization also accelerates the economy, industrialization also accelerates the industrial development of a country. In fact the basic premise is that if a country wishes to accelerate the overall rate of growth of G.N.P and this has to be reflected in an increasing dominating role of manufacturing industry in the total economy.
This also emphasizing on the role which banks plays in order to improve the growth of industries in Nigeria by explicable manifesting ho w the roles banks can be employed for the growth and development of industries. It also emphasizes on the role in which banks play in the industrial development of Nigeria as it could be seen through the sustenance of industrialization in the country. More so, industrialization ensures export expansion and import contraction coupled with the fact that it stimulates foreign exchange earrings, international recognition and the provision of employment opportunities for the teeming population.
Industrialization has been proved beyond doubts as very important for a nation’s survival therefore it is pertinent that we explicable manifest how the role of banks can be employed for the development of these industries though the country recognized the importance of industrialization as far back as 1964 yet when the “petrol Naira” started flowing in, they were blind folded as to ignore the importance of establishing industries to ensure diversified economy. Also the banks provide overdrafts facilities, which are necessary to finance the working capital of the business. An over draft could be defined as arrangement whereby the banks allow the customer to overdraw his account up to a credit position at the end of the period.
Apart from granting loans and over draft facilities there are other roles which includes professional advice, reasing and factoring, also extend into invoice discounting hire purchase, bill discounting hire purchase, bill discounting service and above all the determination of the actual external funds required by a borrow these are accepts of such services which help industrialization grow or expand sight should not e lost of the fact that industrialists and industrialization suffer their own problems, which should be analyzed as solved to ensure industrial development.
These problems of obtaining capital from banks and operational problems are caused by the dictates of the Nigeria environment and society. It has been noticed that the level of banks industrial financing has been very poor compared with what obtains in industrialized nations such as Germany, Untied states of America, V.S.S.R and t he united kingdom to mention but a
few. The central bank of Nigeria should step up their moral suasion policy so or make these banks especially the commercial Bank to increase the level of their financing emphasis should be placed on medium long term loans so as enable the industries concretized their form of outputs with the funds available from the banks, the industrialists should be made to judiciously invest them with other important of sound firm and concrete foundation must have been laid for the industrial development of the country, Banking industrial, the food processing industry the sugar processing industry the tobacco manufacturing industry e.t.c.
 
1.2    STATEMENT OF THE PROBLEM
Banks supposed to have contributed immensely to the industrial development of Nigeria in various aspects.  But the unawareness of the industrialists on the role of banks in industrial development pose a serious problem to the industrial development of Nigeria.  The number of industrialists that make use of the services of the banks in their various firms is limited. Again, most industrialists are not aware of the duties and responsibilities of the banks in the overall growth of their firms.  The poor industrial knowledge of these industrialists help to compound the general problems of industrial development of which bank services can be gainfully employed for the purpose of solving them. It has been noticed that the level of banks industrial financing has been very poor compared with what is obtain in industrialized nations. This study will analyse in details the role of banks in industrial development of Nigeria.
1.3    OBJECTIVE OF THE STUDY
For a meaningful and adequate performance of banks to be achieved in industrial development of Nigeria.  The researcher is set to achieve the following objectives:
i.   To ascertain the need for Banks involvement in industrialization.
ii.  To point out the roles of banks in industrial development.
iii. To evaluate the level of banks industrial financing in Nigeria
iv. To make recommendations based on the findings of the study.
1.4    SIGNIFICANCE OF THE STUDY
The study stressed that to achieve a meaningful industrial development, emphasis must be placed, on industrisation which is an aspect of economic diversification.  The country is most likely to benefit from this study as follows:
i. Apart from ensuring a diversified economy, industrialization also accelerates the industrial development of the country.
ii. Industrialization ensures export expansion and import contraction and also stimulates foreign exchange earnings, international recognition and provision of employment opportunities for the citizens.
iii. Industrialization helps in stabilizing the Nation’s economy and ultimately improves the standard of living of the citizens.
1.5   SCOPE LIMITATION AND DELIMITATION 
This project is aimed at examing how banks participate and the role they play in industrial development of Nigeria since they are financials institution finance is one of the cares in the execution of industrial project. It is also aimed at analyzing industrialization and aid to industrialization.
1.6   DEFINITION OF TERMS
1. Development Banks:- Refers to institutions established to encourage the economic growth of a nation.  The banks are seen as a vehicle for mobilization of channeling medium and long term Capital with the production sector of entrepreneurship and technical assistance.
2. Industrialization: Is the process of developing the capacity of a country to master and locate within its borders the whole industrial production process of intermediate products for other industries, fabrication of the machines and tools required for the manufacture of the desired product and of other machines, skills to operate.
3. Bank: A bank can be defined as an institution or establishment for safe keeping lending and exchange of money.
4. Credit Facilities: This refers to those facilities which the bank grants to their customer. This include loans and advances as well as overdraft.
5. Loan: This refers to a facility which a bank grant to its customers of which the customer is expected to repay the amount at a due date. Interest is paid at the end of each mouth.
6. Overdraft: Is a situation whereby a customer is a allowed to overdraw his account subject to a maximum limit during a given period of time, usually a year. This is short-term financing.