OKAFOR LAURA ISIOMA

The problems of Small and Medium Scale Industries (SMIs) in Nigerian cannot be understated
as a number of factors tend to limit their growth potentials. They’re still faced with the issue of
large capital outlay and to overcome this problem, external borrowing has become inevitable. Commercial banks appear to be the most likely source of funds. Thus, the overall objective of
this research is to identify ways and means by which the vibrancy of small and medium scale
industries will be sustained so that they can play the expected role as one of the engines for
growth in Nigeria’s economic development effort. While a descriptive statistics research design
was adopted in the investigation. Outcome of the study indicates that, there exists an inverse
relationship (though not statistically significant) between the amount of domestic credit made
available to SMI’s and the output of SMI’S in Nigeria. This trend has shown the poor attitude of
commercial banks towards the granting of loans to SMI’s in Nigeria. Conclusively, the inability
of our commercial banks to grant effective loans to SMI’s have translated to low level of output
of SMI’s to GDP. This in turn has impacted negatively on average capacity utilization. While
commercial banks are expected to come to the rescue of SMI’s, the truth must be said, that these
institutions are profit oriented and may not be in a vantage position to give long term loans with
depositor funds that are predominantly short tenured. Based on the findings of study, this paper
recommends that, the intervention programs put in place to reduce the problems of the SMI’s
should be strengthened. Lastly, the Bank of Industry (BOI) should be properly positioned in its
mandate of providing financial assistance for the establishment of large, medium and small
projects as well as the expansion, diversification and modernization of existing enterprises and to
rehabilitate the ailing ones

The problems of Small and Medium Scale Industries (SMIs) in Nigerian cannot be understated
as a number of factors tend to limit their growth potentials. They’re still faced with the issue of
large capital outlay and to overcome this problem, external borrowing has become inevitable. Commercial banks appear to be the most likely source of funds. Thus, the overall objective of
this research is to identify ways and means by which the vibrancy of small and medium scale
industries will be sustained so that they can play the expected role as one of the engines for
growth in Nigeria’s economic development effort. While a descriptive statistics research design
was adopted in the investigation. Outcome of the study indicates that, there exists an inverse
relationship (though not statistically significant) between the amount of domestic credit made
available to SMI’s and the output of SMI’S in Nigeria. This trend has shown the poor attitude of
commercial banks towards the granting of loans to SMI’s in Nigeria. Conclusively, the inability
of our commercial banks to grant effective loans to SMI’s have translated to low level of output
of SMI’s to GDP. This in turn has impacted negatively on average capacity utilization. While
commercial banks are expected to come to the rescue of SMI’s, the truth must be said, that these
institutions are profit oriented and may not be in a vantage position to give long term loans with
depositor funds that are predominantly short tenured. Based on the findings of study, this paper
recommends that, the intervention programs put in place to reduce the problems of the SMI’s
should be strengthened. Lastly, the Bank of Industry (BOI) should be properly positioned in its
mandate of providing financial assistance for the establishment of large, medium and small
projects as well as the expansion, diversification and modernization of existing enterprises and to
rehabilitate the ailing ones.