This study is aimed at appraising the role of the banking sector in the development or its participation in the promotion of SMEs, where union bank of Nigeria Plc was used as a guide. This defines (SMEs), and evaluates the relevance and importance of SMEs in the economic and national development; we then consider the overview of the financial support programmes to SMEs in Nigeria. This reviews the current initiatives and strategies for financing SMEs and also determined the various services of funds for SMEs and using evidence from a sample of one hundred members across all the departments of Union Bank of Nigeria Plc and the proprietor of SMEs, the result from the Spearman Rank Correlations Coefficient (rho) and chi-square analysis shows that SMEs act as catalyst for economic and technological development as well as the fact that growth of small and medium scale enterprises (SMEs) depends largely on the participation.  It was also suggested in this  study that government should have a stable industry policy consciously and deliberately remove administrative bottlenecks involved in obtaining necessary documents. Moreover, government can help by removing artificial policy and regulatory obstacles to SMEs lending-importantly, policies that promote greater competition within the financial sector as a whole are generally likely to be especially good news for smaller borrowers like SMEs. External actors can help too-for example by promoting development of credit information system and reform of collateral regulations.




Title Page

Certification                                                                                  i

Dedication                                                                                     ii

Acknowledgement                                                                        iii

Abstract                                                                                        v

Table of Contents                                                                          vi


Chapter One: Introduction

1.1       Background of the Study                                                   1

1.2       Statement of Problems                                                       4

1.3       Objective of Study                                                               4

1.4       Research Hypothesis                                                          6

1.5       Scope of Study                                                                    6

1.6       Significance of Study                                                          6

1.7       Historical Background of Union Bank of Nigeria Plc       7


Chapter Two: Literature Review

2.1       Introduction                                                                        11

2.2       Assessment of Small and Medium Scale Enterprises

          in Nigeria                                                                             14

2.3       Assessment of Bank’s Operations on Small and

          Medium Scale Enterprises                                                 19

2.4       The Relevance and Importance of Bank’s to Small

          and Medium Scale Enterprises                                         26

2.5       Role, Relevance and Importance of Small and

          Medium Scale Enterprises in the Economic                     29

2.6       Problems and Challenges faced by Small and Medium

          Scale Enterprises in the Development Process.               33

2.7       The Role of Government Policies and Other Agencies

          Support on Small and Medium Scale Enterprises

          in Nigeria                                                                             36


Chapter Three: Research Methodology

3.1       Introduction                                                                        41

3.2       Population of Study                                                            41

3.3       Sampling Technique                                                           42

3.4       Procedure for Data Collection                                           43

3.5       Method of Data Analysis                                                    44

3.6       Standard of Instrument                                                      45

3.7       Limitation of Study                                                             45


Chapter Four: Data Analysis and Presentation of Findings

4.1       Introduction                                                                        46

4.2       Presentations and Analysis of Data According to

          Research Questionnaire                                                     46

4.3       Respondents Characteristics and Classification              51

4.4       Testing Analysis and Interpretation of Research

          Hypothesis                                                                          61


Chapter Five: Summary, Conclusion and Recommendation

5.1       Summary of the Study                                                        68

5.2       Conclusion                                                                          69

5.3       Recommendations                                                              70

Bibliography                                                                        72

Questionnaire                                                                     74

Appendix I                                                                          

Appendix II                                                                         







There is no doubt Nigeria banks and other financial institutions occupy strategic positions in the operation of our economic system. The importance of these banks and other financial institutions are so encompassing that one may not imagine the working of the economic system without them. No wonder that government is always sensitive to the happenings in the banking sector. In an economy such as ours, things have to be bought and paid for (e.g. an entrepreneur, buying raw materials from suppliers), such transactions in modern time and usually done in many cases through the bank credit transfer system because apart from the large amount of money that may be involved in the payment, there is also the need to consider the securities of the money. So bank just act as intermediaries in money business transactions.

Monies kept with bank form the banks deposits since not all of these monies will be demanded by the customers at a time, there are usually surplus saving in the bank (i.e. deposits not required at present by depositors) such surplus savings are usually lent out by the banks who provides funds for finance of business operations. Such funds are what is regarded as debt equity capital of a business i.e. part of the capital of a business that is got through borrowing. Thus, this debt equity capital give by banks to their customers, especially entrepreneurs is an important financing role which the banks perform to help develop entrepreneurship of all types. A lot of entrepreneurs do often approach their banks to give them one kind of loan or the other, which the banks will be willing to oblige. The various methods by which banks can lend money to entrepreneurs include:

i.             Over Draft: A credit facility which allows a customer to draw more money from his account in the bank than what he or she has in his account such facility is usually extended to regular and reliable entrepreneurs with an interest calculated on a daily basis. An entrepreneur can use the facility to pay for current obligation e.g. salaries (Adeleye 1998).

ii.           Short Term Loan: Is also a credit facility granted to an entrepreneur for a short term duration, such as three to six months or a year. This is usually effected by opening an account (known as loan account) in the bank to which the amount of loan given is debited (with the interest and the current account of the beneficiary is credited (Olagunju, 2004).

Small and medium scale enterprises as a concept defies universal definition both among academics and practitioners. It depends to a large extent on a country’s level of development..

Identifiable criteria often adopted on an arbitrary mix in definition include numbers of employee relative size, initial capital outlays, sales value, financial strength independent ownership and types of industry (Oshagbemi 1982 ). The 1987 Industrial Policy of Nigeria defines these enterprises as follows:Small scale are those whose total investment was between a N100,000 and N2 million excluding working capital, medium scale. Those with total investment of between N2 million and N5 excluding land but including working capital.

In 1996, the National Council on Industry (NCI) revised the definition of small and medium scale enterprises as follows:

a.           Small Scale Industry: Enterprises with total cost (including working capital but excluding cost of land above N1 million but not exceeding N40 million with a labour size of between 11 and 35 workers.

b.          Medium Scale Industry: Enterprises with total cost (including working capital but excluding cost N50 million with a labour size of between 36 and 100 workers.

Other agencies with varying definition were the central bank of Nigeria (CBN), the Nigeria Bank for commerce and industry (NBCI), the Nigeria industrial development bank (NIDB) to mention, but a few.

With the above analysis and various definition and contributions from various agencies, the research work is to access the contribution of bank’s to the growth of small and medium scale enterprises.



Nigeria business environment which is seen to be highly volatile and competitive has force a number of organisation especially the small and medium scale enterprise into winding-up because of their inability to withstand the storming business environment in accessibility of foreign exchange as well as the institutional credit, unavailability of basic infrastructural facilities such as good roads, electricity, water supply and telecommunication to mention but few, insufficient capital, lack of insufficient materials (raw materials) lack of good financial body and strategies adviser, also to mention miss management of funds. The long process for approval of loans facility but banks in Nigeria due to qualilateral tendering with other procedure of comfort required by the banks.

In view of the above, it will be difficult for both small and medium scale enterprises to function effectively as a highly profit making organisation, the research work is structured in line with the various contributions and efforts of the Nigeria banks to the above problems undergoing by small scale and medium scale enterprises.



This research study is to examine the impact of banks on small and medium scale enterprises in Nigeria. The economic growth pace, the effectiveness of Central Bank of Nigeria (CBN) as a regulatory institution in monitoring banks contribution on the small and medium scale enterprises with particular reference to Union Bank of Nigeria Plc with other specific objectives stated below:

i.             To define a meaningful way of administering the new policy in achieving set goals; so that the small and medium scale enterprises today will metamorphosize into large-scale industries in the future.

ii.           To appraise the relevance of bank’s contribution in promoting growth of small and medium scale enterprises in both short and long run

iii.          To determine various ways that bank’s contribute to the growth and survival of small and medium scale enterprises.

iv.          To evaluate the participation of small and medium scale enterprises in economic building and development.

v.            To examine the role of government in promoting small and medium scale enterprises in Nigeria and other developing countries.

vi.          To attempt to provide alternative strategies in effective promoting of small and medium scale enterprises where necessary.

vii.        To access the bank under study (Union Bank of Nigeria Plc) as regards her contributions towards the promotion of small and medium scale enterprises. In the part, and the role it has played in the economic development through the promotion of small and medium scale enterprises.



In any research work, there should be some hypothesis to be tested. As we definitely know that hypothesis can be regarded as tentative statement about relationship that exist between two or among many variables.

The following are the research hypothesis to be tested in this study:

1.           Bank participation has not helped in the growth of small and medium scale enterprises

2.           Small and medium scale enterprises does not act as catalyst for economic and technological development.

3.           Banking programmes and activities has not remain  crucial to the promotion of small and medium scale enterprise.

4.           Success of small scale medium scale enterprises is not dependent on efficient financial strategy.


1.5   SCOPE OF STUDY    

The coverage of the study would span through one to five years of banks operations i.e. Union Bank of Nigeria Plc through the loans and advances granted to their various customers operating small and medium scale operations. Also, the study is confined to Lagos Metropolis because of its vast population also highly located small and medium scale enterprises because of its commercialized and industrialized nature of enterprises.



This research is aimed at giving an insight into the various ways in which bank’s contribute to the promotion and operations of small and medium scale enterprises. The relevance of this study cannot therefore be over emphasized considering the present trend in the Nigeria business environment. It is seen to be volatile, competitive and dynamic in nature.

The small and medium scale enterprises of any economy has vital role to play in the economic growth and development of a nation being the essential source of innovation and majority of people which serves as an indicator for improving the standards of living of the citizens and generating foreign exchange for further development of the economy, so there is great need for bank’s contribution.

This study also serve as reference materials to their future researchers who may be interested in the area of study.



Union Bank of Nigeria Plc was established in 1917 with its first branch in Lagos. In 1925, Barclay’s Colonial Bank which resulted in the change of the Barclays Bank (Dominion, colonial and oversea enactment of the Companies Act 1968 and the legal foreign subsidiaries to be incorporated locally. Barclay in 1969 was incorporated as Barclays Bank of Nigeria with ownership structure of Barclays Bank remained unstable when 8.33% of the bank’s shares were offered to Nigeria.

The bank was listed on the Nigeria Stock Exchange following the Nigeria Enterprises Promotion Act of 1972, the Barclays Bank of Nigeria acquired 51.67% of the banks share Barclay Bank Plc, London with only 40% by the enactment of 1977 Nigeria Enterprises Promotion Acts. Barclay International Limited disposed its share holding to Nigeria which reflected the new ownership structure and in co-companies and allied matters acts of 1990, it assume Union Bank of Nigeria Plc.

In line with the Central Bank of Nigeria’s banking policy, Union Bank of Nigeria Plc acquired the foreign Bank Plc and Broad Bank Ltd and absorbed its shares on Union Merchant Bank Ltd.

The bank also increased funds through a public offer/rights issues in the market with these development, Union Bank remains capitalized bank in Nigeria. It has the largest shares (N100,500 billion) and it operates through 379 networks well spread across the country, all of which are on line.

Within the Union Bank group are the following subsidiaries associated companies:

a.           Union Homes Savings and Loan Plc

b.           Union Assurance Company Limited

c.            Union Trustees Limited

d.           Union Bank U.K. Plc

e.            Banque International du Benin, Cotonou

f.             UTL Communication Services Limited

g.            UBN Property Company Limited

h.           Union Capital Market Limited

i.             Union Registrars Limited



i.        Consolidated Discounts Ltd

ii.           HFC Banks Ghana Limited

iii.          Unique Venture Capital Management Company Ltd

Union Bank Group operates on interlocking organisation whereby some board members of Union Bank of Nigeria external directors in the subsidiaries and associate arrangement ensures effective sight and participation decision making process of these companies thereby safeguarding investments.

Today, the bank is a leading regional bank in subsahara of its diverse investment across the globe. A global financial summary reveals its solidity. As at 31st march, gross earnings was N66.576 billion profit, before billion, the total assets was N667.766 billion and share N100.500 billion.


Its operations involves fixed deposit

i.        Internet banking

ii.           Strategic business unit

iii.          Product and services

iv.          Consumer banking products

v.            Credit and loan

vi.          Foreign exchange product

vii.        Account enquiries/account opening

viii.       Customer service

ix.          Electronic E-card and many others



Ade T. Ojo (2004), Small and Medium Scale Enterprises Development and SMIEIS, Lagos, Pages 1, 2, 4–5, 13–16.

Anyanwu C. M. (1996), Efficient Administration of Credit for Small Scale Industries Development in Nigeria, Bullion Vol. 20, No. 3 C. B. N.

Olagunju Y. A. (2004), Entrepreneurship and Small Scale Business Enterprises Development in Nigeria. Pg. 94


Order Complete Project