This research project want to throw more light on effect of Financial a small scale business on economic development and how to solve problem facing small scale business.

Small scale business is an organisation owned and controlled by few people ranges from one person to twenty (20). It requires little capital investment.

The owner bears the risk of the business enterprises, Nigeria agriculture and cooperative bank grant loan to the as farmers in other to increase productivity in the country finance is to ensure survival and market to maintain or achieve economy development high volume of sales or product can be achieved through the use of financial the business e.g. advertisement, sales promotion and public relation, personal selling.

Objective of this study is to highlight the crucial role of financial institution in the finding development and substance of small scale business.

This research work is concerned with problem and solution of financial in management in small scale business, this study restricted to Nigeria. 

Agriculture and Cooperative Bank Limited (NAIB) Ilorin and effort will be made to contract after stamp organisation so as to examine what goes on in their establishment.


Title page 






1.0 Introduction

1.1 State of general problem facing small scale business in Nigeria 

1.2 Aims and objectives of the study 

1.3 Scope of the study 

1.4 Significance of the study 

1.5 Limitation and constraints of the project 

1.6 Historical background of the case study 

1.7 Definition of terms


2.1 Definition small scale business   

2.2 Characteristics of small scale business 

2.3 Form small scale business 

2.4 Sole proprietorship 


3.1 Research method used 

3.2 Instrument used for data collection 

3.3 Research population and sample size 

3.4 Sampling procedure employed

3.5 Statistical techniques used in analyzing data 


4.1 Data analysis and presentation of data  

4.2 Role of scale business in Nigeria development 

4.3 Risks in financing small scale business

4.4 Data analysis and interpretation


5.1 Summary of findings   

5.2 Conclusion 

5.3 Recommendation 




The concept of financial small scale business in Nigeria or service by a firm or organisation is creating awareness to the product or service in order to promote the sales of the product produced.

Business activities all over the world whether those engage in production of product or those that render service they all have an objective to achieve that is done through how their product or services will get known to their customers this is done through financial.

Financing is nay communicative activity whose purpose is to more forward a product or services and idea on where to get the product or service.

Financing a small scale business in Nigeria provides the stimulus upon which sales progress is based on, without good financing power business remain stigmatic therefore wealth expansion of any business comes from financed equally any emphasis on introducing promotion to business also parallel with sales of its product or services by increase the quality sold, its price or a combination or both enhance its public made business known that if a better product is produced, customers will not take special pain to infirm, themselves of its want satisfying attribute and where it can be purchased.     

Hence the need for effective efficient promotion in any organisation the level of financing contribution incurred into business is highly incomparable to one another.

Finances only way of ensure survival and tactical market to maintain or achieve and economy development. Highly volume of sales can be only achieved through the use financing the business like advertisement, sales, promotion and relations personal selling.


Problem of small scale business can be general or specific problem of a general nature may in involve the legal aspect of the business access to credit and raw materials and the lack of appropriate technical and managerial assistance. 


These are the problem arising as a result of the financial institutions in advances loan to a small business and these talk in the categories.  


Because the small business can usually pay only minimum wages, has to fringe benefit and effort low jobs security and few promotional opportunity. It is reasonably to expert difficulties in recruiting high caliber employees. Also they lack adequate number of qualified professional staff as a result of payment two can evaluate loan application with objectively and also monitor business performance and provide professional advice in a containing basis.


Once loans are given, hardly does banker take sufficient interest in the affairs of the business beyond then, adopting legal action for loan recovery whom monitors have degenerated before then, bankers continue to perform their bureaucratic role of administrators, sending notice of recovering of installation interest and remainders to follow the notice and default notice for final interest rate.   


The high rate of euthanasia among small business ands in some cases lack of financial integrity among the operator of small scale industries are sernous incubation to the enterprising banker. There is no exaggeration when loans to small scale industries are tagged.  


In promoting the growth of small scale industries in order to increases their contribution to the growth of the development of the economy, the problem in the domain of government are listed below.  


Government specialized institution for industries development and promotional agencies lack adequate skilled manpower to evaluate and assess loan application to the small business.

(2) lack of efficient supervision

Monitoring of business performance of the enterprises to which loan have been given provision of efficient and effective extensive service, etc. do not receives the attention they reserves, dearly this can only be done if there are adequate member of trained officers, extension officer, technician officers etc. 


When ever government funds have borrowed the default rate in repayment is high because of political commention of borrowers on because the loans was extended without proper appraisal.      


There is inadequate supply of efficient infrastructure such as water, electricity, tender roads and other means of communication is a sinequan on to the efficient performance of small scale enterprises.


Government fund are not limited, in the face of completing needs for government resources sufficient fund are not always available to promote the need of small enterprises.   



The promoter of owners of small scale enterprises are people of average means with no specialized skill or expertise because of financial constraints, they are unable to line the service of specialist on part time or full time basic.

As a result efficient productivity is low and hence the small enterprises cannot service.


Another characteristic is that the small scale proprietor does not there his problems with other nor does he seek good advice in other to find a solution to its problems. This result in high cost and or unprofitable operation.


The financial problem of business is poor accounting often it is only a symptom, the diagnosis which reveals other weakness business financial and stocks required for personal need cash and stock are taken at will for person used who never the need arise without account of such withdrawals. It makes it difficult to assess the operating result of the business and attains starves the firm of liquid resources.


Efficiency is a main area of weakness of small business the owner manager, in most cases, is neither a technical export nor on able administrator. He runs his business with average efficiency leaving margin for better and fuller utilization of resources at his disposal. There is no co-ordinated effort within the sector to develop joining marketing strategy. 

Also small business adopted rapidly and have ability to change which is a natural strength of a small enterprise. This quality may be nullified whom on opportunity recurring rapid change suddenly appears. The manager may be too occupied with on going operational problems to be able to think clearly about the future of the business.

Environment condition change a so rapidly that, unless they start is cost business management calls for constant reorientation those who own and operate their own business or who manage someone else small business must recognize the changing economy, the new social structure and the new forms of completion.

The small enterprises is a relative fragile structure with limited resource to economics its problems even minor problems can be life threaten to be enterprise.


  The objective of the study is to highlight the crucial role of financial institution in the finding development and substance of small scale business. It will also be useful to government and private individual in order to know the problem of this of establishment and the remedy.

The project work is also to carry out research ad investigation in order to find out possible solution that will serve as guide lines towards revamping some small scale business which can be as a result of bad financial management collapsed. 


Study implications

The purpose of research is to inform action. Thus, your study should seek to contextualize its findings within the larger body of research. Research must always be high quality in order to produce knowledge that is applicable outside of the research setting with implications that go beyond the group that has participated in the research. Furthermore, the results of your study should have implications for policy and project implementation.  

As a researchers, it is imperative to take steps to overcome this barrier. Publishing your study may be one initial step to make your research known to the global community. Other proactive measures can be taken to encourage the untake of evidence – based interventions. For example, you can present your research findings at various venues such as the unite for sight sponsored global health and innovation conference. Furthermore, you can send the results of your study to local officials, policy – makers and community leaders.  


This research work is concerned with problem and solution of financial in management in small scale business.

However, this study restricted to Nigeria Agricultural and Cooperative Bank Limited (NACB) Ilorin and effort will be made to contract after stamp organisation. Stamp organisation was to examine what goes on in their establishment.


This is to be justified if consideration is to be given to the large numbers of small scale business which have filled up as a result of bad financial management but without them being able to dearly determined the use of their problems.    

However, it is also good to know the due to lack of production in the organisation and gross management that of scarce many small business have found itself in economic problems which leads to the closure of company after short period of operation.

Furthermore, since the capital needed to run small scale business are supplied by the owner or by so call financial houses or banks. Therefore these fund have to be properly managed in order to encourage their leader to give them more.

A study of this nature is also very important in the sense that seek to show necessary prepared of possible assistance by the government for economic efficiency and effectiveness.


The problem face in this study are the following.

i. Ability of proprietor not to give relevant information concerning their financial affairs.

ii. Unavailability of proper account records 

iii. The time given to carryout research and investigation is too small.


Nigeria Agriculture and Cooperative Bank Limited (NACB) was established as a national agriculture credit institution in November 24, 1912 and went into operation on March 6, 1913. Its establishment was binged on the now vindicted eviction the bank will enhance income level of farmers and thus make farming more attractive.

Today’s NACB started off as the Nigeria Agricultural Bank Limited (NACB) and actually froks its new name in 1978 at the instance of the Nigeria government.

This in the government’s view was to reflect more vivid the banks commitment to agricultural development through the promotion financial of co-operative.

Prior to the establishment of NACB as an institutional under the Nigeria farmers the financial of Nigeria Agriculture sector was essentially being handled by a variety of public institution these included the fund for agriculture and industrial development the regional local government boards, development cooperation’s and the regional marketing boards.

The general consensus however was that these credit financial institution failed due to some factors. Agricultural experts say that these factors range from political interference, inefficiencies project appraisal monitoring and supervision to low coverage of the farming population inadequate finding, adopting of excessively rigid and time consuming procedure for processing loan application low loan recovering and untimely loan distribution.               

The non-institutional tender consisting of such information source as money tender, friends, relationship, and thrift societies took advantage of the weakness of the institution tenders to change exorbitant rates of interest to loan seeking farmers. This was the state Nigeria formal found themselves whom the government commissioned a number of studies which finally culminated in world bank “stone nam government” of 1969.

The report recommended among other thing the establishment of a national agricultural credit institution whose major function would be the provision of credit to farming so as to exterminate the death of capital which has been the major placement of agricultural development in Nigeria.

An after 19 years of existence NACB can unequivocally by said ton have lived up to this objective. It has provided diverse credits to improve the ambit of the country’s agricultural and agro business. 

Thus, the NACB is today a welcome relief to Nigeria farmers the banks migration marked in important landmark in the history of the nations agricultural development institution devoted entirely to investing in all aspects of the agricultural industrial and more importantly, it has continues to serve as a source of fund to Nigeria farmers.

As a development finance institution the Nigeria agricultural and cooperative bank limited (NACB) was established to deliver credit to the agricultural sector of the Nigeria economy the following objectives as its central focus.

⦁ Promotion of agricultural production and rural development 

⦁ Assisting in the improvement of the income adequate of life of the Nigeria rural population.

⦁ Contributing to the overall growth and development of the Nigeria economy. There are also some certain function performs by NACB and they are as follows.

1. The provisions of loans to individual farmer cooperative organisation limited liability companies state and federal government agencies financing direct investment in the equity capital of major agricultural agro allied industrial ventures.

2. Providing guaranties for viable agricultural and agro allied ventures to enable them raise financing either locally or from abroad. 

3. Assisting in improving the incomes and welfare of farmers promoting rural development.

4. Increasing the nation’s output of food and cash crop to meet the needs of a rapidly increasing population.

5. Financing of all forms of agricultural project which include fishing cattle, poultry, rabbitry, piggery, forestry and timber production horticultures available crops and trees crops.

6. Provisions of finance for the marketing of agricultural product locally & for export, if also make finance available to industries that process agricultural products.

7. Financing of agro-allied project including tractor hiring operation agro processing and storage.

In addition, during the investigations research was able to interview the head of department and some offices concerning some other things about how NACB finance small scale business.

According to them they finance farmers cooperation organisation limited liability companies state and federal government agencies, also in addition the bank provide financing by direct investment in the equity capital of major agricultural agro – allied industrial ventures. The banks operation commenced with the establishment of a head office in Kadura and the opening of area office in Bauchi, Sokoto, Ibadan and Enugu.

Furthermore, the bank was able to sonation loans totally N304,222,000 from 1973 to 1980 under the direct tending and the lending schemes credit was channeled though co-operative societies and river basin authorities.

The objectives of the schemes is for the on lending agencies to endeavour to reach as many rural farmers as possible in order to remedy the situation, the NACB introduced the small holder direct loan scheme in March 1981, on pilot scale. 

Under the scheme, each farmer could yet credit up to a maximum of 500 without resource to the provision of either collected or title to loan.            

Furthermore, in order to consolidate this intervention at better delivery of rural credit to farmers, the bank (NANB) introduced the use of agricultural credit assistant with large scale ones which employ costly and highly sophisticated technology.

Short gestation period modern small scale industry enterprises are able to be implemented within a shorter period than large scale industries. This is possible because all the required inputs which are available locally can be quickly or organized.

Mobilizations of local resources including raw material technology, capital like a skilled labour entrepreneurship and demand which will otherwise remain unutilized are effectively and efficiently tapped in the care of small scale industries.

Labour, including the skilled which exist in abundance but are employed or under employed.

Foreign exchange saver, increase production of various industrial item which are important would help to serve substantial amount of foreign exchange provided there are judiciously and progressive monitored programmes for such important substitutes production can be constitute the spring board for industrialization on. 

Efficiency and quality if have exist many scale industries in the rural areas, there will occur enough health competition by ways of efficiency and quality of product manufactured. The competiveness will be such that quality product would be made available for consumer consumption (ANAS) as immediate contact personnel for the rural farmers.

The experience of the NACB was quite bandy in the discussion or rural lending we then concluded by a thought provoking discussion in the prospect for enhanced rural development through agricultural lending.

The most interesting of the strategies is that of subsiding interest rates our conviction is that a subsidy on interest rate restricted only for small rural farmers will serve as an incentive to encourage rural farmers to increase their product it will help to reduce the high cost of credit delivery to this group of farmers.

Finally, it is our conviction the rural small scale farmer was a lot of potential for improving and increasing food and production in the country NACB has prove to be a good financial institution which help a lot in financing some small scale business mainly agricultural basis.


Small scale industries enjoy effective and sound administration since the average number of manager and supervisors. The employees as well catered for, which oils the wheels of progress sound and operatic worker given the available tools would put forth sound performance.

Labour intensive various small scale industry – enterprises are characterized by efficient and effective voe of techniques of higher labour intensiveness in relationship to capital (low capital – labour ration) such industries are efficiently operated side by side.

The small business act states that a small business concern is “one that is independently owned and operated and which is not dominant in its field of operation”. The law also states that in determining what constitutes a small business, the definition will vary from industry to industry to reflect industry differences accurately. 

When the U.S. congress first established SBA, the fundamental question was just what numerical definition should SBA use to define small scale business, industry by industry, to determine what business were eligible for SBA’s programs.   



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