FEDERAL GOVERNMENT FINANCIAL ASSISTANCE TO SMALL-SCALE ENTERPRISES

            The problem of capital security in the operations of small-scale enterprises has been a major obstacles to the development of industrial sectors and this explains why government financial assistance has been manly directed towards this direction. In recent times, the government has devoted a lot of financial resources to this secret in order to liberate the entrepreneurial skill of Nigeria.


 The Nigeria Bank for Commerce and Industry (NBCI) through loan and equity participation, finance business start ups and expands the business with emphasis on manufacturing and service oriented small-scale and medium-scale firms since 1980.

            In 1989, National Economic Reconstruction Fund (NERFUND) was established by degree two to correct the short fall in the provision of fund to small and medium-scale enterprises. By September, 1990, the fund had been able to mobilize N5.6 billion in domestic and foreign currencies for lending the local enterprises (since 1986) another important government programmes for small-scale business sectors is Small And Medium Scale Enterprises Loan Facilitating (SMELE) design to boost finance to the sector. Its total fund base in put at N415.8 million with three credit components. 

These consultancy, training and working capital needed for the establishment for the establishment of new small-scale business and expanding existing ones, pilot credit guarantee schemes and equipment and leasing funds to consist small-scale enterprises that are undercapitalized. In the same way, the credit guarantee scheme is expected to be funded by the three levels of government in Nigeria, the Central Bank and NERFUND.

            Another is the establishment of micro-finance to assist the small-scale enterprises, though such banks have been established as planned but the outcome is not encouraging, the banks are not carrying out their duties as expected, in the sense that those who truly needs the assistance are not the ones which the loan is given to and also the producers involved in collecting loans is not easy as most of the owners of such businesses are not learned. Small-scale enterprises can be financed through debt capital which can be raised from various sources; it includes banks such as commercial banks, merchant and development banks, private financial institutions and other financial intermediaries of various instructions. In addition, financial assistance is also contained in the monetary and credit guide lines which vary from year to year depending on the basic aim of increasing loan facilities to the sector at considered rates. Fiscal policy measures such as pioneer status, import tax relief, import duty relief, capital’s depreciation allowance and other forms or tariff measures have been put in place to create assistance or aids as budgetary measures, Ochejele (1992).

            Federal government active participation in promoting small-scale enterprises is also traceable to the establishment of Industrial Development Centre (IDC). Essentially, Industrial Development Centers are aimed at providing extension of loan application, training of entrepreneurs, managerial assistance product development, product planning and control and other extension services. Apart from the Owerri Industrial Development, other Industrial Development Centre have been initiated at Zaria, Kano, Port-Harcourt, Oyo, Ikorodu, Benin, Oshogbo, Bauchi, Kano and Abeokuta, thus over the years the government has provide an array of assistance to enhance the operation of the small-scale enterprises in Nigeria, Oyewande (1991).
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