FINANCE CHALLENGES OF MANUFACTURING COMPANIES IN NIGERIA AND THEIR CONTRIBUTIONS TO THE GROWTH OF NIGERIA - Project Master
The import dependent industrialization strategy virtually came to a halt in the Late 1970s and early 1980s when the liberal impart policy expanded the imports of finished goods to the detriment of domestic production. In this regard, industrialization constitutes a veritable channel of attaining the lofty and desirable conception and goals of improved quality of life for the populace. Thus, in a supportive mood, Lavis (1967) assumes that in any economy, one or more sectors serve as a prime mover moving the rest of the economy forward. This role of engine of growth or leading sector has usually been played by industrial sector under the industrialization process.
The major problem facing the Nigerian manufacturing sector is having adequate finance resource for investment. Because of the low level of income of this, saving is very low. Since the attainment of independence in 1960, commercial banks in Nigeria have been playing an important role in development process of a nation. The banks in collaboration with other financial institutions have been mobilizing the scarce domestic resources for rapid social, economic and industrial transformation of the country. Other services provided by the commercial banks include facilities for safe-keeping of important documents, provision of advice to customers on insurance and investment matters and provision of cash for bulk payment of non-customers salaries and wages, Umole (1985). In recognitions of this potential roles of the sector, successive governments in Nigeria have continued to articulate policy measures and programmes to achieve industrial growth incentive and adequate finance.
The central goal of government policy was to foster growth in the manufacturing sector. Over the years, and largely in response to some of the previous policy strategies, the main features of the Nigerian manufacturing sector had emerged. The role of bank credits in the growth of manufacturing sector cannot be over-emphasized. For instance, the Federal Government’s Appropriation Bill for the year 2005 has as one of its broad policy objectives to achieve a high economic growth rate (i.e GDP of at least 5%) through a better mobilization and prudent use of economic resources. This objective is not achievable without significant levels of resources from the financial sectors being mobilized and deployed to finance business expansion and growth. Banks have to be effective intermediaries for mobilizing and channeling deposits to the productive sectors of the economy especially, the manufacturing sector.
This study was motivated by the challenges pose by the lack of sufficient bank credits to meet the increasing needs in the manufacturing sector of the Nigerian economy. There is no iota of doubt that bank credits is very crucial and essential in revitalizing the manufacturing sector. As important as bank credits is to the sector in spite the continuous policy strategies to attract credits to the sector, most Nigerian enterprises have remained unattractive for bank credits. Hence, this study therefore intends to throw more light on the operations of bank credits and their resultant effect on the manufacturing sector