THE DEVELOPMENTAL IMPACT OF RURAL BANKING IN NIGERIA (A CASE STUDY OF UNITED BANK FOR AFRICA PLC, AGBANI ROAD BRANCH)
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THE
DEVELOPMENTAL IMPACT OF RURAL BANKING IN NIGERIA
(A
CASE STUDY OF UNITED BANK FOR AFRICA
PLC,
AGBANI ROAD BRANCH)
ABSTRACT
This research work, the developmental
impact of rural banking in Nigeria, a case study of United Bank of Africa (UBA)
PLC Agbani Road Branch, Enugu was carried out to measure to what extent the
rural commercial banks have been able to involve the inhabitant of the rural
areas in economic activities and how successful the bank are measuring up with
their major aim of existence. Sequel to this, the researcher employed a
population size of 25 staffs of United Bank of African PLC, Agbani, Road
Branch. A population sample of 20 being the number of questioners
respondent was equally employed, also the researcher employed percentage
frequently ,statistical techniques to analyze the data sources, the
researchers findings, indicate that rural banking program mes is making a
meaningful impact on the development of a rural areas especially in
agricultural development. Thus there are hindrance such as inadequate
funding, and inability to repay loans as at when due the researcher in turn
recommends that efforts to land rural banking should be sustained, the Central
Bank in particular under whose umbrella the rural banking programme is being
executed should evolve executable policy frame work towards
increases rural banking.
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION
Background of the Study
Statement of Research
Problems
Significance of
Study
Scope of
Study
Limitation of
Scope
Statement of Research
Hypothesis
Definitions of
terms
CHAPTER 2: REVIEW OF RELATED
LITERATURE
CHAPTER 3: RESEARCH METHODOLOGY
Brief Outline of the Chapter
Sources of Data
Collection
Primary
Sources
Secondary
Sources
Organising and Analyzing Gathered
Data
CHAPTER 4 : DATA PRESENTATION AND
ANALYSIS
Questionnaire Analysis
Test of Hypothesis
CHAPTER 5: DISCUSSION OF FINDINGS
(RESULTS), CONCLUSIONS AND RECOMMENDATIONS
Findings
Conclusion
Recommendation
Reference
Appendix
CHAPTER 1:
INTRODUCTION
Banking service when introduced in our
rural areas will bring development or specifically economic development to the
doorstep of every citizen in this country since between 70 – 80 percent of
Nigerians lives in the rural area.
Every Nigeria want to go to the urban
area because of availability of infrastructural amenities like electricity,
good roads, pipe borne water, civilized market operation, job opportunities and
so on. If these social amenities continue to exist in urban areas, life
in rural areas will still remain underdeveloped. Money they say is the
blood that nourishes or gives life to any prosperous economy of a nation.
For money to accomplish its aims in an economy, it needs to be properly managed
and controlled in the banking sector.
Agriculture is the second major sources
that generate revenue to the Nigeria government after oil industry. The
sector of the economy right from time has been neglected. The rural areas
have not felt any positive impact on the development plan but only recorded a
decline in agricultural productivity, which shows that the rural areas have
been neglected at the expense of the urban areas.
The banking industries one of every
nations sectors that has a controlling impact on the economy particularly in
terms of monetary policy, this is why federal government has continuously encouraged
banks to expend their services and facilities not only to the urban cities but
also rural areas.
Background of the
Study
This research work is aimed at
investigating the impact the rural banking services, commercial banks have on
the productivity of small and medium agricultural farmers and the entire
economic activities of the rural areas. This project work also aimed at
acquainting ourselves with the benefit of rural banking services in terms of
mobilizing and organizing present farmers into efficient and active
co-operative groups, small and medium scale farmers and integrated rural
communities.
The objective of this research is to
evaluate how effective credit allocation among productive activities the rural
areas have been realized.
Finally, the aim of the project work is
to suggest policy measures to government in improving rural banking so as to
have the desired development impact on the rural areas in Nigeria.
Statement of Research
Problems:
The commercial bank is a profit making
organization. There is a great fear in establishing in rural areas where
it cannot maximize profit. Rural banking has been seen as indispensable
if the nation is to develop its rural areas. The development of one rural
area may not be a reality if services of commercial banks are not at the reach
of our rural dwellers.
This project work is designed to
measure to what extent the rural commercial banks have been able to involve the
rural dwellers in the economic activities in terms of awareness.
Significance of Study:
Nigeria is a developing country with
more than 70 percent of her population living in the rural areas. These
rural dwellers are faced with lot of hardship in terms of basic
infrastructures. The rural dwellers are mostly farmers, definitely require
loans, to reduce the hardship involved in acquiring input as well as
cultivating their farms, therefore, the services of banking becomes very
essential.
This study is essentially significant
in that it is directed towards evaluating the effect the growth of rural
banking activities has on the rural inhabitants which is a criteria aimed by
measuring economic standard. It is also significant in the sense that it
shows to what extend the rural banking programme in Nigeria has been
successful.
Conventional economics and experience
suggest that by supplying food, labour and invisible surplus, the rural areas
help to generate urban income and employment. They also help to stabilize
if not reduce production cost for industries and cost of existences of
commercial banks in the rural areas will speed up investment.
Scope of Study:
This study is limited to Enugu State, a
state comprising of eighteen (18) local government area each having one or more
rural bank(s). For ease of information we would restrict to Awgu, Nkanu
East dwellers. This project work is designed to measure to what extent
the rural commercial banks have been able to involve the rural dwellers in the
economic activities in terms of awareness and influence on their style of
living through banking activities and how successful the banks are measuring up
with their major aim of existence. The government has accepted banking
persuasive rather than forcing banks to establish branches in the rural areas.
Most villages are without electricity
and pipe borne water and the banks spend much more that customers deposit to
provide these amenities for workers.
A major problem is that the rural
dwellers don’t patronize the bank industries. Most of the rural dwellers
are farmers. They go to the farm before the bank starts its business and
return only after they have closed to customers. Hence the bank finds it
difficult to make profit.
The rural banks encounter lot of
problems cultivating banking habit in the rural dwellers. Rural dwellers
live in mutual suspicion with strangers, for that rural branches workers are
affected.
The rural banks also encounter problems
of granting loans to rural dwellers and small scale businessmen in the rural
areas. Because they are not too aware about why bank lend them loan, they
use this loan for marrying wives, thus means of repayment becomes a problem.
Although United Bank for Africa (UBA)
has been chosen as a case study, other banks like Union Bank of Nigeria (UBN),
first Bank of Nigeria, All States Trust Bank, Citizens Bank etc, can find this
study beneficial to hem since they are all operating the same economic
environment.
The study focuses attention to the
impact of rural banking in the development of rural areas.
Statement of Research
Hypothesis:
The following hypothesis has been
formulated to which the study will attempt providing answers.
Ho:
The United Bank of Africa UBA makes use of techniques/methods in determination
of its return in rural banking.
H1:
Apart from the rural farmers, the United Bank of Africa does not source fund
from other activities of the rural banking.
Ho2:
The United Bank of Africa make adequate benefit from the accumulated investments
of urban banking.
Ho3:
The United Bank of Africa does not derive any benefit from the accumulated
investments of rural banking.
Definition of Terms:
BANK:
According to the Nigerian Banking Act,
1969 (as amended Bank amendment act 1979), a bank is described as the business
of receiving money from outside source as deposits irrespective of the payment
of interest and the granting of money, loan and acceptance of credited or the
purchase of bills and cheques or the purchase and sale of securities for account
of those or the incurring of the obligation to acquirer claims irrespective of
loan prior to their maturity or the assumption of guarantees and other
warranties for others or the commissioner may on the recommendation of the
central bank by order publish the federal gazette designed as banking business.
RURAL AREA:
According to Webster’s New Word
Dictionary, it refers to that not being characterized with citizen or urban
life. That is usually associated with farming and agriculture. The
rural area has the features of low level of literacy, poor health facilities,
and inadequate family planning, low technology and inadequate
infrastructures. In addition, a prominent phenomenon in rural areas is
that the people who live there have as integrated culture and social system as
their way of life. Development is carried out as group efforts in a
community. In Nigeria, majority of people who live in rural areas earn
their main income from agriculture.
Rural bank:
A rural bank can be described as a
brand of existing bank established in the rural area to provide banking
services for rural population. These services could be in the form of
motivation, rural saving, credit allocation among productive activities of the
rural population and linkage of money market in the rural areas with the
capital market in the urban centers, in other words, the adequate efficient and
equitable allocation of resources amongst different sectors of the rural
economy.
The scope of the activities and
operations of a rural bank is similar to that of commercial bank establishing
it but limited due to a verity of reasons. The primary role expected of a
rural bank should be the finance of identified rural development projects of
short and medium terms duration. But given constraints in finding and the
need to have it becomes obvious that it will be desirable and viable that
projects of the following categories should be financed by any rural banks.
Rural Banking
Programme:
This is a programme embarked upon by
the Nigeria government in 1977 with the aim of extending banking habit to the
rural area by mobilizing rural savings, assisting government in implementing
monetary and other development policies. The programme is also aimed at
making productive an activity receive adequate attention by way of allocating
credits. The implementation of the programme is the moments in 1977-1980;
1980-1983 (later extended to 1985) and 1985-1989).
Development:
Development should be perceived as a
multidimensional process involving the re-organisation and orientation of
entire economic and social system. In addition, to improve income and
output, it typically involves radical changes in population, attitude customer
and belief.
Finally, although development is
usually defined in the national context its wide spread realization,
modification of the international, economic and social order.
Economic Development:
This term has generated a lot of
controversies over the years. Some economics see it as political and
structural change while others are of the opinion that it relates the progress
in the basic human needs over time. Another school of thought defines it
as growth accomplished by changes i.e. change in structure of the economic in
the country’s social structure and its political structure.
Others have tended to make basic human
needs approach, an approach which defined economic development in terms of
progress toward reducing the incidence of poverty, unemployment and income
inequalities and for those whose living standards have not been rising.
This approach also seeks ways and means of improving their conditions,
Monetary Policy:
The monetary policy of a nation is a
fact of its broad economic policies. It deals with the discretionary
control of money supply by monetary authorities in order to achieve desired
economic goals.
Standard of Living:
This could be linked with the level of
substance, as of a nation, society, class or person with reference to the
adequacy of necessities in daily life as a result of varying per capita income;
people equally vary in their standard of living. The per capita income in
the United States of America for example cannot be compared to that of
developing countries like Nigeria.
Consequently, the standard of living
differs, and perhaps, the nature of facilities and economic activities present
in urban areas make standard of living differ from the urban area and the rural
dwellers.
Employment:
In the simplest form, employment refers
to the engaging, hiring or making use of the services of a person with the view
of compensating him or her with wages. As a result of the economic
recession in Nigeria employment problem has not been adequately tackled.
Marketing:
Whenever one engages in doing anything
to create satisfaction that the person has engaged in marketing, be it
production of goods or rendering services. The challenges that face
marketing are that of generating ideas and avenues of satisfying consumers
needs and want at a profit in a socially responsible manner. Marketing
involves any interpersonal, inter-organizational relationship with the result
of exchanging processes; it related the exchange of ideas, goods and services.
Loan:
This is the amount granted to
individual companies, banks or any organization by commercial banks or any
other financial institution for a specific period when the money may be paid
back with interest.
Product Unity;
Engaging in the ration of economic
value and quality involving manufacturing of goods and services.
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