IMPACT OF CREDIT ACQUISITION ON THE DEVELOPMENT OF THE SHIPPING INDUSTRY

ATTENTION:

BEFORE YOU READ THE ABSTRACT OR CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

INFORMATION:

YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420

WHATSAPP US ON 08137701720

IMPACT OF CREDIT ACQUISITION ON THE DEVELOPMENT OF THE SHIPPING INDUSTRY

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

The Maritime Transportation Industry in Nigeria is that which is undeniably important to the economic growth of the nation. Its role can affect the economy positively or can also be a set back to the economy. The history, growth and progress of nations are closely interwoven with the degree of development of the maritime transport industry that can exist or already in existence. The Nigerian economy is classified as a mixed economy and the maritime industry of Nigeria is a Major sector of the Nigerian economy putting in consideration that the country’s status is a major oil producing and exporting country. Maritime trade has played a key role in Nigeria’s economic development. It accounts for about 95% of the vehicular means of Nigeria’s International Trade. The economic level, an adequate and efficient maritime transport system plays a vital role in the development of a country’s market especially the market of international trade by transforming local markets in to national, regional and international focus. This allows economies of great scale in areas that have promising comparative advantage with concomitant generation of huge employment opportunities. The maritime sector is capital intensive and thus requires huge amount of funding.

Maritime shipping comprises a large variety of different businesses which according to UNCTAD (2011) can be categoried as follows: Shipping building, ship owning, ship operation (container ships), ship financing, ship scrapping, ship classification, ship registration, ship insurance (Protection & Indemnity), seafarer supply and port operation (container terminal operators). These areas of maritime activities have prospects for sustained growth as supported by the positive trends in value of exports on ships, floating structures and the world seaborne trade.

Shipping as a service sector is an important component of the national economy. It makes a direct significant contribution to GDP, job creation and provides crucial inputs for the rest of the economy. Unfortunately, activities in this sector in Nigeria are dominated by a few foreign firms which afford the enormous capital required in this sector. For example, in terms of ship owning and operation, Okoroji and Ukpere (2011) document that only about eight (8) percent of the total number of vessels that called at the Nigerian port terminal between 1997 and 2006 are owned by Nigerians. Igbokwe (2006) finds that Nigeria has only three vessels duly certified for cabotage shipping services out of one hundred and fourty (140) needed by the oil industry. These statistics indicate negative implications on the growth and viability of indigenous SME’s in the shipping industry as they basically lack adequate capacity to operate competitively. Special intervention policies (albeit unproductive) have been initiated by the federal government in the past to correct this imbalance. These include direct funding through Ship Acquisition and Ship Building Fund (SASBF), Cabotage Vessel Financing Fund (CVFF), cargo reservation and outright Cabotage legislation. However, as is tradition in developed maritime nations, ship acquisition and fleet expansion is better done through debt finance which can only be provided by the banking institutions. This fact questions the commitment of the Nigeria’s banking institution especially the commercial banks in providing entrepreneurial finance to SME’s in the shipping sector.

Existing studies have identified funding as a major constraint to entrepreneurs in establishing and managing SMEs in developing countries; notable among such studies include: Abereijo and Fayomi (2005), Beck (2007), Hoff et al. and Gibson (2008). According to Dalberg Global Development Advisors (2011), SMEs which play a crucial role in furthering growth, innovation and prosperity in developing countries are unfortunately, strongly restricted in accessing the capital that they require to grow and expand, with nearly half of SMEs in these countries rating access to finance as a major constraint. A number of factors have been adduced to this development; at one extreme the government has been blamed for not providing direct funding or adequate legislative support for financial institutions to do so; see Cumming et al (2006), Lerner and Antoinette (2005); at the other extreme, financial institutions point to entrepreneurship related factor: lack of lender information, risk profile and legal environment etc. Thus, further research is needed to identify the constraints hindering banks funding in development of SMEs or the maritime businesses in the shipping sector. The outcome of this study would provide insight into factors affecting the commercial banking institutions in the provision of credit to private sector led SME development. The findings from this study would also provide basis for designing intervention policies aimed at addressing the funding issues of SMEs in the shipping industry. The rest of the paper is structured as follows: in section two, we develop the conceptual framework of this paper and examine related literature. Section three presents the methodology while results of data analysis of the study is presented and discussed in section four. In section five, we discuss the policy implication of the results and conclude the work.

Over the years the Central Bank of Nigeria had stipulated the amount of interest and lending rates that are obtainable in our commercial banks, with a view to harmonize these rates in all commercial banks in all the country it will be of interest to note that the central banks credit policy guideline had been a reflection of the country’s economy form year to year.

The monetary and credit policy measures were designed to accelerate the rate of domestic production maintain healthy balance of payment position reduce the arte of domestic price inflation. Monetary policy measures were also aimed at increasing the flow of credit to the priority sectors of the economy particularly the agricultural and manufacturing sectors so as to expand the production of home made goods and services. The stand of monetary policy continued to be tight to complement a disciplined fiscal policy in order to achieve moderation in inflection any measure and ensure exchange rate stability.

History of Banking In Nigeria

The Nigerian banking ordinance of 1952 and the banking act of 1958 and various amendments and innovations through 1969 laid the foundation for the operation of commercial banking in Nigeria. The number of commercial banks operating in the country rose from eight (8) in 1959 to twenty five (25) in 1983. as at 1995 there are 65 commercial banks in Nigeria with 1634 branches in urban areas 763 branches in rural area and 6 branches abroad totaling 2403 branches a significant increase. While bank branches and offices increased from 160 to 1108 branches and offices in these period. The total deposit liabilities also rose from 13.6 million Naira in December 1969 to 13.9 billion Naira at the end of 1983. Since 1977 and following the enactment or promulgation of Nigeria Enterprises promotion decree 1972 it has become mandatory for all banking institutions in the country to be at sixty percent (60%) Nigeria owned. This showed that with the promulgation of Nigeria enterprises promotion decree Nigeria have started loving more than fifty percent (50%) shores in the commercial banks operating in the country following the current capitalization that us map out by the central banks on all the commercial banks operating in Nigeria.

The commercial banks have over the years proved to be the most important financial intermediary. They have facilities for the rapid transformation and improvement of our economy far and ways they are the largest single group in financial sector out weighting by shore volume of transactions all the other non-banks financial institution joined together throughout the whole world the commercial banks is playing a big role in shaping the economy. They provide the tools contact and expand the money in circulation through the mass of bank rates. In Nigeria however the government has sustained shareholding in the equity capital of the banks. They have contributed immensely to the economic development through their deposit holding and credit to the Nigeria economy.

1.2 Statement of Problem

This study entitled “ empirical analysis of commercial banks lending policies to the private sector” attempt to appraise the various ways through which the commercial banks disburse money in from of loans and advances to the private sector with a view to determine the extent of compliance with the central banks of Nigeria credit guidelines.

For sometime now there have been a large stream of articles books and researches on commercial banks lending polices. This is so because of the need for fund by both the private and public sectors for development purposes. Frankly commercial banks do not have their individual lending policies but can adjust within the stipulated standard with an aim to utilize their customer’s deposit to attain the goal of optimum profit.

It is disheartening to team that the efforts of various government (federal and state) towards the attainment of industrialization have been on persistent increase. There have been great loss of reveneue of most of the essential infrastructural maritime infrastructure. They do not seem to be any significant improvement with regard to output or productivity of shipping industry. In the area of loans and advances that people now cast doubt over the ration ate of commercial and allied bank loans or credit scheme.

1.3 Research Questions

What are the sources of commercial banks funds and types of advances

What are Credit policy guidelines as projected to direct by the central banks of Nigeria (CBN) with a view to determine the sectoral allocations to the shipping industry

What are typical commercial banks lending policies to determine the extent of its compliance with that of central bank. And based on this of review an analysis is made based on the requirement used to advance money to individual and companies. Hence my decision to appraise the commercial banks lending policies to shipping industry.

Through what sources do you raise your find?

What find of loans do you grant to your customers?

What type of securities qualifies one for your loans?

1.4 Objectives of the Study

This study entitled “ empirical analysis of commercial banks lending policies to the private sector” is discuss toward appraising the central banks of Nigeria credit policy guideline regarding loans and advance disbursed by the commercial banks to individual and companies with a view to determine it’s effectiveness and compliance to the rules laid down. Whether the individual/ companies that benefited from the loan actually make use of the fund for the purpose they applied the money for.The researcher will also have on insight (understanding) into the sectoral allocations of these loans and advances from the view point of preferred and less preferred sectors of the economy. The study is directed towards determining the use to which this borrowed money are put by the beneficiaries with a view to determine whether or not the loans are utilized for the purpose for which they are meant for.The study is also geared towards borrowing whether these commercial banks actually give these loans or they give these with stringent conditions making it impossible for poor individuals or small-scale industries to obtain these and repay with much high interest rate accompanying it.

1.5 Significance Of The Study

This study is important in the sense it shows the ways loans and advances made available to individuals and companies by commercial banks with a view to enable them carry on their business and operations with intention to repaying back such loans at an agreed future period and the agreed interest rate being the cost of the loan.

The study is also significant because the finding will be help to commercial banks customers (the beneficiaries) and there fore help the policy makers to make amend the exists lending policy and formulate new and appropriate lending polices or facilities in such a way to reduce these problems to list minimum.

It will also be of immense benefit to future researchers on the same subject matters or in similar circumstances. The study will also provide data for planning purpose.

Furthermore it will help central banks of Nigeria to know whether their credit guidelines are being followed as prescribed.

1.6 Definition Of Terms

Cross Firing: This means lodgment of cash and cheques in the bank only to meet cheques presented for payment at a branch.

Illiquid: A state of affairs or balance sheet of a concern is said to be illiquid when it is unlikely that advances can be repaid on demand. It simply means insufficient cash to meet demand of a firm.

Pledge: This is a delivery of goods or document of title by a debtor to his creditor as a security for debt or for any other obligation.

Mortgage: Is the conveyance of a legal or an equitable interest in real (movable property) or personal property as security for a dent or for the discharge of an obligation

Assignment: This is a transfer by a creditor to an assignee of the right to receive a benefit from a debtor.

Profitability: This is a total net profit or gain made by a concern from its sales or business activities.

Turnover: This is value of daily weekly monthly quarterly and year’s lodgment of cash cheques or transfer made by an individual in the banks.

Commercial Bank: This means any person who transact banking business in Nigeria and whose business includes the acceptance of deposits withdrawal by cheques.

Acceptance House: This means any person who transacts banking business in Nigeria and whose business includes the acceptance of deposits withdrawable by cheque.

Loans: This is the transfer of funds from one economic entity to another which must be regard with interest over an agreed prescribed period of time.

Credit: The word credit comes from a Latin word credo meaning I believe it mean ability to command capital of another in return for a promise to repay at a specified time in the future (usually with cost represented by repayment of interest).

Hypothecation: An agreement to give a charge over goods or over the documents of title to goods in circumstance in which it take it impossible for the lender to have procession of the goods.

Set Off: The combination of the debit and credit accounts so as to arrived at a particular or full payment of a debt.

HOW TO RECEIVE PROJECT MATERIAL(S)

After paying the appropriate amount (#5,000) into our bank Account below, send the following information to

08068231953 or 08168759420

(1) Your project topics

(2) Email Address

(3) Payment Name

(4) Teller Number

We will send your material(s) after we receive bank alert

BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864