Full Project – Rural banking and its effect on the Nigerian economy

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CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Banking services when introduced in our rural areas will bring development or especially economic development to the door step of every citizen in this country since between 70-80 percent of Nigerian lives in the rural area. In most developing countries rural economy is the main traditional pursuit and the key to sustained growth of modern economy, economy growth goes hand in hand with rural economy progress, stagnation in rural economy is the principal explanation for poor economy performance.

Every Nigerian 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 area will still remain under developed, money they say is the blood that nourishes or gives life to any prosperous economy of a nation. For many to accomplish it’s an in economy, it need to be properly managed and controlled in the banking sector.

Agriculture is the second major or sources that generate revenue to the Nigeria government after oil industry. The sector of the economy light from the time has been neglected. The rural areas have not felt any positive impaction of the development plan but only recorded. A decline agricultural productivity, which shows that rural areas have be neglected at the expense of the urban areas. This is why federal government has continuously encouraged banks to extend their services and facilities hot only to the urban area or cities but also rural areas.

1.2       STATEMENT OF THE PROBLEM

Commercial bank is a profit making organization there is a great fear in establishing in rural areas where it cannot maximize or make 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 reality if service of commercial banks is not at the reach of our rural dwellers.

The problem there is how to resolve the profit motive of the rural commercial banks and the essential services being rendered to measure to what extent the rural commercial bank have been able to involve the rural dwellers in the economic activities in terms of awareness.

1.3       PURPOSE OF THE STUDY

The purpose of the project is to suggest policy measure to government in improving rural banking, so as to have the desired development impact on the rural area in Nigeria.

Some of the measure are as follows:

1. To determine the impact of rural banking on rural development
2. To ascertain the relationship between rural banking and improved standard of living.
3. To determine the means used in determining return in rural banking.

1.4       RESEARCH QUESTIONS

1. Does rural banking lead to rural development?
2. To what extent has rural banking improved standard of living?
3. What are the means used in determining return in rural banking?

1.5       RESEARCH HYPOTHESIS

H₀: There is no significant relationship between rural banking and rural development.

H₁: There is significant relationship between rural banking and rural development.

H₀: There is no significant relationship between rural banking and improved standard of living.

H₁: there is significant relationship between rural banking and improved standard of living.

1.6       SCOPE AND LIMITATION OF THE STUDY

This study is limited to Enugu state, a state comprising of eighteen (18) local government area each having one or more rural banks. For ease of information we would restrict to Awgu, Nkanu East dwellers. This project work is designed to measure to what extent to rural commercial bank 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 increasing up with their major aim of existence.

The government has accepted banking persuasive rather than forcing banks to establish branches in rural areas. Most villages are without electricity and pipe borne water and the banks spend much more that customer deposit to provide the same amenities for workers. A major problem is that the rural dwellers are farmer. They go to the farm before the bank starts its business and return only after they have closed to customer. Hence the bank finds it difficult to make profit.

In the process of carrying out the research, focuses on the development of rural banking in Nigeria (rural branches) as case study, concrete efforts were been mode to arrive at a logical conclusion. However, the work was subject to certain limitation.

Financial constraint is another limitation to this work which is a result of high cost of transportation fare to the various bank branches to their data, cost of material to carry this work to conclusive standard was equally important.

Respondent turned out to be cooperating by completing to questionnaires, which took lot of time and energy to convince them.

1.7       SIGNIFICANCE OF THE 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 loan to reduce the hardship involved in acquiring input as well as cultivating their farm, therefore, the service of banking becomes very essential.

This study is essentially significant in that, it directed towards evaluating the effect of 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 since that it show to what extent that rural banking programme in Nigeria has been successful.

Conventional economic and experience suggest that by supplying food, labour and invisible surplus, the rural area help to generate urban income and employment. They also help to stabilize if not reduce production cost for industries and cost of existence of commercial banks, the rural areas will spend up investment.

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Full Project – Rural banking and its effect on the Nigerian economy