This study investigates the technical support which commercial banks provide for small scale industries in Nigeria (a case study of Union Bank of Nigeria Plc). The contributions of commercial banks range from the granting of loans to the small scale industries and advisory services are examined. Various determinants employed include the use of primary sources (those collected by the researcher) and secondary sources (those collected from relevant published materials). Importantly, the study provides entrepreneurs, small scale businesses, bankers, researchers and government official a clearer view of the problems facing small scale industries, understand how best to tackle these problems and ways of stimulating development of small scale industries.


Prior to the 1970s or thereabout, the view that large firms were the cornerstone of modern economy dominated economic literature (Nnanna, 2001). The theory of economy of scale which is predicated on the advantages of large scale operations was almost doctrine. In this context, small scale industries (SSIs) were seen as belonging to the past, out-model and a sign of technological backwardness. Indeed, their rapid decline became an index of industrial progress (Owualah, 2001). Lately, however, this view has changed, as the importance of small scale industries in promoting industrialization and economic growth has been recognized globally.
Studies have shown that SSIs have in many countries provided the mechanism for stimulating indigenous entrepreneurship, enhancing greater employment opportunities per unit of capital invested and aiding the development of local technology (Sule, 1986; World Bank, 1995). They help to mobilize savings for investment and promote the use of local raw materials. In addition, the SSIs contribute to the strengthening of industrial linkages and the integration of industrial with other sectors of the economy through the production of intermediate products such as raw materials, spare parts and machinery. It is also recognized that small enterprises adapt with greater ease under difficult and changing conditions as their low capital intensity allows product lines and inputs to be changed at relatively low cost.
In view of these advantages, greater attention has been given to the promotion of SSI globally.
According to Economics Dictionary (1960), industry is defined as the leading sectors of the economy, the totality of all factories, works, power house, mines and workshops which produce tools and equipment, which use the materials and produce the logs, timbers and woods and further use the immediate goods produced by industries as well by agriculture. There is no universal definition of small scale industry. Each country tends to derive its own definition based on the role SSIs are expected to play in that economy and the programmes of assistance designed to achieve that goal. Varying definitions among countries may arise from differences in industrial organization at different levels of economic development and difference in economic development in parts of the same country (Sule, 1986). The criteria that have been used in the definition include capital investment (fixed assets), annual turnover, gross output and employment. Prior to 1992, different institutions in Nigeria adopted varying definitions of small enterprises. The institutions included the Central Bank of Nigeria, Nigerian Bank for Commerce and Industries, Center for Industrial Research and Development and the National Council on Industry (NCI) streamlined the definition of industrial enterprises to bring in uniformity and providing for its review every four years. The definition was revised in 1996 as follows (NCI, 1986): Small Scale Industry is an enterprise with total cost (including working capital but excluding cost of land) above N1 million, but not exceeding N40 million, with a labour size of between 11 and 35 workers.

The classification of small scale industries in a diagram:
Small scale industry

Factories Non-factories

Cottage Industries Crafts Industry

The increasing development of small scale industries in Nigeria can be appreciated by looking at the pride of place it occupied in many National Development plans. For example, in the second National Development Plan, the government stated that it is its policy to give active support to the promotion and development of small scale industries in the country. To this end, a lot of policies and programme have been initiated by government to enable them attain their objectives culminating in the establishment of the Nigerian Industrial Development Bank (NIDB). In fact, the forth National Development Plan 1980 – 1985 stated that the objective of establishment special assistance programme for the development of small scale industries is for them to serve as a necessary tool for the development of the Nigerian enterprises.
The term small, medium and large are relative. They differ from industry to industry and country to country. In short, there is no unique of universally accepted definition to these terms. What Nigerians considered very large scale in the 1940s may be qualified now as small scale. Also, the optimum size of a ceramic industry is quite dissimilar to that of a fertilizer plant. Some industries are typically small (crafts, gold milling for example).