DEVELOPMENT BANKING IN NIGERIA

1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY 
Development banking in Nigeria was established, as a result of strong needs to close the gap created by the inability of the operating banks in Nigeria such as commercial banks, central bank and merchant banks to provide the needed funds to finance some special sectors of the economy such sectors which must be financed mainly with long-term and sometimes with medium term funds, need finance from specialized banks such as development banks. These banks were established for the purpose of providing medium and long term loans for capital projects in Agriculture commerce, industry and other essential projects that are necessary for economic development of the country, such loans are usually provided from the banks internally resources. For projects that require huge capital resources than it can provided alone, development bank usually mobilizes other financial institutions to raise the required loan for the establishment that requires it.
Apart from providing medium and long term loans for capital projects in specific areas as already mentioned, development banks render ancillary services like proving technical advice on new and existing projects to their customers, engaging in promotional activities to stimulate interests among their customers on new prefects which the banks consider necessary and profitable.
The commercial banks in operation provided short term funds which was as a result of the nature of funds available to them. Occasionally the provided medium term funds and long-term basis. Development banks perform this function by providing long-term loans for capital projects in specific areas. In Nigeria, we have the Nigerian industrial development bank (NIDB), the Nigerian bank for commerce and industry (NBCI) and the Nigerian Agricultural co-operative bank (NACB) now known as Nigerian Agricultural, co-operative and rural development bank limited (NACRD). These banks are owned by the federal government.
Following the reconstruction of the Nigeria industrial development bank limited, NIDB in 2001, which incorporated the mandate of the Nigerian bank of commerce and industry (NBCI), the (NBCI) apperar to have lost its identify. Today you may not discuss the NBCI without seeing it as a part of NIDB.
Nevertheless, since NBCI, is still in existence having not be swallowed by the NIDB,
The NBCI was established through decree 22 of 5th may 1973 by the federal government of Nigeria. The bank which is believe to be a child of circumstance because it came up after the Nigeria civil was when the indigestion decree was set up. It started its operation on 4th October, 1974.
The bank’s authorized capital at inception was N50 million N35 million of this fully paid up and subscribed by the federal government with 60% and the central bank of Nigeria, which had the remaining 40.
The bank when established was meant to assist the implementation of the indigensation decree of 1972
By the decree No22 of 2nd April 1973, the bank was to provide equity capitates and funds by way of loans to indigenous persons, institutions and organizations for medium and long term investments in industry and commerce at such rates and upon board in accordance with the policy directed by the federal executive council
This decree empowered the bank to borrow monies from any source it can, to enable it meet its obligations and discharge functions.

1.2 STATEMENT OF PROBLEM 
Following the increase economic activities in Nigeria, commercial banks which have been established to provide their customers with short term loans can no longer meet up with duties of providing medium. At this point in time the monetary authority and the federal government saw the need to create a bank that will cater for the need of people living in rural and urban areas and those who want to invest on capital projects.
The aim of establishing this bank was to grant medium and long term loans to Nigeria investors. The aim or establishing this bank was defeated due to culminated by the economic depression pampging the Nigeria economy which had lead to the Nigeria economy which had lead to the folding up or wounding up of many industries which had slowed-down the business activates in our industries which affect the development banking in Nigeria.
Development banking have not performed satisfactorily area of capital projects and promotional activities to stimulate interests among their customers on new projects which the bank consider necessary and profitable. This can be attributed to in equate capital base, the high rate of interest charged on loans borrowed and high cost of building houses. New initiatives are therefore needed to tackle these problems.

1.3 OBJECTIVES OF THE STUDY
The objectives of this study are as follows:
1. To final out the role played by development banking in the development of Agriculture, commerce and industrial sectors.
2. To highlight the impact of development banking in the Nigeria Economy.
3. To examine the extent of mobilization of funds to finance capital projects.
4. To examine the sources of funds to the development banking in Nigeria.
5. To determine whether there is any difference in functions of bank that makeup development banking.
6. Finally to make general and specific recommendations for worthwhile for development banking in Nigeria.

1.4 RESEARCH QUESTIONS 
The following research questions have been formulated for the study
1. What is the role played by development banking in the development of Agriculture, commerce and industrial sectors?
2. What are the impact of development banking in the Nigeria economy.
3. What is the extent of mobilization of funds to finance capital projects?
4. What are the source of funds to development banking in Nigeria.
5. What are the difference in functions in banks that make-up development banking?

1.5 SIGNIFICANCE OF THE STUDY 
The results of the study will be beneficial to different people in different ways. It will be beneficial to stakeholders in development banking industry, management and staff of the development-banking sector where achievement has been minimal.
The study will benefit the public who will understand the role played by development banking and use to apply for micro credit loans. It will be equally beneficiary to investors who applied for medium and long-term loan on how development banking finance capital projects. It will also stimulate new thoughts and ideas on how development banking in Nigeria carry out its activities.
Finally, the study forms the basis upon which further research can be actuated.

1.6 SCOPE AND LIMITATION OF THE STUDY
The study was limited to development banking in Nigeria. Because of the time frame and finance constraint on the side of the researcher, the scope of the study was limited to developing banking in Enugu metropolis, Enugu State.
However, the researcher encountered problem in area of gathering materials/data for the research work due to dearth of research materials on the topic. This however, does not distort the researcher from getting relevant documents that aided her in carrying out research work of this nature.

1.7 DEFINITION OF TERMS 
RESUSCITATE AILING INDUSTRIES: This bank resuscitating ailing industries that can operate competitively in the country’s economy.
LOCAL SOURCES OF FUNDS: This are funds provided to the development bank by the federal government of Nigeria and the central bank of Nigeria.
INTERNATIONAL SOURCES OF FUNDS: This is a way by which development bank obtain foreign loans and grants from international agencies.
ABSORPTION OF EXCHANGE RISK: The bank provides facilities that will encourage the absorption of exchange risk encountered by funds users in respect of foreign dominated loans.

REFERENCES
Nwakoby: C.N (2004), “Banking practice and operations
in Nigeria; principles issues and practice, Emene-Enugu, New Generation Books Publishing Company ltd, p 119.

Okeke, C.C.S (1990), “Senior Secondary Economics,
Onitsha, Jet Publishing Company.

CHAPTER TWO