University of Nigeria C. A._92_10783_0... · 2015. 8. 31. · 1, NWUDE, C, A,, a postgraduate student in the Department of Rnnking and Finance, University of Nigeria and with Reai~tration

University of Nigeria Research Publications

NWUDE, C. A.

Aut

hor

PG/MBA/91/10783

Title

Financing Capital Projects in Local Government Through

Community Banks.

Facu

lty

Business Administration

Dep

artm

ent

Banking and Finance

Dat

e December, 1992

Sign

atur

e

Y I N A N C I M G CAPITAL PROJSCTS 1N LOCAL WVEHNHSNTS

I THROUGH COMMUNf TY BANKS*

2UiX41 l'TdD I N PARTIAL FULFILMENT OF THE HEUUXH GMENT

FG,; THi DEGREE OF MASTERS OF BUSINESS ADMINISTHATION

(MBA) IN BANKING A N D FINANCE

DEPARTMENT OF BANKING AND FINANCE

UNIVERSITY OF N I G E R 1 A

ENUGU CAMPUS

DGCEMBER, 1992

1, NWUDE, C, A,, a pos tg radua te s t u d e n t i n

t h e Department of Rnnking and Finance, University

of N ige r i a and w i t h R e a i ~ t r a t i o n No. PG-MRA-9j-20782

has s a t i s f a c t o r i l y completed t h e requi rements f o r t h e

Course and Research work f o r t h e D e ~ r e e of Masters

i n Bus iness Adminis t ra t ion (MBA) i n t h e Department

of Banking and Finance.

Th i s work embodied i n t h i s d i s s e r t a t i o n i s

o r i g i n a l and h a s no t bcje'q'm~brnitted i n p a r t o r f u l l

f o r any ~ t h e r diploma o r degree of t h i s o r anv a t h r r

Univers i ty ,

PROF, I - . 0, OKAFOR HEAD 01' DEPARTMENT

..................... DR. Be Ee CHIKELEZE

SUPERVISOR

iii

This work i s d e d i c a t e d t o my fami ly .

I wi sh t o a c k n o w l e d ~ e t h e immense c o n t r i b u t i o n

and u n d e r s t a n d i n g of my s u p e r v i s o r , D r . B. E. Chike l czc

whose accommodating n a t u r e made t h e comple t ion o f t h i e

work by now p o s s i b l e .

May I a l s o ex t end my ~ r a t i t u d e t o t h e g e n e r a l s t n f f

of N a t i o n a l Board f o r Community Banks and Deputy Governor

Off ice, Enugu especS a l l y t h e D i r e c t o r Gene ra l f o r Local

Government M r . Ose i and M r . Eee of t h e P l ann ing and

Rdsearch S t a t i s t i c s D i v i s i o n .

C a m a l e o i n d e b t e d t o my b r o t h e r M r . Nwudc, N. D.

whose w e a l t h of k n o w l e d ~ e and a d v i c e , as a former

P l a n n i n g O f f i c e r of Aniocha Loca l Government Area i n

Anambra S t a t e was v e r y u s e f u l .

The l a s t b u t n o t t h e leas t is my b o s s M r . S. A.

Onyenwe of Pay O f f i c e S t a t e Educa t ion Awka whose under-

s t and i r lg o f t h e p l i g h t of a worker / s tuden t m ~ d e t h e

complet ion of t h e work p o s s i b l e .

A B S T R A C T - - - - - - - - The i n a d e q u a c y of t h e s e r v i c e s p r o v i d e d by t h e

~ u c a l Governments and t h e i r q u i t e l i m i t e d p o t e n t i a l to

rai , ,o s u b s t a n t i a l r e v e n u e , i n t h e short run, i n t e r n a l l y

!mv@ been n o t i c e d o v e r t i m e . Thus, o v e r 8 G p e r c e n t of

t:w& ~ x y e n d i t u r e o a r e financed b y the Federal and

Stn ta Governments and e s t a b l i s h m e n t of U i r e c t o r a te of

pood, Aoadr and R u r a l I n f r a a t r u c t u r c ( D F H H I ) i n 1906 t o

lay a s o l i d f o u n d a t i o n for the economic g r o w t h and

davelo;,mcnt of t h e r u r a l a r e a s .

I n an attempt t o mobilise s a v i n g s i n t h e r u r a l

.mms a n d c h a n n e l t h e same t o p r o f i t v e n t u r e s by creating

u o d i t s thua a i d i n g economic g r o w t h and deve lopumnt , thu

a~ .m .doned Rural Banking Programme was i n t r o d u c e d i n 1977

f01Lowed by Pe0@48 bank 1989 and Community Banks i n 1891.

T h i s p a p e r s e e k s to a s c e r t a i n t h e extent of capftal

projuct f i n a n c i n g by Community Banka and c a p i t a l project

f i n m c i n g i n Local G o v ~ r n m n l s and how CommunPty Banks

c a n be restructured to a d e q u a t e l y aid Local Governments

i n c a p i t a l p r o j e c t s f i n a n c i n g .

Usin9 c a p i t a l and r e c u r r e n t e x y e n d i t u r ~ s and

i n t u r r i s l l y g e n e r a t e d and s t a t u t o r y a l l o c a t e d r a v e n u a s for

budgeted and a c t u a l f i g u r e s realisad by L o c a l Governments,

c a p i t a l p r o j e c t s f i n a n c i n g i n Local Govornmento was a t u d i e d .

Paid up shares, d e p o s i t s , o thmr l i ab i l i t i e s , total

asaots arid areas of i n v e s t m e n t up to September 1992 by

t;rc banks were used t o s t u d y f i n a n c i n g of c a p i t a l

p r < > j c c t ~ by t h e b a n k s a n a the adequacy of t h e i r caplLtal

~) 'ssQ.

Local Govmrnments need a maximum of d1.9 m i l l i o n

a n n m l l y t o f i n a n c e t h e i r p r o j e c t s w h i l e t h e banks have

an average of w4.04 m i l l i o n i n l o a n s and a d v a n c e s as a t

Septamber 1992. T h i s is 2 ~ . 5 p e r c e n t of t h e i r d e p o s i t s .

T1m paper t h e r e f o r e recommends t h a t t h e c a p i t a l base of

the banks couLd be improved b y a s k i n g L o c a l Governments

tu bcxorne s t a t u t o r y c o n t r i b u t o r s t o t h e e q u i t y shares

of these banks. I n o r d e r to a v o i d a n o c c u r e n c a of undue

in-~rfsrence of L o c a l Governments i n t h e d a y t o day

activities o f t h e banks as w i t n e s s e d i n S t a t e commercial

banks, Local Governments s h o u l d n o t be r e p r e s e n t e d I n

ti board.

T i t l e Page I C e r t i f i c a t i o n , Dedica t ion Acknowledgement

(7 Table of Contents L i s t of Tables

CIIAPTER ONE t INTRODUCTION

1 . 1 Pre l imina ry Comment 1.2 Statement of t h e Problem 1.3 ObJect ives of t h e Study 1.4 S i ~ n i f i c a n c e of t h e Study 1.3 L i m i t a t i o n s

CmPTER TWO: -.- LITERATURE REVIEW

2 -1 Sources of Fund Avai l ab le t o Local Governments

2 Taxat ion 2.2.2 Rate 2.3.3 S t a t u t o r y A l l o c a t i o n 2.1.4 Gran t s 2.1.5 Miacellaneona Rcvcnue

2.2 Loccrl government^ nnd Rural Developrnent 2.3 Trends and P a t t e r n s of b r a 1 Development

i n Niger ia ,

2.3..1 F i r a t Nat iona l Development P lan 1962-1968.

2.3.2 Second N ~ t i o n n l Uevelopnent PLan 1970-1974.

2-3.3 Tbird N a t i o n ~ l Development P lan 1975-(,980,

2.3.4 Four th Nat iona l Development Plen 1981-1985,

2.3.5 D i r e c t o r a t e of Food, Roads and Rural I n f r a s t r u c t u r e (DFRRI).

2.3.6 Rura l Banking and Rurnl Development 2.3.7 A p i ~ u l t u r ~ l c r e d i t Guarantee Scheme

2.4 Community Banks and Rura l Development

2.4.1 Meaning and F o n c t i o n ~ 2.4.2 k h i e v i n g t h e Enumerated Func t ions 2-4 .3 OwnePship S t r u c t u r e 2.4.4 Ibqui rements f o r E n t a b l i s h i n g a

Community Bank

CHAPTER THREE, RESEARCH METHODOLOGY

3.1 Research Design 3.2 Method of D a t a C o l l e c t i o n 3.3 'lrcatmertt of Data

CHAPTER FOURt PRESENTATION AND ANALYSIS OF DATA

4.1 P r e e e n t a t i o n of Recur ren t , C n p i t n l Expend i tu re s , I n t e r n n l l y Generated and S t a t u t o r y A l l o c n t i o n Revenues of heal Covernmen t~

4.1.1 I ' r e sen tn t ion of Local Governments' C n p i t a l P r o j e c t s .

4.1.2 P r e s e n t a t i o n of Local Governments' I n t e r n a l l y Generated Revenues.

4.1.3 I ' r d s e n t a t i o n of I,ocal Governments' I S t a t u t o r y A l l o c a t i o n s . 5 6

a 4. I - 4 F ' r e s e n t a t i o n of Local Governmente r l1.st imated and Actual Expendi tures . 57 I b I: 4.1.5 F f e s e n t a t i o n o f Actual T o t a l Revenues

5 end Expendi tures , 58

! k 4.2 Prenenlnt ion of D a t a o f Community B a n k s ' A s s e t s , b L i n b i l i t i e ~ and Investment Areaa. 59 t ! ' 4.2.3 P r e s e n t a t i o n of Asuets and 8

61

; Liabilities of Community Banks. r 4.2.2 P r e s e n t a t i a n of Areas of Investment

of tho Comrnunitv &inks. 62

r

CHAPTER FIVE: SUMMARY OF FINDINGS ! CONCLUSION i i: 5.1 sum mar;^ o f Findings E

i 5 .2 I.Zecommmdationa 5 . 3 Conclursion

I

CHAPTER ONE

I N T R O D U C T I O N - I - - - - - - - - - -

1 .? PRELIMINARY COMMENT

One of t h e most impor t an t f u n c t i o n 8 of Locnl

Governments i s t h e promotion o f economic ~ r o w t h and

development i n thei r domain. Thiu t h e y cou ld do by

p r o v i d i n a b a s i c i n f r n ~ t r u c t u r e a l i k e r o a d s , etectrlcity

supply, h e a l t h c e n t r c ~ nnd s c h o o l s and e m b ~ r k i n g on

commercial a c t i v i t i e s l i k e c a t a b l j s h i n g shopplng c e n t r c s .

Achievetnent of t h e s e a c t i v i t i e s w e c n p i t a l p r a j e c t a . A

c a p i t ~ l p r o j e c t can bo d e f i n e d as a set of ectivitics

that reml t i n t h e c r e n t i o n of a tock of goods which

would br uaed f o r f u r t h e r p roduc t ion . Local Covernncnt a

f i n d i t d i f f i c u l t t o embark on c a p i d a l p r o j e c t s o r i n v e s t

f o r in r r tancg accord in^ t o O r e w a end Adewunmi t h e pervices

provided by t h e Local A u t h o r i t i e ~ are g r o s s l y inndequnte

q u a n t i t a t i v e l y when cons ide red i n r e l ~ t i a n t o t h e

popu la t i on and a r e a i n t ended t o be s e rved , Gboyin Locnl

Government w i t h a population of 89,000 ( e igh ty -n ine

thousand] was maintain in^ o n l y 57 m i l e s o f l a t e r i t e r o n d a ,

5 d i s p e n s a r i e s and 2 pr imary s c h o o l s , Ankpa Local

Government w i t h a popu ln t ion of 265,000 (two hundred nnd

s i x t y - f i v e thousfand) wrrs m n i n t a i n i n ~ 2 mate rn ' i tg centrcs,

1 3 m a r k e t s and 212 m i l e s of l a t e r i t e r o a d s . A ~ a i n , Locnl

Governments ' p o t e n t i a l , a t l e ~ s t , i n t h e s h o r t r u n t o

r ~ i s e s u b s t a s t i a l r e v e n u e i n t e r n n l l y i 8 q u i t e l i m i t e d .

I n f a c t , f o r most Local Governments o v e r RO p e r c e n t of

* t h e i r e x p e n d i t u r e s are f i n n n c s d by t h e F e d e r a l and S t ~ t , e

Governments f o r i n s t a n c e , i n 2986 Awka Locnl Governmcnt

r e c e i v e d a t o t a l of N 3 . 9 m e a s t a t u t o r y a l l o c a t i o n o u t of

t o t a l e x p e c t e d r e v e n u e of N4.7m w h i l e Nnewi e x p e c t e d *3,3n

o u t of W4,lm t o t a l r e v e n u e budge ted f o r t h e y e a r . Rut

t h e f i n a n c i n g of L o c d Governments by t h e F e d e r a l

Government i a n o t f e l t a d e q u a t e , hence c a l l o v e r t i m e by

t h e L o c a l Governments f o r a chrlnue i n t h e Revenue

A l l o c n t i o n Farmula so t h a t t h e L o c a l Governments w i l l g e t

a R r e n t e r s h e r e o f t h e F e d e r n l Revenue. The problem

t h e r e f o r e i a how t h e y c o u l d pe r fo rm more e d e q u n t e l y t h e i r

d u t y o f promc t i n g economic rlevclarament and ~ r o w t h .

I t is j n t h e l i g h t o f t h e above t h a t t h c F e d e r n l

Government e s t a b l i s h e d D i r e c t o r a t e o f Food, Roads nrld

R u r a l Infrastructure ( D F R R I ) i n 1986. Amone; o t h e r t h i n g a ,

it wns c h a r g c d t o u s e t h e enormous r e s o u r c e s , Like manpower

and l a n d , of t h e r u r a l a f i e ~ s t o lag a ~ o l i d f o u n d a t i o n

'G. 0 . Orewa and J. B. Adewumi, Local Government i n N i g e r i n , en^ n : E t h i o p e P u b l i s h i n g C o r p r a t i o n , 19M, p . 104,

'~nnrnbra S t a t e L a c e l h v c r m o c n t , 1986 Annual lht i n a t c s .

f o r t h e s e c u r i t y , s o c i o - c u l t u r a l , p o l i t i c a l , economic

growth and development of t h e r u r a l areas w i t h t h o ~ e ot'

t h e Local Governments, t h e S t a t e a end t h e Fedc rn l Govcrn-

ments. D e s p i t e t h e ~ c h i e v e m e n t s of DFRRI, t h e r e hns not

been a s i ~ n i f i c a n t i m p ~ c t of t h e i r e x i s t e n c e i n p r o v i d i n ~

t h e needed p r o j e c t s i n t h e r u r a l a r e n s . Accordinff t o

Obndan and I y a r e - )t I n t h e a r e a 8 of r u r a l w a t e r s u p p l y ; a n d e l c c t r i f i c e t i on t.he ach3evemente of t,hc D i r e c t o r a t e hnvc, however, n o t been v e r y impre s s ive . While t h e phased r u r a l e l e c t r i f i c a t i o n proaramme which w n ~ t n r ~ e t t e d a t t h e D i r e c t o r a t e ' s model v i l l a g e s d i d n o t make much proKrese d u r i n q t h a t f i r ~ t f u l l yenr, moat of t h e boreholes sunk i n a number o f S t a t e s d i d n o t function ... most of t h e r o a d s constructed o r r e h a b i l i t a t e d i n some S t a t e s are e a r t h r o a d s . he side^, t h e y d i d n o t have c n l v e r t ~ nnd b r i d ~ o s , t h e r e b y c o n s t r a i n i n g t h e e f f e c t i v e uae of t h e roods . In a d d i t i o n some of the r o a d s are two ntarrow nnd temporary i n n a t u r e t h a t t h y can e a s i l y be washed away by r a i n 8 I,$

Fd t r l i e r i n J u l y 1977 Rurcrl n c r n k i n ~ Pro~;rammc w n s

launched. T h i s wna i n pursunnce of t h e need of

accumulrttinp. and mohi l i s inp ; s a v i n p i n r u r a l a r e n a nnd

c h a n n e l l i n g t h e R a m e t o p r o f i t v e n t u r e s and t o c r e n t e

c r e d i t t,y way of raisin^; loena . accord in^ t o Oknfor,

'Nichnel I. Obndnn end S. 0. I y a r e , "Government P o l i c y 6,nd Rura l Development i n Nigeria", F i r s t Bank Qrta r te r Jy Review, March 1991 , pp. 10-11.

t h e r u r a l communities t u rned t h e i r bncks on r u r a l bnnk

branches when i t becnme c l e a r t h a t t h e r u r a l b r a n c h e ~

were not prepared t o mnfch t h e i r eagerness f a r r u r a l

d e p o s i t s w i t h any memuro of enthusiam t o d i ~ p e n s e r w ~ l

c r e d i t . Subsequent ly , t h e i n t r o d u c t i o n of S t r u c t u r n l

A d j l l ~ t ~ e n t Pro~ramrne (SAP) i n 2986 and t h e accompnnicd

de regu la t ion of t h e economy and t h e need t o a c c e l e r ~ t e

t h e pace of p rov id ina t h e d e s i r e d banking s e r v i c e t o t h e

r u r a l areas of t h e country l e d t o t h e i n t r o d u c t i o n of

Peoples Bank i n 2989. Peoples Bank is considered

d e f e c t i v e i n s t r u c t u r e and o p e r a t i o n by merely g r n n t i n ~

loans from t h e l i m i t e d amounts ~ o v e r n m e n t could provide

and n e ~ x e c t i n ~ t h e important a spec t o f s av ings mobi l i s n t i a n

Thus community Banks were in t roduced i n 1991.

The ob j e c t i v e a of t h e banks ere: 5

(i) t h e promotion of r u r a l development b providing tankfng s e r v i c e s ( c r e d i t and d e p o s i t 3 ns wel l pa o t h e r f a c i l i t i c ~ t o communities inadequate ly supp l i ed w i t h ~ u c h s e r v i c e ,

1 , I t t *F. 0. Okofor, *Role of Community Banks i n Grnsfironta Development", Paper p r e s e n t e d a t t h e F i r s t Anniversnry nnd

s , I d A n n ~ ~ a l Conference of Community bank^ a t Shernton Hotel Abuja, A p r i l , 1992, P. 43.

1

.5~omhuni ty R e n t s ' p r o s p r e t u ~ May ,992, p. 3.

t h e r ap id enhancement of the devsla~mant of

product ive a c t i v i t j e s i n t h e r u r a l n reaa and

hence t h e i.mprovemcnt of t h e economic s t ~ t u s

of both t h e r u r a l people m d r u r a l a r c a s ;

t h e promotion of t h e emergence of a n e f . f ec t ive

and i n t e ~ r a t e d nnt iannl f i n a n c i a l ~ y s t e m t h n t

respottdu t o t h e needs of t h e whole economy;

t h e i rdculcat ian o f d l ~ l e i p l i n e d banking h a b i t s ,

among t h e masses of low-income w o r k c r ~ i n Ni~crin

e s p e c i a l l y t h o s e i n t h e r u r a l nreaR nnd

f o ~ t e r i n ~ of t h e s p i r i t of community o t m e r ~ h t p

nnd usc of economic n s s e t s and t h e mnintenancc

of such f a c i 1 i t . j ~ ~ nnd o r g n n i s a t i o n on cr a u i t n b l e

b a s i s .

Thus wi th t h e aforementioned o b j e c t i v e s , i t i~ hoped

t h a t t h e reserwch w i l l p rov ide informat ion on t h e

adequacy of lnnancing of Local Governments c a p i t a l

p r o j e c t s by Community Banks, h i g h l i ~ h t t h e problem nrc?nw

i n t h e Crrmmunf t y Brinks* processem nnd ~ t r u c t u r e and

provide s u ~ ~ e 6 t i o n s f o r t h e i r modi f icn t ion .

1.2 SJ'ATEMENT OF THE PRORLEM

E h.ince there i~ inndcquncy of capital p r o j c c t s i n

t h e r u r a l a r e a s ~ n d t h e r e i s u r g e n t need for :thrac ,.-

p r o j e c t s l i k e p i p e b o r n c f i t e r , r o a d s , e l c c t r l c i t , ~ nnd

mnrket development and c s t a b l i s h m c n t of cohmunity nnnks

clmrged nmong o t h e r t h i n ~ s w i t h the enhancement of rnpit l

developvent of p r o d u c t i v e a c t i v i t i e s i n t h e r u r a l nrcnn.

t h e prohlem becomes:

1. t h e Local Gavernmcnt .~ , do t h e y have t h e cnpnci t ,g

t o ndequa t e ly provtde thcwe?

2. i n rl s i t u a t i o n where t h e l o c a l Governmcnt,~ cnnnot ,

have t h e banks t h e c a p a c i t y t o a s s i ~ t them t o d o i t 7

1.3 -, 0H.rECTLYES OF THE STUDY

111 view o f t h e s t a t e d problems t h e pnpcr would

enqu i r e ~ p c c i f i c a l l y i n t o - 1. capl t a l p r o j e c t f i n n n c i n ~ i n Local Governments,

2. f i n ~ n c i n p ; of c a p i t ~ l p r o j e c t s by Community I h n k s ,

3, how t h e community banks can be r e s t r u c t u r e d t o

ndeaua t e ly a i d Loca l Governments i n c ~ p i t ~ l

p r o j e c t s f i nnnc ing ,

1 . 4 SIGNIFICANCE OF STUDY

Recent government p o l i c i e e show t h e e x t e n t of i t s

i n t e r e s t i n r u r a l devel.opmcnt, f o r i n s t a n c e , R u r a l

Bankine; 1977, DFRRI 1986, P e o p l e s Bank 1989 and

: Community Banks 1991. T h e r e f o r e t h i s s t u d y i s hopcd

t o be of i n t e r e s t t o t h e government b e c a u s e i t would

enab le i t t o e v a l u a t e t h e b a n k s m d p r o b a h l y p u t i n

p lace mach ine ry f o r improvement s o t h n t t h e banks cnn

f a c i l i t a t e r u r d developmcnt ,

It i s hoped that i t would p r o b a b l y h e l p f e l l o w

r e s e a r c h e r 8 on ~ i m i l a r s t u d y ,

1.5 LT MITAT1 ONS ANI) SCOPE

A s e r i o u s l i m i t a t i o n e n c o u n t e r e d i n t h i s a t u d y

i~ lack of d e t a . It was t h o i n t e n t i o n o f t h e writer t o

use a p c r j o d o f s f u d y of t e n y e a r s . U n f o r t u n a t e l y , dntn

could n o t be c o l l e c t e d f o r t h e m i d p e r i o d e x c e p t f o r

t h r e e y e n r s . Some y e n r s c o l l e c t e d had t o be dropped

because i t c a n s i s t o n l y b u d ~ e t e d f i g u r e 8 w i t h o u t

co r respond inp a c t u a l f i ~ u r e s s p e n t which doe8 n o t ~ i v e

room f o r cornparism on how t h e Local Governments a c t u ~ l l y

functioned-. The writer t h e r e f o r e d e c i d e d t o u s e t h e

t h r e e y e a r s b e c a u s e i t i s a C ~ O R S s e c t i o n a l d n t a ,an f o u r

Local Governments t h a t there fore ~ i v e twelve per iods

of s tudy.

The four Locnl Governments s tud ied a r e Awka, F m u ~ u ,

Nnewi and O n i t ~ h a whi l e t h e hanks s tud ied cou ld not be

mentioned becnuse o f the agreement between t h e writer

and o f f i c i a l s o f NBCB (Nntionnl Board f o r Community

Banks).

CllAPTER TWO

I,I TEIZATURE REVIEW

WURCF? OF IWND AVAILABLE TO LOCAL GOVERNMENTS 2-1 r.-- -, --- A l o c a l government i 6 nn i d e n t o make t h e impact

of t h e C e n t r a l Government r e a c h t h e g r n s s r o o t , I t hns

d e f i n i t e t e r r i t o r y and d e l c ~ a t e d r e g u l a t i o n nnd t o

enforce them w i t h i n i t s area of j t w i ~ d i c t i o n , thrls i t

needs fund t o f u n c t i o n p r o p e r l y -

O r e w a and Adewumi i d e n t i f i e d seven major sourceR

of revenue open t o modern Loca l Governments namely: 1

( i ) Taxa t ion

(ii) Hate

I ( i i i ) S t a t u t o r y A l l o c a t i o n I

( i v ) G r a n t s from b o t h Federal and S t n t e Governments

( v ) Miscellaneous revenue i temu

( v i ) Motor parks and market f e e s .

( v i i ) Commercinl u n d e r t a k i n g s

Although t h e s e c l ~ s s i f i c n t i o n s n r e a r b i t r a r y , t h e y

n e v e r t h e l e s s show n r e n s where modern Local Governments

can t a p revenue.

2.1.1 Taxu t ion

A t a x is a compulsory l e v y imposed on i n d i v i d u a l ' s

income, companys' p r o f i t s , goods f o r s a l e and l ~ n d c d

p r o p e r t i e s - A t a x may be imposed by any of t h e t h r e e

t i e r government@. These may be r e f e r r e d t o as l a c n l ,

s ta te and f e d e r a l t a x r e s p e c t i v e l y .

A l oca l tax which t h e concern o f t h i s paper i e rl tnx

l e v i e d by a Local Government i n i t s own r i g h t and which

i 8 l o c a l l y assessed and c o l l e c t e d and p roceeds which nre

s p e n t as dec ided by t h e government.

2.1.2 R a t e

Ra t e on t h e o t h e r hand i s a p a r t i c u l a r k ind af

tax which embodied t h e a p p l i c a t i o n of p r i n c i p l e s o f

t a x a t i o n . I t i~ sometimes u e l e c t i v e i n n a t u r e . I t i~

paid by t h o s e who own landed p r o p e r t i e s o r by consumers

of p a r t i c u l a r s e r v i c e a p rov ided by t h e government. The

l a t t e r was used by governments i n t h e c o l o n i a l and pos t

independence e r a i n form of wnte r r a t e s .

One n r e n of c o n t r o v e r s y is whether r a t i n g and o t h e r

forms of ~ R X P S imposed by Local Governments a d t u a l l y

q u a l i f y as lxxml t a x e s i n t h e l i ~ h t of t h e d e f i n i t i o n of

l o c a l t a x ? owlan and' ~ u ~ ~ e s t r d t h e r e i s no l o c a l tnx .- 'L. S. Rawland, " In Rn Independent s o u r c e of t a x

lkvenue E s a e n t i a l f o r N i g e r i a Locnl Governments"? Locnl Government F j n a n c i n ~ i n Ni i n : Problems and Pro8 a-1~1 L. Rowland, e : U n i v e r s i t y of Ife 1979, p. 7 2 .

presently in N i ~ r r i a nnd t h c r e mn,v n o t hnvc \)pen

a n v i n t h e p n B t . I k p o i n t e d o u t t h a t o n e

o u l s i n n d i n p : c o n d i t i o n o f R l o c a l tnx is t h n t

i t m u s t h e n s s c s s c d a n d c o l l e c t e d h y t h e J o c n l

nu1 h o r i t y i m p o s i n ~ i t , R c c o r d i u ~ t o him thc.

l o c n l t , n x e s l e v i e d i n mnnv c o ~ ~ n t r i e s o f w l l i c

Nierria i s n o cxccbpi i o n i s t h c income ( p o l l )

t a x n n d t h e p r o p e r t y t a x on r e n l e s t n t c . JIc

c o n t i n u e d I hnt, whcn I d o c n l Covcrnmcw ts lcvic3tl

t n x c s i n t h e past., t lwy w e r e n s s c s s c d nlltl

c o l l e c t e d by t h e i 2 c ~ i o n n l government.^ on b c l ~ n l f

o f t h e L o c a l C o v e r n m c n t s . Adcde. j i r c n t l i l y

l i k e i n c o m e t n x anti communi ty 1,nx nre n o t t r u e

tnxc-s w i t h both the I h ~ i o n n l a n d L o c n l Covcrnrnerit s

3 la kin^ n p r - e s c r i h e d s h n r e o f t h e p r o c e c d s . Suf-

fice* j.t i , ~ say t h ~ t t h e era o f t n x s h n r i n ~ h a s

Ronc w i t h c n c h ~ ; o v c r n r n ~ n t to kin,^ c n r e o f i l s

2.4.3 S t t l t u t o r y A1 l o c a t i o n

Ano the r nren o f L o c a l Governments source of

r e v e n u e i s s t a t u t o r v a L l o c a t i o n f rom b o t h P'cderr-11

and S t a t e Governments. In s e c l r c l ~ of an

a d e q u a t e f ormuln f o r s h a r i n g t h e n o t i o n a l

rev tmue Okigbo ' s commission on Revenue

A l l o c a t i o n recornmt!nded and wns a c c e p t e d by

t h e E 'edcral Government 10 p e r c e n t f o r t h e

tl~erl 301 l o c o l ~ o v c r n r n c n t u . Thc e l n r i n ~

inodequncy of tll4.s n s n r e s u l t 01' more

~ ' e s y ~ o n s i h i li t i c s of these governrncn ts rcsu.1 tecl

i n t h e p r e s e n t formula of 20 p e r c e n t o f t h e

nn t , iona l r e v e n u e f o r t h e p r e s e n t 589 local

2.1.4 Cr:lnts

A Krnn t i s a c o r i t r i l ) u t i o r l mnde by t h e

fet1e:-a1 o r S t n t e ~ o v w n m c n t t o n l o c n l p;ovornmcnt

t o e n a b l e the govcrnrnc.nt c o v e r the c o s t o f some

Governmsnt g r a n t s can e i t h e r be speci f ic o r

p rnn ta i n a i d of l o c n l oxpcndi turc .

S p o c i f i c g r a n t i~ f u r t h e r divided i n t o percentnge

p n n t s nnd u n i t c r n n t s .

Pcrcentnge ~ r o n t i s a s i t u n t i o n where t h e

c o s t of p r o v i f l i n ~ p n r t i c r l l a r e e r v i c e w i l l be

e s t i m a t e d a n d a fixed pe rcen tage of i t provided

i n form of rant by t h e Fede ra l o r S t n t e

Govsrnmcnt,

Uni t g r a n t i s where t h e Fede ra l Government

pays a f i x e d amount i n r e s p e c t of a determined

u n i t , Por example i t mny d e c i d e t o c o n t r i b u t e

a f i x e d amount f o r each approved p r o j e c t by thc

Local Government.

Araianed revenue i s a d d i t i o n o r furnish in^

o f a d d i t i o n a l f i n n n c e r e q u i r e d i n t h e Local

Governments by t h o Fctlernl Government ae t h e

expendi tures and revcnucs of t h e Local Government a

Increase .

Rlock ~ r m t i s u s u a l l y baeed on popu la t ion

nnd s e v e r e l y r e e t r i c t e d by t h e f n c t t h a t by l a w

c e r t a i n minimum s e r v i c e s have t o be provided by

2. ? - LO(:AL GOVERNPIISNTS RURAL DISYELOPMENT 0

According t o t h e G u i d e l i n e s f o r L o c a l

Govcrnmtnt ~ e f o r m f t h c f o l l o w i n p s h o u l d bc t h e

r e s p o n s i b i l i t y o f Loca l Govefinments s a v e under

e x c e p t i o n a l o r tempornrg c i r c u m s l a n c c s :

Marke t s and motor p a r k s ,

S a n i t a r y i n s p e c t i a n , r e f u s e nnd n i ~ h t solJ

d.i s p o s a l ,

Sewage,

C o n t r o l of vermin,

SJ .aughtcr h o u s e s and s l a u g h t e r s l a b s ,

Pub1 i c c o n v e n i e n c e s ,

nririal ~ r o u n d s ,

R e g i s t r a t i o n of b i r t h s , d e a t h s and m a r r j n ~ e s

( c x c e p t m a r r i a g e s ~ o v c r n c d by t h e M a r r i n ~ c

11 <: t ) , P r o v i s i o n of cornmunit v nnd l o c a l r e c r e n t i o n

ccbnt r e s , p a r k s , ~ n r d e n s and ~ u l ~ l i c open s p n c e s ,

C ~ . ~ z i n c ~ r o u n d s , f u e l p l n n t a t i o n s ,

L ~ . c e n s i n g and r e g u l a t i o n of b i c y c l e s ,

Htmd c a r t s and o t h c r t y p e s of v e h i c l e s

e x c e p t t h o s e mechanically p r o p e l l e d and c a n o e s ,

' ~ u i d e l i n c s f o r L o c a l Govcrnrncnt Rcf'orrn, Fedc:ri 1 Rcpuhl ic o f N j ~ ~ r i n Aua, 1976, p, I .

( :on t ro l of keeping a n i m a l s ,

C o n t r o l of h o a r d i n a s , a d v e r t i s e m e n t ,

{Jse of l o u d s e n k e r s i n o r n e a r p u b l i c p l n c c s ,

I)rumming,

C o n t r o l of l a n d he ld by customary t e n u r e ,

Naming of r o n d s nnd s t r e e t s and numberins

of p l o t s / h u i l d i n ~ s ,

C o n t r o l nnd Collection of r evenue from

f o r c s t r y ou t s i d o t h e " F o r e s t E s t a t e " of

a n x e t t e d F o r e s t Rese rve s ,

Col l e c t , i o n of v e h i c l e pn rk ing c h n r p e s ,

C o l l e c t i o n of p r o p e r t y and o t h e r r a t e s ,

Community t a x and o t h e r d e s i g n a t e d revenue

s o u r c e s .

Items w h i c h shou ld g e n c r o l l y b e r e ~ n r d c d a s

Local Governments responsibilities, a l t h o u g h S t a t p

Governments and o t h e r o r g a n i s a t i o n s mny a l s o perform

tllese f u n c t i o n s o r mny pe r fo rm some of them en1 i r e l y

u n t i 1 Local. Govcrnrncnt 5 nre rend? t o pc r fo rm

them arc n s f o l l o w s :

IItlaltir c e n t r e s , mat c r n i t y c e n t r e s ,

d i s p c n s n r i c s and hcalt , l i c l i n i c s ,

nmbulrwce s c r v i c e , l o p r o s v c l i n i c s anrl

p r e v e n t i v e hca1C.h s e r v i c e s ,

n b b a t o i r s , mcnt i n s p e c t i o n ,

n u r s e r y nnd pr imnry and a d u l t educr31, i on ,

i nf orrn~~t i on nnd p u b l i c en1 i ~1~te11mcnl ,

p r o v i s i o n o f s c h o l n r s h i p s and b u r s m i c s ,

p r o v i s i o n of p u b l i c libraries and r c n d i r i ~

rooms,

a ~ r i r r ~ l t u r n l c x t e n s f o n , animal hen1 111

e x t e n s i o n s e r v i c e s and v e t e r i n a r y c l i ~ i i c s ,

r u r t ~ l nnd semi-urban wnte r sr lpplv, f Jre

s e r v i c e s ,

p r o v i s i o n of r o a d s a n d s t r e e t s (Ot,hcr than

t r u n k ronds ) , t h e i r l i r h t i n r : d r n i n n p ; ~ ,

c o n t r o l of' wnl cr and a tmosphe r i c pol 1 u l i o n ,

c o n t r o l of h r ~ n n r s , p r o s t i t rr t , ion nnd

r t ~ l ~ b i r i n f i o n of d e s t i l u t e s ,

I ' r c n - i s i o n of p n b l i c u t i l i t i e s c i c e p t

where r e s t r i c t ctl by o t h c r l e g i s l r ~ t i t r n

spcci f icnl 1-y inc l u d i n r p r o v i s i 0 1 1 o f roncl

and i n l a n d w n t e r t r n n s p o r t , p u b l i c housing

programmes, O p e r a t i o n o f commerc ia l

u n d c r t a k i n c s ,

C o n t r o l of t r n f f i c nnd park in^,-

r e g u l e t i o n and c o n t r o l of b u i l d i n ~ s ,

town and c o u n t r y p l a n n i n g , C h i e f t a i n c y

m u t t e r s a n d m ~ i n t c n n n c e o f t r a d i t i o n

o f f i c e s ,

L o c a l Governments n lweys s t r i v e t o mcct t h c

af orrrncnt i o n e d f u n c t i o n s h ~ i t arc mnin ly h n n d i c ~ n p c d

by f u n d . ' rhc q u a n t i t y nnd q u n l l t , ~ of services

prov ided by t h e s e ~ o v e r n m e n t s v n r v from o n r t o

nnot tm- .

I n t c ! r m s of q u a l i t y the L o c a l Government

s e r v i c c s litrve b e e n r c n e r n l l v d e f a c t 4 ve b e c a u s e

t h e r e s o u r c e s a v a i l n b l e t o them are i n c o p a b l e of

p r o v i d i n p t h e e x p a n d i n g s e r v i c e s , The

s ton t l a rds c f r o a d s arc f-rencrnlly p o o r b e i n a

n e a r l y 100 p e r c e n t l a t e ~ i t e , c o v e r e d w i t h p o t

h o l e s i n t h e dry s e n s o n and water l o ~ g e d d u r i n ~

t h e r n i n y sewton , The t r u n k r o o d s b ~ i n ~ mnin ta in r*d

by e i t h e r t h e F e d e r a l o r S t n t e Govcrnmcnts i n t ,he

u r b a n c e n t r e s sometimes t e n d t o del .udc n c n s u n l

v i s i t o r as t o t h e r c n l c o n d i t i o n o f t h e t o t n l

r o n d s s n t h c s e areas. F o r i n s t m c e i n Z a r i n

m e t r o p o l i t a n area t h e f e e d e r r o a d s a re l a t e r i t e

r o n d s ~ t n d some become v i r t u c l l l y u n u s u a b l c d w i n p ;

t h e r a i n y seosorl . The t a r r e d r o a d s are t h e t r u n k

r o a d r u n n i n g t h r o u g h the town and one o t h e r

road . 5

I n m e d i c a l and h e a l t h s e r v i c e s n w o r s c

s i t u a t i o n i s recorded. The p r o v i s i o n o f mere

p l y s i c r r l s t r u c t u r e s d o n o t n e c e s s a r i l y r e p r e s e n t

much t a t h e u s e r s o f t h e s e s e r v i c e s e s p e c i a l l y

where t h e build in^ c a n n o t b e p r o p e r l y e q u i p p e d .

There werc i n s t a n c e s t l i r o u ~ h o u t t h e c o u n t r y of'

h c n l t h i n s t i t u t i o n s b e i n g s l i u t down f o r l a c k of

d r u , ~ s , equipment o r even s t n f f t o m a i n t a i n them.

Cnses n l s o nholllld of d i s p c n s n r i e s b e i n g mnnncd

by u n q u ? l i f i e d n t t e n d n n t s who pose n o t o n l y as

d i s p c n s n r y n s s i s t a n t s b u t somet imes a s t h e r u r a l

medica l o f f i c e r s . Ih some of t h c s e d i s p e n s a r i e s

t h e c o u t ~ c i l s c a n o n l l - p r o v i d e f i rs t a i d t r c n t r n c n t

i 0. Orcwo nnd J. B. Adewumi, 9. cft. p. 108

t o keep t h e p l a c e g o i n g and a v e r t i t s b e i n g s h u t

down complc tc ly . The i n s a n i t a r y concqition of

drai7s i n mmy urbnn c e n t r e s a p p e a r s t o be t o t n l l v

u n ~ f f e c t e d by t h e p e r - s i s t e n t p u b l i c o u t c r y nyninut

t h e s i t u a l i o n ,

2 . 3 TRENDS AND PAT'J'KIINS OF RURAL f)EVELOPblY;NfP IN NIGERIA

2 . 3 . 3 F i r s t Na t ionn l Development Plnn 1 T)62-496P

The f i r s t a t t e m p t at f o r m u l a t i n g r u r n l

deve: oplncnt w e r e m : ~ r l e i n t h e f i r s t Nat ionn l

t h i s development w a s on a g r i c u l t u r e . The r e n a o n i n p

be in^,; t h a t ~ r o w t h of the rura .1 s e c t o r w n s more

n prclccss of mohil i z j n g under -u t i l i z e d and non-

u t i l j zed l a n d and l a b o u r . Also was t h e pc:rception

t h a t the r o l e of the r u r a l s e c t o r i n t h e developmcnt

! procc ss is , p a r t i c u l ~ r l y r emarkab l e , i n t h e use of

tile c ~ r i c u l t u r a l . s u r p l u s which i t a e n c r ~ t c s .

Al thouqh t h e p l n n was nhandoncd i r r 1966 ,

c m p h ~ s i s i n t h e o r i ~ i n n l p l a n was on Rovernment,

d i r e c t e d p r o j c c t s 1 i k e fn rm s e t . t l e m e n t s ,

p l a n t a t i o n , i r r i ~ a t i o n schemes , e x t e n s i o n

s e r v i c e s , c r e d i t , e d u c a t i o n nnd train in^, p r o c e s -

sing and d i s t r i b u t i o n .

I n t h e c n t e g o r i e s o f t h e ~ o v e r n m e n t d i r e c l c d

p r o j c c t s 42 .8 p e r c e n t o f t h e e s t i m n t e d p u b l i c

s e c t o r c a p i t a l e x p e n d i t u r e on n g r i c u l t u r e

proKramrne f o r t h e p l a n per i od was u n s p e n t . G

Suc l~ u n d e r s p e r l d i n ~ r c f Lec tcd some b n s i c d c f c c t s

i n tile 0 v c r ; r l l d e s i f r n ~ n d i m p l e m c n t n t i o n o f i l l e

c ~ g r i ~ : u l t u r a L p l n n . I t mag bc n r g u e d t h a t the

f i r s t p l a n d i d n o t p l a c e c e n t r r t l a t t e n t i o n on

hronrlly Imscd z n i n s i l l 0111,put c\nd expnns io l l o f

services f o r the r u r n l w e n s .

' ~ e c o n d Nnt i o n n l Dcvelopmcnt P l a n , 197% 1974, p . 104 .

2.3.2 Second N a t i o n a l h x e l o p m c n t P l n n (1970-1974 )

It p l n c c d e m p h a s i s on h r o a d l y bnged ~ d n s

i n o u t p u t and e x p o r ~ s i o n o f s e r v i c e s f o r t h e r u r a l

popul c ~ t i o n . 'I'llc mnin o h j c ~ c t i v c s of t h e npri culCur*nl

p o l i c y w e r e :

( i ) E n s u r i n ~ food s u p p l i c s i n n d e q u a t e q u a n t i t y

t o k e e p p a c e 1%-i t,h i n c r e a s e d p o p u l a t i o n mid

~ l r b a n i s a t iorl, h n v i n ~ r e c a r d s t o c h n n ~ i n ~

t as t ,es nnd t h e nccd f o r f n i r and s t a b l e

~ ~ r i c e s .

( i i ) f k p n n d i n ~ t h e p r o d u c t i o n of e x p o r t c r o p s

w i t h a v i e w to i n c r e a s i n g nnd f u r t h e r

diversify in^ t h e c o u n t r y ' s f o r e i g n e x c l ~ t m p e

c a r n i n g s s o v i t a l i n t h e deve lopmen t p r o c e s s .

( i i i ) Y r o p f ~ g n t i n g t h e p r o d u c t i o n of a ~ r i c u l t u r a l

m o t c r i n l s f o r extensive d o m e s t i c m a n u f a c t u r -

i n g a c t i v i t i e s , e s p e c i a l l y i n t h c f i e l d of

n ~ r o - b a s e d i n d u s t r i e s .

( i v ) C r e a t i n ~ r u r a l employment o p p o r t u n i t i cs t o hbrro-

l u t e + more o f t h e i n c r e a s i n ~ l a b o u r f o r c e

i n t h e n a t i o n :1nd m i n i m i s i n g t he t e n d e n c y

f o m i nndcqr ln te nnd i n e f f i c i c n t u s e of hum:rn

r e q o u r c e s i n t h e r u r a l tarens general.1-y.

( v ) h > l v i n g a p p r o p r i n t c i n s t i t u t i o n a l and

a d m i n i s t r a t i v e nppnratuff t o f a c i l i t a t e a

smooth integrated development o f t h e n g r i c t i l -

tu r -a1 p o t e n t i n 1 o f t h e c o u n t r y as a whole.

'Fools t o t l c h i e v e t h c s e oh j e c t i v e s were l n n d

t e n u r e r e f o r m , i r r i g a t i o n and s o i l c o n s e r v a t i o n ,

mechnn i sa t ion , a g r i c u l t u r a l e d u c a t i o n , n @ i c u l t , u r n l

r e s e a r c h and e x t e n s i o n s c r v i c e s .

From t h e f i r s t prorrress r e p o r t o n l v 60 p e r c e n t

o f p l anned p u b l i c s e c t o r c x p c n d i t u r e had been s p e n t .

i h e v e r , t h e a n n u a l ~ r o w l l i r a te t n r g e t of 4 . 7

percent f o r t h a t y e n r prcrved f a r t o o a m b i t i o u s s i n c e

ngricul t u r e ' s c o n t r i b ~ ~ t i o r i t o ~ r o w t l ~ r a t e was 2

percent . As i n t h e e { ~ r l y p l a n ~ w r i ncl, a p i c u l t u r ~ l

cxpendit,u*e f o c u s e d on f o o d c r o p s nnd mnny s t a t e s

went i n t o l n r ~ e scale pl n n t a t i on p r o d u c t i o n .

2.3.3 T h i r d Nuti onnl Dcvclopment P lnn 1975-

khnphnsia wns p l a c e d on government d i r e c t

p roduc t i o n a c t i v i t i es t h r o u ~ h t h e Nn t ionn l

A c c c l e r n t e d Food Prod t lc t ion Pro~rclrnrne (NAFPP),

t h e establishment of more River n a s i n Developmcnl

A u t h o r i t i e s and i n t e ~ r n t e d r u r a l development

p r o j e c t s . The achievements made du r in f f t h i s

p lnn p e r i o d toward r u r ~ l development i n c l u d e d

t h e p r o v i s i o n of n e c e s s n r y i n p u t t o meet t h e

rowi in^ needs of f a r m e r s f o r s e e d s , f e r t i l i z e r , a g r i c u l t u r a l implements , s t o r a g e under NAFPP nnd

the e s t a b l i s h m e n t of f i v e ru r a l . i n t e g r a t e d

n g r i c u l t u r a l p r o j e c t s i n Gombe, Gusau, Fun tua ,

Anynnaba nnd Lafis-

2 . 3 - 4 - F o u r t h Nat ionnl h v e l o p m e n t P lnn 1981-i9R5

The b a s i c p o l i c y w n s t o promote a g r i c u l t u r n l .

p r o d u ~ t i o r ~ and t o improve s o c i n l a m e n i t i e s i n t h e

r u r ~ L a r e o s t h r o u g h t h e p r o v i s i o n o f f ec r l e r r o a d s ,

w ~ t e r s u p ~ l y and s t o r a c c f a c i l i t i e s , A mnjor

s t r n t egy f o r t h e a t tninrnent of t h c s c o b j e c t i v e s

wns t h e A g r i c u l t u r n l Development P r o j e c t (ADP)/

I n t e ~ r e t e d R u r a l Deve.l.opment p r o jcct IRDP.

hDP hns been n s t r n t e ~ y e x p e c t e d t o b r i n r

t h e b e n e f i t s o f development t o t h e p o o r e s t p e o p l e

i n t h e r u r a l areas and t o s o l v e , i n t h e s h o r t e r

and l on f f - t e rms , t h e p e r e n n i a l f o o d s h o r t n ~ e s

t h n t b c d e v i l t h e n o t i o n p e r i o d i c a l l y . It w a s i n i t 1 n1,cd

i l l 1972 f o l l o w i n g t h e recomrncndntions o f a F'erlcral

Covernrnent s p o n s o r e d nnd \ ?or ld t3ctnk a s s i s t c d

n r~ t ionwide n g r i c u l t u r a l s e c t o r m i s s i o n . The m i ssi-on

recommended s i x projects (based o n c o c o a , r i c c nnd

o i l palm) i n t h e s o u t h e r n p a r t s and t h r e e i n t c ~ r n t e d

rurnl development p r o j e c t s i n t h e N o r t h e r n p o r t s of

the c o u n t r y . Tile f i r s t e n c l a v e ADPs s t ~ r t c d i n

Funtun nnd Gusnu i n 1974/75 nnd Combc i n 1975/76.

'I'llese w e r e q u i tc s u c c c s s f ~ ~ l nnd more were e s t n h l i s h c d

1 i k c Ualtchi 1981 , l ieno 2982, Sokoto 2983 and Kndunri

l'hc main comvoncnt s o f t ,he t lcvelopment p l n n

wcrc :

( a ) the e s t a b l i s h n c n t or fo rm s e r v i c e c e n t r e s from

whl c h small h o l d e r rnr rncrs coul d o b t n i n itcms

suc h ns farm i I ~ ~ I C , C X ~ C I I S ~ O I I and t r n i n i n y

i n t h e u s e o f irnprovcd f a r m i n g methods.

C r e d i t f o c i 1-itics t h r o u g h c o - o p c r n t i v c s y s t e m

and m n r k c t i n ~ f a c i l i t i e s t o h c l p o b t ~ i t l thc?

best p o s s i b l e p r i c e f o r f n r m c r s ' p r o d u c e ;

( h ) ruri.11 r o n d c o u s t r u c t i o n t o p i v e n c c e s s t o t h e

f n r ~ n s e r v i c e c e n t r e s ; and

( c ) p r o v i s i o n of w a t e r f o r i r r i g a t i o n , human

con:;umpt i on nncl l i v c s t o c k p r o d u c t i o n t.hroup;.h

c o n s t r u c t i o t l of dams nnd b o r e h o l e s .

Since 1987 t h e s c o p e o f c o n s t r u c t i o n work on

fccder r o a d s , dams and b o r e h o l e s hns d e c l i n e d duc

mainly t o t h e e x i s t e n c e of t h e D i r e c t o r a t e o f

Food, Rnnds a n d i t u r a l I n f r a s t r u c t u r e s (UIi'RRI) which

a l s o u n d c r t ~ l k e s i m i l n r ' n a t i v i t i e s . 7

- --

' c c n t r n l h n k R e p o r t 1987 p. 22.

2.3.5 D i r e c t o r a t e of Food, Roecis and Hurnl I n f r s s t r u c t u r c (IlFIU11.)

It wt3s c s t f l b l i s l ~ e d i n 1986. I t r e c o g n i s e s

t h e r i i r n l mnn ns p r o d u c e r and consumer beyond

t h e r u r a l r e c o g n i t i o n n s p r o d u c e r and s o u r c e of

r u r a l s u r p l u s f o r t h c urbnn economy and e x p o r t s .

I t wns cstahli shed w i tll t h e f a l lowinp; o b j e c t i v c s :

(a) To improve t h e q v n l i t y of l i f e and s t n n d n r d

of L i v i n g of Chc m:~, jo r i ty o f the people i n

t h a r u r n l n r e n s .

( h ) To u s e t h c enormous r e s o u r c e s of t h e rurnl

n r e n s t o lay n s o l i d f o u n d a t i o n f o r t h e

s e c u r i t y , soc io -cu l t u r n l , p o l i t i c a l , c c o n o ~ i c

gro.nrth and devclopmcnt of t h e r u r a l Firens

wit.:^ t h o s e o f tlie Local Government Arens,

t h e S t n t e s and t h e n a t i o n ,

( c ) To e n s u r e d e e p l y r o o t e d and s e l f - s u s t a i n i n 6

development p r o c e s s b a s e d on e f f e c t i v e l y

h o b i l i s e d mnss p a r t i c i p a t i o n , s t a r t i n k from

the E r n s s r o o t s nnd encompassing t h e entire

n ~ t i o n t h e r e a f t e r .

In o r d e r t o n c h i c v c i t s o l ~ j c c t i v e s DFRRT

hns ,tended t o be i n v n l v c d d i r e c t l y i n p r o d u c t i v e

u ~ r i c u l t u r d a c t i v i t i e s I ike l a r g e s c n l e fn r rn s ,

r u r n l road c o n s t r u c t i o n / r e h n b i l i t n t i o n , r u r a l

wnter s u p p l y and r u r n l e l e c t r i f i c a t i o n .

' ~ c c o r d i n r ; t o Iynre nnd Obndnn DFRRI has n

problem of f o c u s , i t s i rnpnct would b e g r e a t l y

f e l t i n thc r u r a l n r c n s i f i t c o n c e n t r a t e s o n :I

few a c t f v i t i e s i.nvolvi.nl: t h e p r o v i s i o n o f d u r n h l c

ln frns tr u c t u r e l i k e w t c r s u p p l y , r u r n l e l e c t r i f i-

cation and r o n d s . Tiley o b s e r v e d t h a t s i c n i f 4 c n n t

p r o c r e s s w n s mndc i n 1999.

2.3.6 - R w n l Dnnlting nnd - Ilturnl Development

It w n s e s t n b l i s h c d i n 1977, b e f o r e then i t ,

wns only s~tctl brinks 0s c o - o p e r a t i v e a n d commcrce

Dnnli,, A f r i c a n C o n t , i n e n t n l Bank a n d N a t i o n a l Bank, hr~d r u r n l b r a n c h e s . I t s o b j e c t i v e s were -

( i ) t o c u l t i v n t e b a r ~ k i n p h n b f t amonr r u r n l

d w e l l e r s ,

( i i ) t o m o b i l i z e snvi.nvs from t h e r u r ~ l n r c n s

f o r t h e p u r p o s e of c i ~ a n n e l l i n ~ snme into

p r o f i t v e n t u r e s ,

( i i i ) t o c r e n t e c r e d i t by W R Y o f r n i s i n p l o n n s f o r

s m a l l ~ n d rnedirm s c ~ l c e n t e r p r i s e s .

'~ccordin~ ' t o A ~ r l t h e above h ~ v c a c o n o t n t i o n

o f i n d u c i r l g b n n k s t o i n i t i n t e dcvelopmcnt p r o j e c t s

rnt,her t h a n simply r e s l ) o n d i n ~ t o them since t h e r e

is h a r d l y a n y deve lopment t o r e s p o n d t o i n t h e r u r n l

Ilrctls.

The i m p l c m e n t ~ t i o n w a s p l a n n e d t o f a l l 3 n t o

three pl inses namely 9977-1980, 1980-1983 and 19RT,-l!385l.

'I'lle t h e n 18 b a n k s were r c q u i r e d t o e s t a b l i s h 200

brc~nchc?; i n t h e r u r a l a r e a s a c r o s s t h e c o u n t r y i n

the f i r s t p h n s c . 266 b r a n c h e s w e r e expected i n

nominntcd r u r a l n r e n s bv t h e n 20 commercia l brinks

in t h e second phnse nnd 300 b r a n c h e s by t h e t11en 28

'N. N. Nwosu, "Community ~ r ~ a n i s n t i o n R R u r a l I)cvcloprnentW N i r e r i ~ n JournnL of Y11b-l.i~ Admir l i s t rn t i o n n r ~ d Local Government Y o 1 . 5 No. 2 Nov . 1987 P . 67.

commercial brinks i n t h e t h i r d phnsc. T h e bnnks

w e r e q u i r e d t o l e n d n o t l e ss t l inn a s p e c i f i e d

p c r c e n t n g e o f t h e t o t a l d e p o s i t s c o l l e c t e d i n

t l , e i r r u r n l b r n n c h e s t o b o r r o w e r s i n sucll r u r a l

arcas. The p e r c e n t n g e s were 30 p e r c e n t i n 1QFV

mrd 4 0 p e r c e n t i n 2985. It is c u r r e n t l y 4 5

pc.rccnt.

T o t n l numher of r u r a l b r n n c h e s cst ,nl) l i slicrl

n~ n t October 1938 s t o o d n t 573 o u t o f 7 G G

brnnches r c p r e s e n t i n q 74.8 p e r c e n t w i t h monthlv

nvcrnae d e p o s i t w l ~ i c h wns at H4421 m i l l i o n i n

1980, X7S91.S m i l l i o n iu 1983. A t t h e end o f

the f i r s t p h n s c n t o t n l of N116.4 m i l l i o n was

o r ~ t s t ~ a n d i n p ; n s d e p o s i t s i n n l l t h e r u r n l hrnncl lcs

rive rag in^ N0.G mi I l i o n p e r n hrnncll . Tot,nl l o n n s

nn:I advances o f t h e s e r u r a l b r a n c h e s nmount t o

f i2! .4 m i l l i o n t h e r e b y p u t t i n g t h e r a t i o of t.o!.:11

l o m s nnd a d v n n c c s t o d e p o s i t s by thcsc hrnncl ies rlt

19.2 p e r c e n t . Tlius i t c o u l d be s e e n t h n t r u r a l

brrmches d i d n o t mca t u p t h e minimum lend in^

peccentnge o f 30 p e r c e n t . T h i s wns c o n f i r m e d by

Ahrlulkndir when h e commented t h a t commercinl hnnks '

r e sponse t o t h e requirement t o Lend t o r u r n l

branch c u s t omers n minimum p c r c e n t c t r c o f t o t , a l

d e p o s i t s rnobil.iseil i n sr~ch a r e a s wns very poor

u n t i l p e n a l t i c s w e r e imposed on n o n - r c p o r t i nrr:

bankso. The p r o p o r t i o n of r u r n l l o n n s t h u s

ro se f'rom 33.9 p c r c e n t i n 1985 t o n penk o f 42.8

percent i n 1986 a n d t h e n d e c l i n e d t o 40.1 percc r l t

find 36 .9 p e r c e n t i n 1987 cmd 1988 r e s p e c t i v e l y .

T h c good side e f f e c t of r u r a l bank in^ were

2.3.7 A g r i c u l t u r ~ l -- - C r e d i t G u a r a n t e e - --- Scheme

I t ~ : I S c s t n b l i s h c d i n 197H. I t s a i m w i l s t o

ot~surc t h a t f nrmcrs lmvc n : ~ c e s s t o c r e d i t which

w i l l i n t u r n i n d u c e and g r e n t l y oncournp.e more

w r i c u l t u r n l p r o d u c t i o n . I ts name s t e m s f rom t h e

Ruarantee o f 75 p c r c e n t o f t h e l o a n s t o f a r m e r s

f o r q r i c u l t u r a l p r o d u c t i o n by F e d e r n l Government

and C e n t r a l Bank of N i ~ e r i a . Hetween 197R nn,d i !)85

11,074 p r o j e c t s w o r t h more t h n n M248.4 m i l l i o n hnd

been funded' u n d e r t h e schcmc.

9 ~ b d u i k n t l i r A. "The Hole of Dnnks i n Achicvina: Self-f(el ian.5 kkonomy", -.- Uusi - --- n v s s ---- l ' i r n c ! ~ -- I:cc. ~ ( i t l ~ , + ~ ~ i ' , : J Val. 13 Nu. 50, p. 9.

11 has been s u r g e s t e d i n somc q u a r t e r s t h a t

f o r n c c c l e r a t e d r u r n l deve lopment t h e g u a r n n t c e

s h o u l d b e i n c r e n s e d t o 85 p e r c e n t i n v i e w o f hjyh

riskv n n t u r e o f n g r i c u l t u r a l p r o d u c t s ,

2 .4 COFII\ICTNITY TIANKS AM) RURAL T)EVELOI'FtISNT

2.4 .l klcrlninp; and F u n c t i o n s

T h e f u n d a m e n t a l concept . of a community l3ar1lc

i s of a s e l f - s u s t a i n i n g f i n a n c i a l i n s t i t u t i o n ,

owned and m m a a e d b y a community o r g r o u p o f

Communitaes, f o r t h e p u r p o s e of p r o v i d i n g c r e d i t ,

d e p o s i t , b a n k i n g and o t h e r f i n a n c i a l s e r v i c e s t o

i t s members, l a r g e l y on t h e b a s i s of t h e i r s e l f -

r e c o g n i t i o n and c r e d i t w o r t h i n e s s . T h i s i s i n

c o n t r a s t t o t h e n e a r - t o t 0 1 r e l i a n c e b y t h e

orthodox hanks on v i n h l e and n e ~ o t i n h l c c o l l n t e r n l s

a8 t h c b a s i s f o r g i v i n q c r e d i t .

I n v iew o f t h e o b j e c t i v e s of t h e bnnks s t ~ t e d

in c h ~ p t e r one t h e y nre e x p e c t c d n c c o r d i n g t o NRCR

(Nnt ionnl Board f o r Cornmuni t y hnks) t o per ' form

the f o l l o w i n g f u n c t i o n s , 10 -.-

1 ° ~ ; , m m u n i f llnnks P r o s p e c t u s ?in?- 1992 p . 3 .

( i ) Accept v a r i o u s t y p e s o f d e p o s i t s i n c l u d i n ~

s a - r i n g s , t i m e nnd t a r g e t d e p o s i t s , f rom

i n t l i v i d u a l s , g roups and o t h e r o r g a n i s a t i o n s .

( i i ) I s m c redeemable d e b e n t u r e s t o i n t e r e s t e d

p a r t i e s t o r a i s e f u n d s from members of t h e

p u b l i c .

( i i i ) I i ece ive money o r c o l l e c t p r o c e e d s o f

bank ing i n s t x u m c n t s on b e h a l f of i t s

cus tomers .

( i v ) P r o v i d e a n c i l i n r y b a n k i n g s c r v i c e s t o i t s

c u s t o m e r s such ns r e m i t i n n c e of f u n d s ,

snf 'e d e p o s i t f n c i l i t i e s e tc .

(v) M a i n t a i n and op@rat,e v n r i o u s t y p e s of t t ccoun t s

w i i 11 o r f o r o t h c r banks i n Niaeria.

( v i ) I n v e s t s u r p l u s f u n d s of t h e bnnk i n s u i t n b l c

in t ; t rumcnts i n c l u d i n g p l n c i n f f s u c h f u n d s i n

o t l w r banks .

( v i i ) Pay and r e c e i v e i n t e r e s t s as may b e a g r e e d

upon, between community Uanks and t h e i r

c l i e n t s i n a c c o r d n n c e w i t h p u b l i c p o l i c y .

( v i i i ) P r o v i d e c r c d i t t o i t s c u s t o m e r s , e s p e c i a l l y

small and mcdivm s c a l e e n t e r p r i s e s bnscd

i n i t s area of o p e r a t i o n and promote nnd

moni to r c f C c c t i v e l o a n usaye amongst t hem.

(iu Operntcr eq11l ptncBr)f I c!~t!-c i r t y ; frlc1.l 1.t i e s ;mrl

s u p e r v i s e c r e d i t schemes t o e n s u r c n c c c s s

of i t s cus torncrs t o f a rm i n p u t s , i n c l ~ t d i n q

f i n n n c i n ~ i n p u t s p u r c h n s e on n consignment

I m s i s f o r c r o u p s of c l i e n l s.

(x) Givc ~ u a r n n t e c i n f a v o w of i t s c u s t o m ~ r s

t o r i v e them g r c n t e r a c c e s s t o credi t and

o t h e r r e s o u r c e s .

(xi) "ieceivc r e - f i n a n c i n g o r o t h e r f u n d s f rom t h e

N l X B rind o t h e r s o u r c e s , p r i v a t e o r p u b l i c on

t e r m s m u t u a l l y a c c e p t a b l e t o b o t h t h e

p r o v i d e r of f u n d s and t h e r e c i p i e n t community

hank.

(xii) 1"erf orm ~ r a s s r o o t s development s u c h n s

s u p p o r t i n a i n d i v i d u a l , c o - o p e r a t i v e and

[croup f o r m a t i o n a c t i v i t i e s a s s i s t i n g c l i c n t s

i~ m a r k e t i n g of a g r i c u l t u r a l , r u r a l , i n d u s t r i a l

n ~ d ohher e x t e n s i o n s e r v i c e s t o c l i e n t s nnd

o?hcr commun i t y members.

( x i i i ) E n l i g h t e n t h c community on t h e e f f e c t i v e

u s e of c r e d i t end o t h e r b n n k i n s s e r v i c e s

s o as t o enhnncc i n d i v i d u ~ l , c o l l e c t i v e

and community l l roduc t ion nnd development ,

The banks are p r o h i b i t e d t o engage i n s o p h i s t l c n t c d

bwnkinp s e r v i c e s l i k e f o r e i g n exchange t r n n s n c t , i o n s

o r i n t c t r n a t i o n a l commercial p n p c r s , c o r p o r n t c f i n n n c c

i n o r d e r t o e n a b l e them r e t a i n t h e i r l o c a l f o c u s nntl

c o n c e n t r a t e on cornmt~ni t y s e r v i c e . Though t h e y cnn

o b t a i n f o r e i g n e x c h n n f ~ c f o r c l i e n t s i t i s done

tllrougl~ t h e c o r r e s p o n d e n t bnnk by o p e n i n g domic in ry

~ ~ c c o u n t i n f a v o u r of the communiCy bnnk.

Also , t h e y ere not a l lowed t o c l e n r cheques i n

the c lc .~ r inp : Ilouse, They have t o ,qo t h r o u ~ l l t h e i r

corrc?spontlcnt bank .

2.4.2 <\ch iev i ng t h e Enumerated F u n c t i o n s

111 as much as t h e f o r e g o i n g f u n c t i o n s a r e s e l f

e x p l m a ~ o r v some of them if n o t a l l had been i n t e n d e d

t o b e f u l f i l l e d by t h e r u r a l bank ing progrnrnmc b u t

cvidencc? h a s shown t h a t t h e y have been found w n n t i n c

it1 i ~ c h i r w i n g thcm. ' h e r e f o r e i t i s hoped t h a t

comnlunily bank ing c o u l d e x c e l where t h e r u r a l banking

f n i l e d r.f t h e v p e r f o r m t ,heir f u n c t i o n s i n t h i s

mrtnn(fr.

A v i a b l e nnd self s u s t a i n j n y croilil d e l i v e r y

yvatcrn rust, he p u t i n plnce i n t h a t s e c t o r i n

order t o a c h i e v e n r a p i d r u r n l devel.oprnent. Tlte

bnnks nt-e e x p e c t e d to f o r m u l n t e f u n c t i o n n l c r c d i t

d e l i v e r y p ~ c k a ~ e s t h a t c a n s a t i s f y t h e c r e d i t n e e d s

of o p e r a t o r s a t t h a t l e v e l . In d e s i g n i n g s u c h

p n e k a ~ e s t h e b a s i c c r c d i t f e a t u r e s , c r e d i t volume,

tonure , repayment terms nnd s e c u r i t y r e q u i r e r n c n t s , must be t a i l o r e d t o s i t u n t i m n a l n e e d s a n d o p e r ~ t i n ~

circurnstctnces. Thf s i s i m p o r t a n t b e c a u s e r u r n l

banking wcheme which w t ~ s d e s i g n e d t o p r o v i d e t h a t

unlrlue s c r v i c e has n c h i c v e d v e r y l i m i t e d s u c c e s s

mnlnly bccclusc t h e r u r n l b r a n c h e s of b ~ n k s were u n n b l c

t o ndnpt t h e i r c r e d i t d e l t v c r y proccclures t o l o c n l

c ircumntnncc .~ . For i n s t ancc s i n c e l o a n d e f a u l t i s

rr mn,jor problem of N i ~ r ? r i n n bnnks , community h m k s

almuld auard agaj n s t that . , i n rloiny so t h e y s h o u l d

not. place u ~ d u c ? ernplmsis on c o l . l n t e r n l s . They

cnohd re1.y on g r o u p e n n c t i o n s t o e n f o r c e c r e d i t

recovery: 'This is cover3 n~ t h e i r c r e d i t e x p o s u r e

w i t h muturtl ~ u n r n n t c e prorrrnmmes.

According t o O k ~ f o r s a v i n g s m o b i l i s a t i o n

a t t h e ~ r a s s r o o t s s u f f e r f rom, one major s e t b n c k ,

nhscnce o f an a p p r o p r i n d e i n s t i t u t i o n a l frnmewnrk

thnt wou ld h n r n c s s t h c vc ry s i z e n b l c amount of

u n v i n ~ s whicli c x i s t i n t h e i n fo rmn l s e c t o r nnd

convert them i n t o i n s t i t u t i o n n l j sed d e p o s i t s . 11

T h i s would b e nch icvcd by tllc banks n o t o p c r n t , i n r

ns R mere d e p o s i t r c c c i v e r b u t w i l l i n g and ctqm1)lc

t o provide t h e complemcntnry c r e d i t d e l i v e r y

s e rv i ce r e q u i r e d by p o t , c n t i a l cust.omers. A d e p o s i t

r c l n t i o r A ~ i p i s e a s i e r t o c r e a t e and n u t u r e i f t h e

potent in1 cus tomer i s n s s u r e d of a c c e s s t o c r e d i t

when the need ari scs. The r u r a l cornmunit i e s t urnc0

t h e i r bocks on r u r a l bank b r a n d l e s when i t hecnmc

c lcnr t h a t t h e y were more i n t e r e s t e d i n d e p o s i t s

1 Imn i n d i s p e n s i r l ~ rut-nl c r e d i t , fi toreover, t o

nttraot alld r c t ~ i n t h o l r cus tomers t h e banks hnve

t o rml i se t h c y u r c d e n l i n g w i t h c u ~ t o m e r s w i t h

srn~ll s c a l e bnnking o p e r a t i o n s , whose c a s h wi t hrlrawnl

hab i t s k i l l b e u n p r e d i c t n b l e , cus tomers who can e ~ s i 1.v

chnngc t h e i r minds and who w i l l make m i s t a k c s w l i i l c

cornpletinp: v e r y s imp le forms. T t ~ e s c a r e ' p eop l e t h n t

nrcl ~ u i d e d b y "Idemon p r i . nc ip l e " t h n t snys t h b t t r u s t ,

rind f i r s t hand k n o w l e d ~ c of p a r t i e s is t h e pr imnrv

dc t e r t n i r~mt of b u s i n c s s Such cus tomers

arc d i f f i c u l t t o hand l e b u t t h e y w i l l ~ c n e r a t e R l o t

of income o p p o r t u n i t i c s f o r t h e hanks i f p r o p e r l y

h n n d l e d , R s i m i l a r bnnk, Grameen h n k i n O n n ~ l n s d c s h

w i t h 500 brnnches w i t s ahl-c t o have a d e p o s i t of

95 mil l ion o r 74100 m i l l i o n a t N20 p e r d o l l n r w i t h i n

n per iod of 1976-?986,, d e s p i t e t h e d c s p n r n t e pove r ty

6 3 trr the d e p o s i t o r s . ( J n f o r t u n n t e l y , such cus tomc~rs

need t o he n t t e n d e d t o b ~ r s t a f f w i t h a dcg rce of

pflCLcnce, t o l e r n n c e and unders tnndinp: t h a t i s f rw

nbnve t h e l e v e l of such v i r t u e s e x h i b i t e d by bnnks

i n Ni~er ic* .

The e x t e n s i o n cervices model cnn e a s i l y bc

appl ied t o u p l i f t t h e performance of r u r a l commerce

~ n d indusl ry . Most o p e r a t o r s i n t h c r u r a l economy

experienc-2 d i f f i c u l t y i l l r e l n t i n g t o banks and o t h e r

f innncinl market o p e r n t o r s becnuse t h e y l a c k k n o w l c d ~ e .

l'he b a n k s shoul t l endcnvour' t o p r o v i d e b u s i n e s s

extension s e r v i c e s d e s i ~ n e d t o make up f o r such

knowled~e Bnps i n a r e a of' f i n n n c i n l r e c o r d keep ing ,

i n v c s t n ~ e n l o p p o r t u n i t v nwnreness and e x p o r t m n r k c t i n ~

procodurcs. They cou ld d e l i v e r s u c h e x t e n s i o n

progrnmrnes and locnL e x h i b i t i o n s . The e x t e n s i o n

s e rv i ce s can s u h s t n n t i a l l v j mprove t h e bank

r e l n t i o n s h i p q u a l i t y o f t h e i r t a r g e t cus tomers .

Community bnnks arc expec t ed t o c r e a t e t h e

main l i n k s between t h e f o r m a l and i n fo rmn l f i n s n c i n l

~ c c t o r s . T h e r e f o r e , i t i s expec t ed t h a t n numhcr

of c r e d i t i n s t i t u t i o n s l i k e (NACl3) N i r c r i n n

A ~ r i c u l i u r a l and Co-opernt i v c Rnnlc and ( N W I )

N i ~ c r i n n 13nnk f o r commerce and Tmdustry and S t n t c

b e l o p m e n t f i n t znc in l in ,s t , i t ,u t ions l j k e t h e formvr

Annmhra S t s t e C e n t r a l Inves tment Company Enugu

mny l i k e t o e x p l o i t the i n t i m a t e r e l a t i o n s h i p

betmen community bnnks r~nd r u r a l a r e n a by us in^

them as on-lend in^ bnnlcs.

The bnnks shou ld ndnp t i t s o p e r a t i o n s t o

uui t t h e demands o f t h e l o c a l environment . F l e x i b i -

litv may be r e f l e c t e d i n t h e c h o i c e of work in^ hou r s

or working dnvs i n con fo rmi ty w i t h t h e b u s i n e s s

p r ac t i c e of t h e community f o r i n s t a n c e s t n y i n g open

fo r very l o n ~ hours o r m ~ r k c t dnys t o e n a b l e cust,ornc?*s

lotlce t h e i r d e p o s i t s . I t cou ld a l s o o p e r ~ l t e mohi lc

bariltina ~ e r v i c c s p rov ided adequn t e s e c u r i t y nrrnnKc-

ments i r e mndc.

Since cornmrinity ttnnks by l n w arc ~llowed t o

opera te o n l y on unit, h n n k i r l ~ b n s i s , p~rowth shou ld

be on product, l i n e e x p m s i o n . Under t h i s n bank

; adds more bnnking p r o d u c t s and services as i t

slxpands i t s c a p i t n l and a s s e t b a s e , a c q u i r e s

llraha~ement c z ~ p a b i l i t y and as i t s s t n f f p i n s

d Xper i enc e . 'l'he o p e r a t i o n s of' t h e hnnks o r e r e q u i r e d t o

be f l e x i b l e , norl-routinisecl a n d ~ d c t p t i vc, they

thore fom refpire workers w l l o are capable of

rnnrlnpment n r ~ d supi?rvi sorv 1 cvel s. Top cpn l i t y

atnf f i s nccos sn rp hecnusc poor ones w i l l c r e a t e

More c o s t s t,Iran c o s t s snved h v h i r i n ~ them a t

The un.8.C c o s t of o p e r a t i o n s i s likely t o bc

igh, f i r s t 1 . r because of the d i seconomics of s m r - t l l

1.o opera tzons nnd becnusc of t h e t,vl)e of

cuatomws expec ted t o p n t r o n i s c the hnnks. Ma j o r j t v

of t h e cus tomers 8re l i k e l y t o bc smnl.1 u n i t

dperntors whose b n n k i n ~ r e l i l t i o n s h i p s a r e

ha rac te r i sed by smrlll u n i t t r n n s n c t i o n s wi t1.r h igh

f requcncv o f t r ~ n s n c t i o n s . l 'ltese cus t ,omers '

c h i \ r ~ r , c t e r i s t i c s have n d v c r s e cos t , i m p l i c n t i o n s ,

'l'hc banks s h o u l d t h t r e r o r e d e v i c e c o s t c ~ t t t i n f ~

~ ~ t r a t c g i c s t o o f f se t t h e i n h e r e n t c o s t d i sndvnnt n ~ c s .

C o s t r e d r ~ c t i o n m e a s u r e s l i k e t h e a d o p t i o n of'

f l cx i b l e work in^ hour 5 , employment o f few w o r k c r s

clncl e n ~ q e m e n t of e x p e r i e n c e d s t a f f on p n r t - t i m e

h s i s cou ld y i c l d s u b s t u n t , i a l c o s t savl_ngs.

2.4.3 O w e r s h i p S t r u c t u r e _

T h prospectus o f community hanks l a i d down

the k i n d of i n d i v i d t m l and R r o u p s q u n l i f i e d t o be

p o s s i b l e owner s o f t h e banks . I t i s structured i n

R way t o ujtl n c h i e v i n a t h e NnCI3 l a i d down f u n c t i o n 8

of' the h:mks. The bnnlts n r c e x p v c t c d t o b e owned

by R cro5.s s e c t j o n o f Chc f o l l o w i r ~ p ; c s l t e g o r i c s of

p r o p r i c t ( # r s .

( i ) con mu nit,^ A~cve l .opmen t A s s o c i n t i o n s (CDAs)

which i s r c g n r d e d n s t h e p r i m n r y p r o m o t e r s of t h e

bonk. The term "Community Devcl.opmpnt Assoc i nt i o n s "

rcf'ers t o s u c h cornmunitv o r g r m i s a t , i o n s FLS town

u n i o n s o r d i s t r i c t r * s s o c i n t i o n s o r s j m i l n r b o d i c s

t h a t r e p r e s e n t t r a d i t i o n a l apex o r g o n i s a t i o n f o r

p1.anning and d i r e c t i n f : deve lopmenta l a c t i v i t i e s

wi th in t h e community. NBCB n d v i s e s t h a t C D A s

should own i \ t l e a s t 30 p e r c e n t of t h e s h a r e s

especia l l v +,hrou~;I l c n p i t n l i s n t i o n of t h e dona t i o n

of f i x e d n s x c t s by mcrnbcrs of t h c communitv t o

the bank.

( i i ) Trade A s s o c i n t i o n s s u c h ns c o - o p e r a t i v e

s o c i e t i e s , f a r m e r s ' F r o u p s , o c c u p ~ l t i o n r \ l u n i o n s ,

market o r ~ n n i s n t i o n , s o c i a l cl.ubs, aRe ~ r n d e s and

corpora te b o d i e s opern t inp ; w i t h i n t h e cornmuni t y .

( i i i ) l n d i ~ e les and i n d i v i d u a l s w i t h i n t h e community

except t h a t 110 s i n g l e p e r s o n s h a l l h o l d mor'e t h a n

5 percent of the s h a r e s of t h e bank. 'I'he number o f

promo tin^ i n d i v i d u a l s must n o t b e less t h a n 5 0 ,

I t i s brorthy t o n o t e t h a t more t h a n one

community niny j o i n t l y e s t n b l i s h n community bank

whcre n s i n ~ l c community cnnnoi m c h e t a l J t h e N13Cn

extcrl t o f cn:ri tal. pr'o,ject s f i nilnc ing i ~ r Locnl Govern-

ments ant1 hoj.; i t c o u l d bc d o n e t l rough t,he cornrnuni t,p-

bnnlis t o r :ntr3 ince rnpirr ruri~ l tlevel opmcnt . In ordcr

to stuclv t hi: I hc wr'j t.cr col lcctcd cross sect ~ o n n l

hvcrmncnts t.llc b a n k s wcrc d i v i d e r 1 i n t o zones o f 5

GI t l lnt. it:li\.c c 1 0 : I! clv~t.:lcl.er'i st, ic:; of' b n r ~ k for ins3 : 3 1 \ t , ~ c . A

. Fif:TTTOf> OF' I)\?'A COI,LECfI'1ON -. -- Dnta c o l l e c t e d are sccontlnry ones. I t i s n

cross scct,ionnl. d a t a cornprisinp; c a p i t n l a n d

recurrent expenrlit~lres nnd i n t e r n n l l y gcnerntcrl nnd

f irlrir~c in^ i n Local Governments.

*'irrurcs for pni d up shnrcs , d e p o s i t s , other

I l ~ i b i l [ t i e s , t o t a l nssots and arcas of investment.

u : ) t o ~kpternhw 1992 by the bnnks were c o l l c c l e d .

3 . 3 'I'ItKAl'T+I15NT OF 1)ATtl - The f i ~ u r e s col lrctcd wcrc roundcd up t o the

ncnres4 million. Thc d a t a where n e c e s s a r y w c r c

convcr Cc*d i n t o pcrcentnges for 5 n s tnnce the R C t 1 .~11

cr+!> j tnl. c-xl;f*r.rrli t r ~ x ' e as p e r c e n t a g e o f csl, imnted

cnpi t n l expcnd i t iwe w a s computed. This convc!rs i o n

t o pcrccr1tny;cri was ncccssnr'y i n orrlcr t o :iff o r r l 1 l ~ r x

wr i t er rm casy s t u d y of thc data invo lved . Ccomctr8ic

mrnn wns empl oycd t o f inti tlie metin o f t h e dntn i n

is most, w i tnh1.c mcthotl o f f i n t l i n r thc mean of

f i ~ u r e s i nvol v i n ~ ; rot, i 0 s . Ilowevcr , because of ,.;om(.

u n r c l i a b i l i t y of p o i n t , c s t imntors c o n f i d e n c e i n 1 crv:.rl

wi th a 95 percent, confirlcnce wns further used i n o r d w

rlctcussr!l-7 i n orderD t o f i n d out t h e e x t e n t of loans nnd

vwcc:rltoi:e o f t o t n l i n v e s t m e n t s t o t o t n l a s s e t s o f t h e

hrwks; nvernre pcrccntr\~c of toti11 invcsttntmts t o t o t n l

nL;qcts of the lmtiks; ;wernEe p c r c e n t a a e o f Cotn l i n v e s t -

pt ' rcentnsc of c a p i t a l pro j c c t s t o t o t a l invest,mrbn t .F a n d

ml.nt s (1o'ln.s tincl nclvnnrcs) w e r e computed t o f r nrl o u t

I R I c n i ~ l ) L C t h e writcr t o cornprrrc the communi ty h n l t s '

( t i c i bnnk.5 m e t the st,ntut,ory 30 percent sti pulnt ecl for

rurial corinrcrcinl bnnks branches i u their t o t n l l o a n s

o m - ' 0 3 9 3 B

Table X V r e c o r d s t,hc estjrnr-ited and trct.l~rll

recurrent e x p c ~ ~ r l i t .urc . The i ,nl~Le shows that. on i , J 1 ~

trsii'f: n t - d i s t r i b a t i o n i t was f ouncl r a l 9:: i : c * , 3 ~ t b ~ t I

r b t . . * 1 ~f corjf i c'icracc: Clm t tlle nut unl reerwt-cr, i

I i t t - ( I t st,ri lmt i o n i ~ n d w i th 95 p e r c e n t conf'i d m c c I

(a ".-

I - , y . .

mc-nis. 1"or i j s t n n c e , f h n l c I hns RS L O W as 6 . 2 p e r c e n t

of its t o t a l a:::icts i n invcstrncmts w h i lu Ikank I1 hns

pcrccnt . C o n t r - a r v t o low i n v c s t ~ i c n t i n c:11) i t n l prn,jcct .. Liy tlic biinks t here is hi r.;h prrf crencc t o i n v c s t n i i ~ n l , ~ j 11

f

miti n d v i ~ l l c e s i .:;sucd by thc banks 35.8 p e r c e n t , on the

nvern,n;e, was i ~ : s u c d Tor c n p i t n l projects. 'l'hc ;tvc?rnt:c

I.J;;lne n t - t l i s ir ibut i n n w i t h n 95 percen t ,

l c v c l o r cnnfic?cncc i t wns founrl i h : ~ C the bntplis

ir!vestc>l l ~ e t ~ d c c w - 20.2 t o 53 pcrccnt. of I h c t r

t o l n l : a4 sc1.s i n J o n n s nnrl ndvnnces. With rt 95

percent l e v e l of conf idence , us in^ a t - d i s t r i b u t i o n

~ r o n l e d , i s s u e d between - 12.0 t o 83.44 percent f o r

cnp i t a l p r o j e c t s w h i l e between - 33 t o 44.4 pcrceklt

of t h e i l total asmets w a s i s s u e d f o r c a p i t a l p r o j ~ c t s .

A ninimum of 30 p e r c e n t o f all d e p o s i t s

mohilised i n t h e r u r a l area is r e q u i r e d t o be

chnnnellcd t o l o a n s and edvances i n euch meas by

t h o rurral banks. T h i s s t i p u l n t i o n of t h e Central .

Bank of f q i g e r i a (CBN) i a n o t m e t by the community

banks th-!.s i s because t h e community banks on the

average channel 20.5 p e r c e n t of t h e i r deposits t o

l o n n s and advances.

4.3 ANAI ,YSTS OF DATA ."-.

A" e n q u i r y i n t o t h e c a p i t a l p r o j e c t s Financing

in t h e Local Governments i n d i c a t e s t h a t t h e y spend an

average of 75.34 p e r c e n t of t h e b u d ~ e t e d figures.

Gecntmss of the l i k e l y e r r o r o f p o i n t eskimipte, t h e

work was extended f u r t h e r by using t - d i a t r i h u t ' i o n .

-

I t WRR t h e r o f a r e e s i . * ~ h l i s h e d t h ~ t w i t h a 95 pe rcen t

canf idcnce t h a t t h e Local Governments spend between

47.16 and 103.52 p e r c e n t of t h e i r e s t i m a t e . This

wide d i s p a r i t y i n d i c a t e s R wide f l u c t u a t i o n i n t h e

r n t e by which t h e y cau ld g e t c l o s e t o t h e budgeted

cap i ta l e x p e n d i t u r e s i n a ~ i v e n p e r i a d ,

The f i n a n c i n g of t h e p r o j e c t s were mainly

from i n t e r n a l l y gene ra t ed and r s ta tu tory a l l o c a t i o n s .

On the ave reae 62.2 p e r c e n t of t h e e s t i m a t e d i n t e r n a l l y

generated revenue and 82.31 p e r c e n t of t h e eatinanted

s t a tu to ry a1 t o c a t i o n were der ived . Thua t h e L o c d

Goverimerrts i;uacl+Iity t o meet t h e i r budgeted f i ~ n r e s

i n c a p i t a l p r o j e c t cou ld ha t r a c e d from s t a t u t o r y

a l loca t ion and i n t e r n a l l y gene ra t ed s o u r c e s f a l l i n g

below t h e budgeted f i g u r e s .

From tire faree;oings i t i s c l e a r t h a t t h e L o c ~ l

Covernnrcn ts need a maximum average a f 52.84 percent

(from 47.16 t o 103.52 i n t e r v a l ; t h e r e f o r e 100 - 47.36 .=

52-84) of t h p i r budgeted fund f o r c a p i t a l p ro , jec t s t,o

enable them execu te a l l t h e i r p lanned project^ w i t h i n

the f i n a n c i a l yea r . T h i s i s pu t a t t h e v a l u e of

N1.9 m i 1 l i . m hu t of t h e 843.55 average budgeted annunllg.

T h i n nevdcd fund could be d r a s t i c a l l y reduced by

irnrroverncnd i n t h e i n t e r n a l l y genernted and

~ t r r t u t o r y el l o c a t i a n funds.

I n o r d e r t o a s c e r t a i n whether t h e percentnqe

of t o t a l revenue spen t on c a p i t a l p r o j e c t s was

enough for cont inuous growth t h e w r i t e r compared

the Loca $. Governments ave rage expend i tu re on c u p i t a l

p r o j e c t s w i t h thc! I!? pperceht a t i p u l n t e d by A r t h u r

L e w i s ns t h e minimum r e q u i r e d f o r cont inuous ~ l ' a w t h .

I t ~3:; o i ~ r i e ~ v e d kfr iv t , many of t h e Local Goverr~tnents

performed w e l l i n terms of requi rements f o r growth.

It was found t h a t t h e Local Governments ~ p n d Rn

avernKc of 21 p e r c e n t of t h e i r t o t a l revenue on

cap l t a l p r o j e c t s , which l i e s w i t h i n an i n t e r v a l of

15.4 t o 26.6 pe rcen t w i t h a 95 p e r c e n t l e v e l of

confidence, The re fo re i n as much a8 t h e a c t u a l

expcndituren in c a p i t a l p r o j e c t s i n t h e Loeal

Governmen", aaf less than t h e b u d ~ e t e d amounts they

are enoup;h f o r cont inoua growth.

commerce which on t h e ave rage is 64.3 p e r c e n t sf

",h+P to::+' : w o n t m m t s compared t o 35.7 p e r c e n t

i n c a p i t a l p r o j e c t s . It could be suggested t h a t

t h e l o w r i s k a s s o c i a t e d w i t h commerce may be t h e

reason f o r t h i s k ind of inventrnent ponture . Th i s

i s negation of one of t h e p r i n c i p a l 0 b j c c t i v e ~

f o r the bank8 es t ab l i shmen t which i s r a p i d

development of p roduc t ive ~ c t i v i t i e a . The banka

would be a b l e t o ach ieve t h i n o b j e c t i v e by

i n v c a t i n ~ ( i n farm of ~ r ~ n t i n g more l o a n s t o

ind iv idua ls o r Local Covernnents) i n a r e a a of a u r i c u l -

ture and forestry, mining and quar ry in&, manufactur ing

and food proccasilag, c o n a t r n c t i o n and maintenance of

feeder roads and real estate. Having t h e c a p a c i t y to

reasonable inven t i n these produc t ive areas could

probably depend on t h c ~ e factu: The banka from t h e i r

mabilisc an t h e average t o t a l d e p o s i t s up t o 45.2

percent of t h e i r t o t a l a s s e t a . 20 p e r c e n t of t h e t o t a l

deposits mohi l ised w e r e i s s u e d as l o a n s and advances

while 72.52 pe rcen t of t h e i r t o t a l a s a e t s were i n

cash. Theref o r e i t is expec ted t b a t if t h e p rcaen t

rate of depoa i t m o b i l i ~ a t i o n ahauld con t inue , p t r c e n t a p

of laanft and d v a n e e a i s s u e d ou t of d e p a s i t s i nc reased

and l e v e l of cash t o a n s e t s reduced camrnunity banks

would be i n a p o s i t i o n t o f innnce t h e s e c a p i t a l

projects. It i~ expected t h a t t h e community bsnks

improved investment i n product ive a c t i v i t i e s l i k e

mannfacturing, a g r i c u l t u r e and food process ing

would a i d development and growth i n t h e r u r a l areas

and the re fo re improve t h e income of t h e banks. I t

f a due t o t h e rea l iaa t im of t h i s improved income

that t h e commercial banks normally have 72 percen t

of t h e i r a s s e t s i n loans and advances u n l i k e an

averago of 15.9 pe rcen t i n community banke.

Therefore, i f t h e banks could d i v e r t t h e i r

a t tent ion more t o c a p i t a l pro j a c t s than commerce

there is a l i k e l y i n d i c a t i o n t h a t t h e Local Governments

can source t h e i r e x t e r n a l f i n a n c i n g from them mince

r local government may need up t o N1.9m annual ly and

t h e bonks have an average of W4.04m i n locrns and

advances though t h i s average l i e s wi th in an i n t e r v a l

a t - 6.54 tr 14.62 m i l l i o n n a i r a wi th a 95 percent

l eve l of c o d i dence.

CHAPTER FIVE

SUMMARY OF FINDINGS RECOMMENDATIOYS A M 3 cuMus1m

SUMMARY OF FINDINGS P

From t h e a tudy t h e w r i t e r has been a b l e t o

f i n d o u t the fo l lowing:

1. That t h e I a c a l Governments on t h e average

spend about 75.34 percen t of t h e i r budgeted

fund f o r c a p i t a l expendi tures . T h i s 75.34

percent i s expected w i t h a 95 pe rcen t l e v e l

af conf idence t o f a l l w i t h i n an i n t e r v a l

of 43-16 t o 103.52 percen t .

2. Therefore they need on the average a maximm

of 52:84 p e r c e n t of t h e i r b u d ~ e t e d fund on

cap i t a 1 expenditures from e x t e r n a l source@

d o enanre them execute f u l l y t h e i r c ~ p i t a l

p ro jecxs.

3. Some o: t h e p l n u s i b l e r ensons f o r t h e a c t m l

c a p i t a l expend i tu re on c a p i t a l p r o j e c t s ba ing

lower than the budgeted i s t h a t i n t e r n a l l y

. - p . w q . s f r d and r-tntutorg a l l o c a t i o n kurwds on

the tzverage P*," rr'espectivelg 63-22 percent

nnd f .3.31 percent of t h e b u d ~ e t e d amount,

4, On tk4e averaqe t h e banks inves t ed 1 5 . 9

percent of t h e i r t o t n l nssets i n loan8 nnd

advances. This i8 poor when compared t o 72

percent of t o t a l assets in l oans and advnnces

amonK commercinl banks,

5 . The .I 9w r a t e om fnvcs tmmt may b e partly of

b e c a u ~ e ~ 7 2 . 5 2 percent of assets t i e d up i n

cash cornnnred to 15 percent i n commercjal bm~kw.

5 , The btmks have a h i ~ h preference f o r l . on t~a r*?~:!

advanc r:s i n commerce. On the average 6.4.3 p v f ~ ~ t

of tl lcir t o t n l investment is i n commerce.

7 . The perccrrtnge o f total dcpnsit~ in l o a n s and

advances i s 20.5 percent .

5 .2 ~ESCOMMEMDATIONS

1 . ('he cash l e v e l of the banks should be dr-tast icallv

,-educed t o ahout 20 pe rcen t . The balance would

oe d i v e r t e d t o income y i e l d i n g n s s e t s , The

Ihcason of kcep l ng l u r a a pcrccnt.agc of cash mryv

b e b e c a u s e of t h e e x p e c t a t i o n of most c l i e n t s

of t h e banks b e i n g l o w income e a r n e r s wlto mny

make u s e of snvin~s a c c o u n t s a s i f t h e v n r e

c u r r e n t accounts . T h i s cnn h e checked by

investment? i n ~ h o r t term i n s t r u m e n t s l i k e T'renstrry

U i i l f 3 that can be conve r t ed i n t o cash ~1 a short,

nrbf ice wi tkrout n p p r e c i a b l e l o s s i n v a l u e -

2. There i~ nced f a r improvement on t h e c r tp i tn l

hrvna o f t h e s e banks. T h i s can be a c h i e v ~ d by

mnndating, u n l i k e w h a t is c o n t a i n e d i n the

bank's prospec tus , t h e Local Governments t o

own a p a r t i c u l a r p e r c e n t a g e of t h e t o t a l c a p i t a l

i n a l l banks i n t h e Loca l Government A r m . I n

oriler to a v o i d t h e i r i n t e r f e r e n c e i n t h e

naalaagemcot of t h e banks, t h e v shou ld n o t be

represented i n t h e b o a r d s of t h e banks .

3. h n n : ~ and n d v m c e s t o commerce shou ld be c h e c k e d

by the use of n c e i l i n g .

4. Anotlicr f a c t o r i s t h e i ~ s u e of t h e match ing

loan. I t i s n o t c o n s i d e r a t e f o r i t t o hltve n

l i m i t - It shou ld depend on the c a p i t a l base of

t h o bfpnk and t h e e x t e n t NnCB can a f f o r d . This

would widen t h e l e n d i n g c a p a c i t y of t h e b a n k s ,

5 . Banks w i t h i n a p a r t i c u l a r Local Government

Area c o u ~ d form a s y n d i c a t e t o f i n a n c e any

l oan 4ouq;ht by the Local Government t h n t cm>n~sat.

be f i r ~ n n c c d hy ane bank.

6 . Mana~vment ~ L r u c t u r e of t h e banks has no in ter -nnl

a u d i t s t a f f personnel . . I n as much as the NRCR

is t.ht1 supervisory organ t h e p l n c e of tan

i n t c r n c l audi tor cannot be over-emphas l gctl,

A a a daatexwml a u d i t o r shauld be i n s t i t u t e d . B14>

slioulrj rejmr't d i r e c t l y t o t h e board and hnvc

equal ~ t n t . 1 1 ~ a8 t h e rnnnagcr i n t h e board as tan

cx.-of i lcio mcntkivr. Thi s p o s i t ion would nfforrl

hiti2 EN: oppox kuai i '.g t,o do h i s work wi thou t

f c u r 0;- ~ ~ V O P P I X . .

5.3 ENCLUSION

I n t h ~ summnry of f t n d i n ~ s i t would be n o t i c e d

t h a t , t h e Local Governments have need f o r e x t e r n a l

sources of f i n a n c e , T h i s i s t o e n a b l e them e x e c u t e

t h e i r c a p i t a l p r o j e c t s because of t h e i r b e i n g a b l e

Co f i n a n c e o n l y 75-34 p e r c e n t of t h e i r a n n u a l

budectcd crllrita.1 project,^, There cou ld be Fmprove-

ment on t h i s i f t h e r e i s neceRsary c h e c k s on

intern~llv ~ c n e r a t n d and c o l l e c t i o n of s t n t u t o r y

a l l o c a t i o n funds . I f t h e s e a r e a d e q u a t e l y checked

thc: e x ~ c l exterr t f o r e x t e r n n l f inoncine; could Ire

asccr t uined.

The'e i s an i n d i c a t i o n t h a t t h e banks can

fund t h e .ocal Governments i n t h e i r c a p i t a l p r o j c c t s

f inanc ing , T h i s i s becn~xse t h e Local Governments

may need ti maximum of HI-9 m i l l i o n n a i r a a n n u a l l y

t o f i n a n c e t h e i r c a p i t a l p r o j e c t s w h i l e t h e banks

have an a ~ e r e g e of N4.04 m i l l i o n n n i r e irr looms nnd

advnnces tly September 1992. The c a p n c i t y of t h e

banks t o do t h i s c o u l d be i n c r e a s e d w i t h im~aralremrmt

in t h e bnrlks

by nmndatlng

c a p i t a l base. T h i s cou ld b e achieved

t h e Local Governments t o c o n t r i b u t e t o

t h e capi a1 base (equity shnres) of these banks.

Moreover , improveme.nt i n the banks ' asset mannprncrlt

and non-1J.miting o f matching l o n n s would make ntnre

funds avkilable for investment by t h e banks.

It;l;+t ovenlcn(, i n t h e bnnks' c a p j t a l and p'chp~c"r

assets nanap;czment are important i n order t o nffc~lr- 3

Ihr! F:-r7*.r* S $ ~ . W P P : ~ I krsr;lj for f i n a n c l l n ~ of ~)rodr lc t b v v

nctivitics i n t h e rural nrens . In ns much :IS 3F'nl?l

~ n d NAI,i?A are crv-rently alojnr: thnt they A r e

pror:rrmmc. r thnt rnn f i s s l e out m y moment espeeirs1l;r

w i t h cIrnu.:s i n ~~ovcrnrncnt .

Ahdulkadir , A, ; "The Ro1.e of nnnks i n A c h i e v i n ~ Se l f - Reljnait Economy", &sincss Tint%, 16th December ? 988,

Arle, T, O j o ; f'Finwlcing t l lc Tnformal Sec tor of t h e ~conornk what l lo l e s Have t h e Comrnrrn i I y Tkmks". ;i2t Bank Quarterly Review. Mnrch 1991.

Community I Z r t nk ,c,

Wole Adewu~mi. n a n k b n ~ and Finance ---- i n Ni erio, U n i t e d kingdom: Crehnrn Uurn, -=-"T 1982 nambrn S t a t e L,acnl Government 9 Eetimate 1986,

Crlidelines f o r Local Government Reform, Federal Republic of N i g e r i a , August 1976,

tewia, W. Arthur - London: GeorAe

McClave, Jnrnc!~ T. end Denson G e o r ~ e P . ; S t a t i s t i c : ; fzx R ~ s S n c s s and Economicz. m o m ! iw R~cmill a n , 1988.

Ohadan, I , M s c h o c l and Iyere S , 0. ; "Government Po l i cy and Iiurnl Development i n N i R c ? s l a " . - I"'isg.r?, Rnnk Q u n r t ~ r l y Review. March P991.

' " &&for, F, 0,'; nlltole of Community Banks i n Grassroot Development" Paper presented a t The Pi s n t , ? r i ~ r j ddi'riapy and Annual Canf ercnce of Community Hnnks at Sheraton Hotel AbuJa April, 1902.

Problems and Prospects. cd A. A w d c j l S . &wlnnd, Ife . University P r a ~ e , 1979.

Second National Development Plan 1970-1 974.

x = Ac-r,ual revenues n s p e r c e n t n ~ e of e ~ t i r n n t e a

Year X x - x 24. 1

-33.3

-23.0

32.6 -29.1

19.1 14.3 43.9 11.9

- -18.8

20.1

x

S =

log x Log GM = E 1

: I-

- x = 82.31 L PC*3 x = A c t u r k L ~ l . l o c o t d o n a s percentnge of es t irnntes

95 percent conf idence internnl

Log CM =

x P Actual expenditures as percentage of estimates -

X - X

Awka 97.7 76.9 53.8

1 , '$ o f t o W 1 investrnonts to to ta l a s s e t s

- X - X (x - ;)"

p e r c e n t co:$ j.dc,.rlca i n t e r v a l

r -- t o t 11 d n p o s . i t as prcctnta::c.? of' to t j l assot,:;

Mean d' t h e total investment in millions of naira.

S t E ( X - ;)' n -

X X - X

0,211 -3081 1 4. 53 1 1 . 5 3 C) . I 4. -3.9 0,276 -3 .74

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University of Nigeria C. A._92_10783_0... · 2015. 8. 31. · 1, NWUDE, C, A,, a postgraduate student in the Department of Rnnking and Finance, University of Nigeria and with Reai~tration