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Small firms to resist banks

by Business News Report

Small and medium scale business entrepreneurs in Nigeria may staunchly resists the move by banks to own shares in them, investigation conducted by The Republic has revealed. Small scale entrepreneurs sampled who pleaded anonymity are of the view that banks owning shares in their ventures would erode the autonomy and authority in such venture.
According to the entrepreneurs, banks are too strict and too nosy to be good partners in their business.
According to some of the entrepreneurs their control in the business would no longer be effective.
The federal government had in the 1988 budget announced government intention to amend the necessary portion of the banking act to enable banks own share in small and medium scale businesses that are wholly Nigeria owned.
This move became imperative as a result of the desire of government to build sound economic base enterprises form the bedrock.

Small scale enterprises through out the country out of country face difficulty in obtaining loans and finding the necessary operating cash.
According to information banking sources a good number of this class of businesses do not have good records and accounting practices and as a result cannot be given bank loans.
This, sources said would not be allowed to happen if banks become part owners of such business.
A number of this category of business hoard a lot of information about their operations in order to evade tax payments.
A good number also employ family hands that are not qualified to hold such positions. The business men argued that this control they have on their businesses would be eroded by banks owning shares in their business.
Banks officials however said that public enlightenment is required to get the entrepreneurs to see the benefit they would derive from access to finance, increase in their capital base, good management which banks particularly would bring to them.
The managing director of First Bank Nigeria Limited Chief Wale Adeosun argued that bank ownership of equity in small and medium scale business should be for a specific period after which they should dispose of the equity back to the owners of the business or the public that is when the business concerned would have taken proper footing.

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