CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

            In West Africa before the advent of the European, trade by barter was a phenomenon of the economy. The early stage of monetary development in West African was characterized by crude or primitive saving structures, where valuables are personally hidden in placed not easily detected or kept with some money lenders for custody. Although the term “banking” was not in use “savings: had already been a part of the community. Thus, the idea of banking was not completely foreign to the West African continent. The term “banking” come into existence in Nigeria, with the advent of the European. The numerous advantages associated with the banking institutions called for the rapid development of the banking industry. According to Mobouway, Okaniyan, banks are important from then point of view of economic development because they influence the thriftiness of the community, assist in the mobilization of saving and channel the savings mobilized into investment. Thus, as a result of this fast development, the primitive peasant of West Africa economy was in no time transformed into a modernized and commercialized economy. In view of banking advantages, both the federal and the state budgets and policy speeches. The emphasis on the need to develop the rural areas through the uses of rural banking in Ovia Local Government Area was inaugurated in 1973 in other to help the rural dwellers who mainly used other means of saving their money by lending it out to somebody. Another means is that, they gather themselves and start paying any amount of money to one particular person, this act is called “Osusu”. The rural banking development programme is aimed at including the various commercial, merchant and developmental banks to mobilize savings the fact that economic development in the rural areas has been growing at a snail pace. Good enough, all of which one factors in nation building. Taking a good look at the activities of Ovia Local Government Area. This has to be in the mind of many people. The effect of banking scheme in the rural areas. A careful study of the historical background of the banking scheme will be a stepping stone into looking at the various ones of activities performed by the bankers.     

STATEMENT OF THE PROBLEMS       

            Many people in the society have a questionable thought about the impact ogf the rural banking scheme in the rural areas. The researcher has the belief that banks one supposed to be the one of the instruments of the government that is used in facilitating economical growth. In this approach, the government is striving towards reviving the economy by focusing attention on the rural areas of the country so as to promote agricultural activities, which in turn will help to raise the standard of living in the country. The overriding problem in Nigeria, which affects the development of rural banking is the underdeveloped and poorly adopted financial practices, which prevail the country, commercial banks in Nigeria have often concentrated their business in the urban areas, they have not considered it necessary to set up branches in the rural sector. Before the recent government efforts to bring banking facilities to the rural areas, the alleged delay in securing an approval to establish rural branches have not enhanced the provision of rural banking facilities in Nigeria. The lack of banking facilities in the rural areas has also concentrated a major obstacle in the way of rural banking in the traditional way, using institutions such as the “Osusu” money lenders and daily savings collection and so it has not been easy to develop orthodox banking habit in them. The resulting effect shows that even after the establishment of the rural bank branches, the volume of business activities still remain low. These factors inevitably discourage bank from moving to the rural areas. Finally, the infrastructural facilities such as pipe borne water, electricity,. Good road network, modern houses and effective communication facilities are either not available. Thus, the bank staff feels reluctant to say in such area or places. There is a general death of skilled banking personnel.     

PURPOSE OF THE STUDY

            Nigeria like any other developing countries of the world is paying more attention on how to accelerate the rate of her economic development. As a means of achieving this purpose, there are avenues opened to the government to expose its realization. Thus, the main purpose of this work is to look at the effect of rural banking scheme in the rural areas of the economic development in Edo State. The project is also geared towards findings out how the rural commercial bank can mobilize savings from rural dwellers. Furthermore, the project takes a look at the extent to which rural banks have been able to meet the needs of the people through their lending policy to finance projects like agricultures, small-scale indigenous business and government projects. The sum up purpose of this research could be seen as follows;

1.      To determine the role of rural bank are playing in the overall economic development of Edo State in all its ramifications.

2.      To determine the extent to which the rural banks in Edo State fulfill the loan disbursement objectives in order to facilitates economic activities in the state.   

RESEARCH QUESTIONS

1.      For how long have you been dealing with this bank?

2.      What type of account do you operate with the bank?

3.      How long does it take you to open this account from the day this bank was commissioned?

4.      If it takes you a long time to open this account what was responsible for the delay?

5.      Have you ever asked the bank for a loan or overdraft?

6.      Was the loan granted?

SIGNIFICANCE OF THE STUDY

            Highlight of some of the major areas of economic development in Ovia Local Government Area. Will provide the background information to interested individuals such as ministries of economic development. The study will also help in bringing about some of the problem facing bank operation in the area relevant to staff in particular and the customers in general. Finally, the findings of this study will serve as a take off for subsequent researchers who would like to carryout similar studies.

SCOPE OF THE STUDY

            At the completion of this research work, the researcher hops to successfully come up with solutions to the following investigations.

1.      To find out how successful the programme has been executed.

2.      To determine whether and to what extent the scheme has promote the development of the rural areas economically.

3.      Also the researcher will be able to examine the various problems faced with this programmes and to suggest possible solution.

DEFINITION OF TERMS   

            These words or group of words have been used in the course of writing the research. These words of the reader. So to make the reading more meaningful the words have been defined especially as it relates to the research topic.

Rural area: underdeveloped area dominated by agriculture.

Banking: This is the act of collecting saving of money and assisting people in terms of facilitating financial exchange.

Scheme: Systematic arrangement proposed for executing a plan of action.

Rural banking scheme: A plan by the government, through the central bank to effect the establishment of commercial banks in various local government area in the country.

Money: Anything, which is generally accepted in the exchange or for the settlement of debt.

Barrier economy: A society where there is a total absence of monetary transaction.

Economic development: The total transformation of the mode of doing things both economically and politically.

Economic growth: If good and services production in a given period increased from year to year when measured by the total goods and service produced in given period.

Indigenous bank: banking institution owned and controlled by the citizen of the place in which such a bank is located.

Alternatively it is a banking institution where the majority of shares are owned by the citizens of the place in which the bank is located.

Infrastructure: Infrastructures refers to all installations usually found in bank in form of technological development that will enhance the work performed as distinct from all manual operations.

Rural inhabitants: These are those people who make their living in the rural areas.

Standard of living: It means the extent to which make their living in the rural areas. Also one can satisfy its wants. But when only able to satisfy its basic needs such as food and shelter