Select Currency
Translate this page

LOAN SYNDICATION AS AN ALTERNATIVE BUSINESS FINANCING STRATEGY IN NIGERIA

Format: MS WORD  |  Chapter: 1-5  |  Pages: 65  |  837 Users found this project useful  |  Price NGN3,000

GET THE COMPLETE PROJECT

CHAPTER ONE

INTRODOUCTION

1.1 BACKGROUND OF THE STUDY

The velalive insufficiency of fund for capital investment is a common factor in every economy especially in developing counties of the world. In developing counties like Nigeria; the low level of capital investment manifest in high unemployment rates; low productivity and corresponding low standard of living for greater majority of the population. Finding a solution to this problem of providing fund for capital investment has been a major  pre-occupation of financial institutions in Nigeria. Beyond the traditional term loan; share offers; bonds and on; business organizations and   financial institutions alike have sought out avenue to tackle the problem of insufficient fund for capital investment. One of the solutions they have come up with is syndicated load or multiple  credit facilities , which is aimed at spreading risks and weakening the impact of restricting laws and regulation on lending by financial institutions. Syndicate has been defined as an association of industrialist , or financial or banking consortium forced to carry out some industrial projects . 

 

Accordingly, loan syndication is basically defined as an agreement between two or borrower with credit facility utilizing common loan documentation.

The spectacular growth of loan syndication as an alternative financial instrument for business organization occurred as response to several economic factors in Nigeria. Notable among these were:

- The National industrial policy of 1989, which is aimed at achieving, accelerated pace of industrial growth in Nigeria economy.

- The Introduction of structural adjustment programmed in 1986, culminating in the establishment of foreign Exchange market (F E M) and depreciation of the aria, This made imported machinery and equipment very expensive and requiring hung capital outlays which most companies or financial institution can not comfortably afford.  

- Restriction on credit expansion by government and monetary authorities to minimize inflation. Central bank of Nigeria dose not included syndicated loan finance with in the credit checking, banks are there fore, able to syndicate loans with out interfering with the credit ceiling.

- The scrapping of import license regime which enabled more users of imported equipment and machineries to source and bring into the country. 

- Deregulation of interest rate made loan syndication attractive to both business organizations and financial institutions. The above factors concerned with the persistent domestic inflation and arising cost of domestic production have increased the magnitude of credits demand by vanoys users of fund particularly the industrial producers. In addition, there are certain legal and regulatory limitations on lending activities of commercial and merchant banks such as the statutory lending limit as provided in the banking act of 1969s. 13 (1) , the liquidity requirement ,e t c . In order to surmount these legal and regulatory limitations on lending activities of commercial bank (union bank) and merchant banks, loan syndication has become an attractive credit delivery technique aimed at spreading risks reducing the impact of the restricting laws and regulations. Currently, there exists no comprehensive enacted law on loan syndication in the country as to regulate the activities of the financial institution that lead and participate in the syndication. What is perhaps significant about loan syndication in the country is not the rapid growth of the financial institutions involved loan syndication, but their activities which have been quite remarkable over the years. Also, the study of the extent to which union bank of Nigeria plc.

 

Employ syndicated loan as an alternative financing means with particular reference to Anambra and Enugu states respective financing means with loan as an alternatively have been carried out in this study. The researcher carefully appraised all aspects of loan syndication as financing alternative in the country from the point of view of the borrower. It is also made clear in this work that consideration of numerous merits of syndicated loan financing as against its demerits. It is not to be used as a last resort but should be considered alongside with equivalent alternatives. All these notwithstanding the most important of this study (it empirical study) is to know the popularity of syndicated loan financing among business organization in the country and the extent to which they employ it as financing alternative, no such study has been carried out in Nigeria.  For the empirical study, Anambra and Enugu State respectively have been chosen due to constraint imposed by cost and short-term on the researcher, otherwise the researcher could have conducted the survey throughout the country.

 

1.2 STATEMENT OF PROBLEM 

There are conflicting views as to whether business organizations should be financed by syndicated loan or not. The opposition to the use of this alternative, especially in Nigeria, argues that syndicated loan is expensive and involves much administrative work. Also, there is need to point  out in every clear terms the advantages inherent in syndicated loan as medium and long term financing alternative. Besides, a review of the role of financial institutions in financing N9igeria business organization through syndicate loan is of paramount importance. In addition to the above, the extent to which syndicated loan financing is embraced by Union bank of Nigeria Plc. In the country need to be studies to know actually whether the much emphasized syndicated loan financing is being employed as financing alternative in Nigeria. 

 

1.3 OBJECTIVE OF THE STUDY 

The purpose of this study includes inter-allies; 

- An examination in general terms of the various issues involved in loan syndication.

- To find out whether loan syndication is really a new approach to or another form of borrowing.

- To synthesize the merits and demerits of syndicated loan-financing vis-à-vis other sources of medium and long-term financing both by cost and codeless.

- To survey the extent and prospects of loan syndication business in Nigeria analyzing critically the role of business organizations and financial institutions. 

- To find out whether loan syndication can help in industrial development of the country, especially under the current economic situation. 

- To examine the extent of penetration of syndicated loan financing among business organizations in the country. 

 

1.4 SIGNIFICANCE OF THE STUDY 

This study will be of crucial benefit to the borrowers. The attention of the researcher was drawn by the need for loan syndication in Nigeria especially in the area of providing the borrower with credit facilities. This becomes obvious that will be a need to grant study that could examine loan syndication as it affects the investment and capital project outlays. Therefore, the significant of this study is to look into ways of making it easy for financing a capital project outlays which requires a syndicated loan, and also to encourage financial firms to jointly finance project which one financial firm cannot single handedly finance. It is hoped that after this study. It will be useful to every bank especially those in merchant banking and development banking. It will also provide information to general public on how to employ loan syndication as alternative business financing. This work is expected to be of immense values to the students in financial studies and other related courses mostly accountancy, banking and finance and so on, since this is part of what they are going  to practice in their various place of work. Lastly, it will and government and other institutions to formulate suitable policy that will guide them in financing a big projects jointly with other financing firm.

 

1.5 SCOPE OF THE STUDY

This research work only covers the loan syndication as an alternative business financing strategy in Nigeria. I took a close looks at the needs, functions and various benefit associated with Nigeria loan syndication. 

 

LIMITATIONS OF THE STUDY

The first limitation, which was obvious, is the dearth of statistical data. Lack of statistical data from our financial institutions like central bank of Nigeria (CBN), ministry of finance, including commercial and merchant banks where the researcher visited at Enugu, Onitsha and Lagos to collect list of corporations they have financed through syndicated loan adhered strictly to the rule of secretly in banking, thus they refused to release such information. Another problem is the time constraint. A research of this nature need relatively long time during which information for accurate infirmness could be drawn, the period for the study is short , hence time posed as a constraint to the researcher.

Lastly, as the cost, the researcher would have extended the survey to other states at the empirical level and this would have produced accurate and more comprehensive work but for the hinge cost of transportation and accommodation in the various state of the federation. It is not possible.

 

1.6 STATEMENT OF HYPOTHESIS:

Ho syndicated loan has been employed against other alternatives as a medium long term financing strategy.

Hi syndicate loan has not been employed against other alternatives as a medium long term financing strategy.

Ho does syndicate loan has any impact on our national economy?

Hi syndicated loan has much impact in our national economy.

Ho syndicated loan has much impact in our national economy.

 

1.7 DEFINITION OF TERMS: 

The research topic has some key words, which call for treatment before anything else.

SYNDICATE: It has been defined as an association of industrialist, or financials or banking consortium forced to carry out come industrial projects.

LOAN SYNDICATION: It is defined as an agreement between two or more lending financial institutions to provide a borrower with credit facility utilizing common loan documentation.

GET THE COMPLETE PROJECT

Not What You Are Looking For?



For QUICK Help Call Us Now!

+234 813 292 6373


Here's what our amazing customers are saying

JONNAH EHIS
Ajayi Crowther University, Oyo
I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!
Excellent
MATTHEW NGBEDE
Ahmadu Bello University
I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!
Excellent
Temitayo Ayodele
Obafemi Awolowo University
My friend told me about iprojectmaster website, I doubted her until I saw her download her full project instantly, I tried mine too and got it instantly, right now, am telling everyone in my school about iprojectmaster.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work
Very Good
Stancy M
Abia State University, Uturu
I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much iprojectmaster, infact, I owe my graduating well today to you guys...
Excellent
Ibrahim Muhammad Muhammad
Usmanu danfodiyo university, sokoto
It's a site that give researcher student's to gain access work,easier,affordable and understandable. I appreciate the iproject master teams for making my project work fast and available .I will surely,recommend this site to my friends.thanks a lot..!
Excellent
Dau Mohammed Kabiru
Kaduna State College of Education Gidan Waya
This is my first time..Your service is superb. But because I was pressed for time, I became jittery when I did not receive feedbackd. I will do more business with you and I will recommend you to my friends. Thank you.
Very Good
Joseph M. Yohanna
Thanks a lot, am really grateful and will surely tell my friends about your website.
Excellent
Merry From BSU
I am now a graduate because of iprojectmaster.com, God Bless you guys for me.
Excellent
Samuel From Ajayi Crowther University
You guys just made life easier for students. Thanks alot iprojectmaster.com
Excellent
Musa From Ahmadu Bello University
Thank you iprojectmaster for saving my life, please keep it up and may God continue to bless you people.
Excellent

HOW TO GET YOUR COMPLETE PROJECT INSTANTLY

  • Select 3 Project Topics of your choice from your Department.
  • Submit the 3 topics to your Supervisor for Approval.
  • Call Our Instant Help Desk on 0813-292-6373 and Get Your Complete Project Material Instantly.
  • All project materials on this website are well researched by professionals with high level of professionalism.

FREQUENTLY ASKED QUESTIONS

How do i choose a Project Topic?

Look for your department and select any topic of your choice

I have a fresh topic that is not on your website. How do I go about it?

How fast can i get a complete project from your website?

Within 15 minutes if the exact project topic is on our website

Is it a complete research project or just materials?

It is a Complete Research Project i.e Chapters 1-5, Abstract, Table of Contents, Full References, Questionnaires / Secondary Data

One of your topics suites my project, but the case study is different. What do i do?

Call Our Instant Help Desk Now: (+234) 813-292-6373 and you will be responded to immediately

How do i get my complete project?

Your Complete Project Material will be sent to your Email Address in Ms Word document format

Can I get my Complete Project through WhatsApp?

Yes! We can send your Complete Research Project to your WhatsApp Number

What if my Project Supervisor made some changes to a topic i picked from your website?

Call Our Instant Help Desk Now: (+234) 813-292-6373 and you will be responded to immediately

Do you assist students with Assignment and Project Proposal?

Yes! Call Our Instant Help Desk Now: (+234) 813-292-6373 and you will be responded to immediately

What if i do not have any project topic idea at all?

Smiles! We've Got You Covered. Chat with us on WhatsApp Now to Get Instant Help: (+234) 813-292-6373

How can i trust this site?

We are well aware of fraudulent activities that have been happening on the internet. It is regrettable, but hopefully declining. However, we wish to reinstate to our esteemed clients that we are genuine and duly registered with the Corporate Affairs Commission as "PRIMEDGE TECHNOLOGY". This site runs on Secure Sockets Layer (SSL), therefore all transactions on this site are HIGHLY secure and safe!