CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Long before the inception of community banking system in Nigeria , intensive campaigns were organized nation wide urging community to form community Development Association [CDA] or where they already exist6 in form of town union or patriotic association to register them in their local government. This was to create an avenue for which they could more eect t lively participate in rural development programmes at grassroots .Development association was found and registered as at 31st December 1992. It is pertinent to mention that government had before this time established some development agency intended to providing grassroots’ development. These include National Directorate for Employment [NDE] Better life programmed of Rural Dweller [BLPRD] Rural Banking ,people’s Bank and Directorate of food , road and Rural infrastructure [DEFRRI] whose primary task was to a identify , involve and support viable local community organization in the mobilization of the rural population for sustained rural development activities bearing in the mind the need of promoting greater participation and economic self- reliance on rural development “ On the basis of this and other functions defined in the Decree 4 of the 1987, as stressed by mabogunje, the directorate fell into three broad areas as
1. Community organization and social mobilization
2. Infrastructural Development
3. Promotion of productive activities. The idea of community banking was made known to the public during January 1st 1990 budget speech by the president and commander of chief the Armed forces, General Ibrahhim Alamosa Babangida, in that speech he clearly spelt out what the government has in mind as follows The adjustment subsidy levels of domestic price of petroleum product have been estimated millions is 1990 fiscal year, Government decided that the sum be put back into strengthening its programme of grass-root economic development Accordingly, the sun of #453 million will accrue to special account with the central bank to strengthening the people’s bank. Maboguje defined community bank as a self sustaining financial institution, owned and managed by providing credit, deposit banking and other financial services to its members largely on the basis of their self recognition and credit worthiness” Based on the foregoing, comm. Unity bank are primarily set up to promote productive activities in the rural areas. Specifically, they ar5e meant to facilitate the programmes of the directorate of food, road rural infrastructure by providing easy access to credit for rural producers. National Network of community banks are intended to greatly strengthen the massive programmes of government in rural development. To day’s over 1,110 community banks are found to have been established throughout the country with Alheri community community bank , Tudun Wada in Kadauna State as the first to be commissioned on 31st December, 1990. The shi of emphasis to rural development is a matter of necessity at this present state of our development. It is important to state here that over 75% o the country’s resources endowment abounds in the rural areas. Again, part of our experiences in rural development has clearly shown of rural that eort at expanding economic base of scarcity of, and restricting access to loan able fund. In addressing this problem, pervious government in their economic policies had relied exclusive on development banking and rural branch banking of the orthodox banks. However, it was observed that the sophisticated mode of operation of the conventional bank, their legalistic insistence on collateral had rendered them incapable of dealing with the unsophisticated rural dweller and lower strata of our society. Jags and Nkom stressed that the introduction of community bank was itself motivated b y the failure of previous attempts at extending credit to the rural producer. It is therefore, in firm belief and commitment to rural development that every Nigerian who is engaged in productive activities must have access to loan able fund regardless of the size of loan. This is why community bank as a catalyst for rural development will be reviewed in the project between 1992- 1995, using ogui urban community Bank Enugu as a case study.
OGUI URBAN COMMUNITY BANK ENUGU
The bank was incorporated in April 1992. It started operation 17th July 1992 with sta strength of thirteen which at the time of writing this project has risen to twenty seven ogui urban community bank started operation during the deregulation of the banking in Nigeria. As at November 1995 the bank was operating with little above 1000 savings account holders, 300 current account holders comprising individuals, organizations and sta of the bank. The banks also have eleven {11} fixed deposit account holders. Apart from the conventional banking functions, the bank has contributed to rural development through her mass transit services among others. Ogui urban community bank has no other branch because community banks are established to function within one community alone, thus reflecting theUNIT BANKING SYSTEM – which operates in some advanced country of the world such as United states of America {U.S.A}. However, the bank uses United Bank for African [UBA] and union bank PLS Enugu as her correspondents bank to facilitate clearing business in the central bank of Nigeria. The bank renders all banking services except foreign exchange transaction, which the decree establishing it restricted to other financial institutions.