2.2 THEORETICAL FRAMEWORK
2.2.1 The Basic Needs Approach of rural development
This theory is anchored on the belief of individual basic needs. It is anchored on the notion that development of human capital involves the provision of health services, education, housing, sanitation, water supply and adequate nutrition. The rationale of this theory is that the direct provision of such goods and services is likely to relieve absolute poverty more immediately than alternative strategies which simply attempt to accelerate growth or which rely on raising incomes and productivity.
To support this strategy, the argument is that the productivity and incomes of the poor depends on direct provision of health, education, water supply, housing, sanitation facilities. Hence the basic need approach emphasizes the process and efforts at providing the basic needs of the individuals within a given place as the most potent way of developing the place.
This theory remains the potent approach to rural development despite its shortcomings. One of the pitfalls is that it is difficult to help all the poor uniformly in the absence of the provision of their basic needs.
2.2.2 The organizational Management Theory of rural development
The approach is also known as Administrative System theory which emphasizes on institutional development. This theory is derived from Public administration by the Western industrialized societies, and stresses the need to institutionalized administration. It advocates for the need for fashioning ways of conducting administration of rural and under-developing areas normally and characteristically. It basic assumption is to increase rationality and sees it as a means of enhancing productivity and improving the economy of the less developed societies. Other approaches associated to the organizational management theory is
behaviors from the perspective of the general, social and cultural characteristic of a society. This theory advocates that administrative weaknesses in Nigeria are characterized by the cultural and social practices of Nigerian societies. This is because when a certain social norms or beliefs hindered development plan, then that society should not expect growth. This is because the whole idea of rural development administration came as a result of the noticed in ability of the developing states evolved a stable administration as modeled from their former colonial masters (for post colonial state)
2.3 CONCEPTUAL FRAMEWORK
2.3.1 CONCEPTS AND OBJECTIVES OF COMMUNITY BANKING IN NIGERIA
Community Banks were introduced in 1990, the Peoples Bank of Nigeria was already in operation providing credit to small-scale operators in both rural and urban areas. But because the Peoples Bank was restricted by a stipulated credit ceiling per client another credit delivery institution was needed to bridge the gap between it and the mainstream banks. Nigerian Community Banking is essentially built on the broad concept of sustainability. It integrates a number of distinct elements that make for sustainable development; the most remarkable of which is mass participation/ownership or what Ejiofor (1994) terms collectivization. Nigerian Community Banks are privately owned, self-sustaining financial institutions owned by a community, or a group of communities to provide financial services to members of the community. As such, groups such as Community Development Associations (CDAs), co-operative societies, farmers’ unions, trade groups, as well as individuals constitute the shareholders of a community bank. Because the patronage of a community bank is supposed to be largely by its owners it assumes the essential character of a co-operative society. Community Banks are small-scale and grassroots oriented and are supposed to be non-discriminatory in approach. In summary, Community Banks are supposed to use the advantages of mass ownership to reach out to small-scale producers in the informal sector of the economy, inculcating in them disciplined banking habits, developing their productive potentials and promoting their financial and banking services so as to ultimately promote grassroots/rural development within the framework of an integrated national financial system that responds to the needs of the whole economy. The establishment of community banks is expected to give rural residents the ability to enjoy banking facilities they no longer have to keep their money under their mattresses and pillows.
Community banks are commonly centered around communities, and a large percentage of community banks have all of their branches located within one to three counties. In 2011, 46 percent of 6,356 community banks had all of their offices located in one county, and another 36 percent had all of their offices located within two to three counties (FDIC 2012). Despite recent increases in the number of community bank branches, they still have fewer offices and a smaller footprint than larger banks. Although, while they may have fewer branches, many community banks hold a dominant share of total deposits in the areas in which they operate. The Federal Deposit Insurance Coperation recognized that community banks are difficult to identify, so they provided some specific criteria a financial institution must meet to be considered a community bank. Frequently community banks are simply defined as banks with total assets that are less than $1 billion. This can cause issues, however, because there are many smaller banks that do not operate as community banks. In turn, there are also larger banks that operate more like a community bank. Different organizations also classify community banks in different ways. For example, in some instances all banks under $10 billion in assets are considered community banks. Community banks generally focus on what most people would call “normal” banking activities. They are known for their relationships with their customers and the surrounding community. According to the 2012 Federal Deposit Insurance Cooperation Community Banking Study, the community banking industry has gone through many changes in the years since the financial crisis of 2007– 2008 (FDIC 2012). Although the common opinion is that community banks have suffered since the financial crisis, the Federal Deposit Insurance Cooperation study found that they have been surprisingly resilient. The rate of mergers, acquisitions and failures among community banks has been far lower than non-community banks
2.3.2 THE CURRENT STATE OF COMMUNITY BANKING
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