Commercial Banks and Finance Houses as Sources of Finance for SS 3

Class: SS 3
Term: First Term
Week: 7
Age: 17 years
Duration: 60 minutes
Subject: Salesmanship
Curriculum Theme: Sources of Finance
Previous Lesson: Sources of Finance
Topic: SOURCES OF FINANCE
Subject Matter: Commercial banks; Functions of finance houses e.g cooperative societies, micro- finance organizations, Nigerian export-import bank; (NEXIM)

Specific Objectives

By the end of the lesson, pupils/students should be able to:

Cognitive Domain

• Define commercial banks.
• Identify various finance houses.
• State the functions of commercial banks as sources of finance.
• Explain the functions of cooperative societies as sources of finance.
• Describe the functions of micro-finance organizations as sources of finance.
• Outline the functions of the Nigerian Export-Import Bank (NEXIM).

Affective Domain

• Appreciate the importance of commercial banks in business financing.
• Recognize the role of finance houses in supporting small and medium enterprises.
• Value the contributions of NEXIM to export-oriented businesses.

Psychomotor Domain

• List different types of finance houses.
• Differentiate between commercial banks and finance houses.

Reference Materials

The following resources were used in planning this lesson:

• 2014 Senior Secondary Education Curriculum (SSEC)
• Relevant State Unified Scheme of Work
• A suitable Salesmanship textbook for SS 3
• FCT ERC/NAPPS Scheme of work

Instructional Materials

The teacher will teach this lesson with the aid of:

• Whiteboard and markers
• Charts showing different financial institutions
• Handouts detailing functions of finance houses
• Pictures of commercial banks and micro-finance organizations

Rationale for the Lesson

Understanding various sources of finance is fundamental for any business student, especially in Salesmanship, as it directly impacts business operations and growth. This lesson provides students with knowledge of how commercial banks and specialized finance houses contribute to capital availability. It equips them with practical insights into securing funds for entrepreneurial ventures and business expansion.

Prerequisite/Previous Knowledge

Students should have a basic understanding of what finance is and the general concept of business operations.

Lesson Content/Board Summary

SOURCES OF FINANCE

Commercial Banks as Sources of Finance

Commercial banks are financial institutions that provide a wide range of financial services to individuals, businesses, and governments. They play a significant role in providing finance for businesses through various means.

1. Loans and Overdrafts: Commercial banks offer short-term, medium-term, and long-term loans to businesses for various purposes such as working capital, expansion, or asset acquisition. Overdraft facilities allow businesses to withdraw more money than they have in their account, up to an agreed limit.
2. Discounting Bills of Exchange: Banks can provide immediate cash to businesses by purchasing their bills of exchange (promissory notes) at a discounted rate, thereby providing short-term finance.
3. Leasing: Some commercial banks offer leasing services, allowing businesses to use assets (like machinery or vehicles) without outright purchase, conserving capital.
4. Trade Finance: They facilitate international trade by providing services like letters of credit, which assure exporters of payment and importers of goods delivery, thus easing trade transactions.
5. Issuing Guarantees: Banks can issue guarantees on behalf of businesses, which helps them secure contracts or credit from other parties.

Functions of Finance Houses as Sources of Finance

Finance houses are non-bank financial institutions that specialize in providing specific types of financial services, often catering to niches not fully served by traditional commercial banks. They are crucial for promoting financial inclusion and supporting specific sectors.

Cooperative Societies

Cooperative societies are autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. As sources of finance, they:

1. Provide Loans to Members: Members contribute regularly to a common fund, from which they can borrow at reasonable interest rates for personal or business needs.
2. Encourage Savings: They promote a culture of saving among members, accumulating capital that can then be lent out.
3. Offer Financial Education: Some cooperatives also provide financial literacy training to their members, improving their ability to manage funds and access credit responsibly.

Micro-finance Organizations

Micro-finance organizations (MFOs) are financial institutions that provide financial services, such as small loans (micro-credit), savings, and insurance, to low-income individuals or groups who typically lack access to conventional banking services. Their functions as sources of finance include:

1. Micro-credit Provision: They offer small loans to entrepreneurs, particularly women and those in rural areas, to start or expand small businesses.
2. Savings Mobilization: MFOs encourage and facilitate savings among the poor, providing a safe place for their money and helping them build capital.
3. Financial Inclusion: By reaching underserved populations, they bring more people into the formal financial system, enabling them to access finance for productive activities.

Nigerian Export-Import Bank (NEXIM)

The Nigerian Export-Import Bank (NEXIM) is a development finance institution established by the Federal Government of Nigeria to promote the diversification of the Nigerian economy and support the non-oil export sector. As a source of finance, NEXIM:

1. Provides Export Credit Facilities: Offers various credit facilities (e.g., direct lending, rediscounting, and refinancing facilities) to Nigerian exporters to enable them to produce and export goods.
2. Offers Export Credit Guarantees and Insurance: Protects Nigerian exporters against political and commercial risks associated with international trade, making it safer for them to engage in export activities.
3. Provides Trade Information and Advisory Services: Assists exporters with market information, business linkages, and advisory services, enhancing their capacity to compete globally.
4. Supports Export-Oriented Projects: Finances projects that have significant export potential, helping to boost Nigeria’s non-oil exports.

Teaching Methods/Instructional Techniques

Discussion, Explanation, Question and Answer, Guided Practice, Group Work

Instructional Procedures

Step 1: Introduction

Time: 5 minutes

Teaching Skill: Hook/Recall

Teacher’s Activity: The teacher greets the students and asks them to recall what they know about sources of finance generally. The teacher then introduces the topic: Commercial Banks and Finance Houses as Sources of Finance.

Pupils’ Activity: Pupils respond to questions and listen attentively to the introduction.

Learning Point: Introduction to finance sources

Step 2: Commercial Banks

Time: 10 minutes

Teaching Skill: Explanation/Discussion

Teacher’s Activity: The teacher explains what commercial banks are and discusses their various functions as sources of finance for businesses, providing examples of loans, overdrafts, and trade finance. The teacher encourages students to share examples of commercial banks they know.

Pupils’ Activity: Pupils listen, ask questions, and contribute examples of commercial banks.

Learning Point: Commercial bank functions

Step 3: Introduction to Finance Houses

Time: 5 minutes

Teaching Skill: Explanation

Teacher’s Activity: The teacher introduces the concept of finance houses as non-bank financial institutions and explains why they are important, especially for specific financial needs not always met by commercial banks.

Pupils’ Activity: Pupils listen and understand the distinction between commercial banks and finance houses.

Learning Point: Concept of finance houses

Step 4: Cooperative Societies

Time: 10 minutes

Teaching Skill: Discussion/Elaboration

Teacher’s Activity: The teacher discusses cooperative societies, explaining their structure and how they serve as sources of finance for their members. The teacher asks students if they know of any cooperative societies in their communities.

Pupils’ Activity: Students state functions of cooperative societies and share examples from their local communities.

Learning Point: Cooperative society functions

Step 5: Micro-finance Organizations

Time: 10 minutes

Teaching Skill: Explanation/Examples

Teacher’s Activity: The teacher explains the role of micro-finance organizations, focusing on their importance in providing micro-credit and savings facilities to low-income individuals and small businesses. The teacher provides examples of micro-finance banks in Nigeria.

Pupils’ Activity: Pupils listen, take notes, and ask questions for clarification.

Learning Point: Micro-finance organization roles

Step 6: Nigerian Export-Import Bank (NEXIM)

Time: 5 minutes

Teaching Skill: Explanation/Clarification

Teacher’s Activity: The teacher explains the specific mandate and functions of NEXIM, highlighting its role in supporting non-oil exports and providing export credit facilities and guarantees.

Pupils’ Activity: Students state functions of NEXIM and understand its specialized role.

Learning Point: NEXIM bank functions

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. What is a commercial bank?
2. Mention two functions of commercial banks as sources of finance.
3. Name three types of finance houses discussed today.
4. State two functions of cooperative societies.
5. Explain the role of NEXIM in financing exports.

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Understanding finance sources

Step 8: Note-Taking

Time: 10 minutes

Teaching Skill: Guided Writing

Teacher’s Activity: The teacher guides pupils/students to copy the essential Board Summary notes on commercial banks and finance houses into their notebooks.

Pupils’ Activity: Pupils/students copy the notes carefully into their notebooks.

Learning Point: Recording lesson notes

Step 9: Conclusion

Time: 5 minutes

Teaching Skill: Consolidation

Teacher’s Activity: The teacher summarises the key points of the lesson, emphasizing the diverse options businesses have for sourcing finance from both traditional banks and specialized finance houses. The teacher encourages students to consider these options in future business ventures.

Pupils’ Activity: Pupils listen and ask any final questions.

Learning Point: Reinforcing lesson concepts

Continuous Assessment/Further Study

Type: Homework

Instruction: Answer the following questions in your notebook:

1. Differentiate between a commercial bank and a micro-finance organization, providing two points of difference.
2. Research and write a short paragraph on how a local cooperative society in your area helps its members financially.
3. Imagine you want to start a small business selling locally made crafts for export. Which financial institution discussed today would be most relevant to your financing needs and why?

Lesson Keywords

• Commercial Banks – Financial institutions offering diverse services including loans and overdrafts.
• Finance Houses – Non-bank institutions specializing in specific financial services.
• Cooperative Societies – Member-owned organizations providing loans and savings facilities.
• Micro-finance Organizations – Institutions offering small loans and savings to low-income individuals.
• NEXIM – Nigerian Export-Import Bank, supporting non-oil exports.
• Loans – Borrowed money that is expected to be paid back with interest.
• Overdraft – Permission to overdraw a bank account up to a specified limit.

Differentiation

For students who grasp concepts quickly, encourage them to research other types of finance houses in Nigeria (e.g., development banks, venture capital firms) and their specific roles. For students needing more support, provide simplified handouts with key terms and functions, and pair them with stronger students for group activities.

Suggested Lesson Videos

For further understanding, search on YouTube for: commercial banks functions nigeria ss3 and finance houses nigeria NEXIM microfinance