Banking Reform in Nigeria
BRIEF HISTORY OF NIGERIAN BANKING
A formal legal structure to banking in Nigeria is a relatively recent invention. Prior to 1952 there was no legislation governing the banking system in Nigeria. The British Bank of West Africa (BBWA) started operating in Nigeria by the year 1892. After the BBWA, Barclays Bank became the second expatriate bank to operate in Nigeria by the year 1917. The first indigenous bank, The Bank of Nigeria was founded in the year 1933 and also operated successfully. After the World War 11, British rule over Nigeria weakened with the passage of the 1946 Constitution that gave majority of the seats in the National Assembly to native Nigerians. The Nigerian government began to regulate banking with passage of the Bank Ordinance of 1952. A motivation for the passage of the 1952 Ordinance was the failure of 21 of 25 Nigerian banks in the period from 1947 to 1952. The creation of the Central Bank Ordinance of 1958 further strengthened the bank regulatory structure of Nigeria. The Central Bank began full operations on July 1, 1959.
The 1960s and 1970s saw more financial institutions being created and a greater role of Nigerian government in regulating and owning banks in Nigeria. The Nigerian government took ownership of 60% of the equity in expatriate banks operating in Nigeria, including First Bank, United Bank of Africa.
Until 1979, banks predominately owned by the federal government dominated the Nigerian banking industry. After 1979, privately held banks began to emerge again in Nigeria, but the federal government still dominated banking till the introduction of the Structural Adjustment Program.
In 1986, the Nigerian government, as a condition of an agreement to borrow from the International Monetary Fund, introduced a structural Adjustment Program that generally required economic liberalization and decreased government regulation and ownership in much of the economy. Bank licensing requirements were significantly eased resulting in a
A formal legal structure to banking in Nigeria is a relatively recent invention. Prior to 1952 there was no legislation governing the banking system in Nigeria. The British Bank of West Africa (BBWA) started operating in Nigeria by the year 1892. After the BBWA, Barclays Bank became the second expatriate bank to operate in Nigeria by the year 1917. The first indigenous bank, The Bank of Nigeria was founded in the year 1933 and also operated successfully. After the World War 11, British rule over Nigeria weakened with the passage of the 1946 Constitution that gave majority of the seats in the National Assembly to native Nigerians. The Nigerian government began to regulate banking with passage of the Bank Ordinance of 1952. A motivation for the passage of the 1952 Ordinance was the failure of 21 of 25 Nigerian banks in the period from 1947 to 1952. The creation of the Central Bank Ordinance of 1958 further strengthened the bank regulatory structure of Nigeria. The Central Bank began full operations on July 1, 1959.
The 1960s and 1970s saw more financial institutions being created and a greater role of Nigerian government in regulating and owning banks in Nigeria. The Nigerian government took ownership of 60% of the equity in expatriate banks operating in Nigeria, including First Bank, United Bank of Africa.
Until 1979, banks predominately owned by the federal government dominated the Nigerian banking industry. After 1979, privately held banks began to emerge again in Nigeria, but the federal government still dominated banking till the introduction of the Structural Adjustment Program.
In 1986, the Nigerian government, as a condition of an agreement to borrow from the International Monetary Fund, introduced a structural Adjustment Program that generally required economic liberalization and decreased government regulation and ownership in much of the economy. Bank licensing requirements were significantly eased resulting in a