Problems, Solutions and Prospects for the Development and Progress of the Banking Industry in Nigeria
AHMADU BELLO UNIVERSITY ZARIA
FACULTY OF ADMINISTRATION
DEPARTMENT OF ACCOUNTING
AUDIT MANAGEMENT ACCT 707
USENI YUSUF ONWUDE
MBF/ADMIN/0483/2009-2010
[pic][pic]INTRODUCTION
SOLUDO.C (2004: 4) The Nigerian banking system has undergone remarkable changes over the years, in terms of the number of institutions, ownership structure, as well as depth and breadth of operations. These changes have been influenced largely by challenges posed by deregulation of the financial sector, globalization of operations, technological innovations and adoption of supervisory and prudential requirements that conform to international standards. It is widely believed that savings and investment must go hand in hand for sustained economic growth.
The challenges solutions and prospects for the development growth and progress of the banking industry in Nigeria can be analyzed from eight dimensions.
Political environment: The political instability in our country especially every electioneering year (1993, 1999, 2003, 2007 and 2011) contributed in no small way to the worsening of the financial situation of our banks and other financial institutions. These periods experienced massive panics withdrawals from banks, economic activities were at their lowest and there is a general sense of insecurity.
Economic environment: Most banks were highly exposed to the oil and gas sector by offering lines of credit to boost financing of local projects/companies. In the process they were consequently burnt when oil prices crashed. A significant number of banks were also involved in margin lending which arose as a result of the growth of the stock market while giving little or no attention to the small and medium scale projects. Even when they do they place stinger measures than what they will impose on more established firms.
Business environment: A lack of a sufficiently developed infrastructure and business environment has had a negative influence on
FACULTY OF ADMINISTRATION
DEPARTMENT OF ACCOUNTING
AUDIT MANAGEMENT ACCT 707
USENI YUSUF ONWUDE
MBF/ADMIN/0483/2009-2010
[pic][pic]INTRODUCTION
SOLUDO.C (2004: 4) The Nigerian banking system has undergone remarkable changes over the years, in terms of the number of institutions, ownership structure, as well as depth and breadth of operations. These changes have been influenced largely by challenges posed by deregulation of the financial sector, globalization of operations, technological innovations and adoption of supervisory and prudential requirements that conform to international standards. It is widely believed that savings and investment must go hand in hand for sustained economic growth.
The challenges solutions and prospects for the development growth and progress of the banking industry in Nigeria can be analyzed from eight dimensions.
Political environment: The political instability in our country especially every electioneering year (1993, 1999, 2003, 2007 and 2011) contributed in no small way to the worsening of the financial situation of our banks and other financial institutions. These periods experienced massive panics withdrawals from banks, economic activities were at their lowest and there is a general sense of insecurity.
Economic environment: Most banks were highly exposed to the oil and gas sector by offering lines of credit to boost financing of local projects/companies. In the process they were consequently burnt when oil prices crashed. A significant number of banks were also involved in margin lending which arose as a result of the growth of the stock market while giving little or no attention to the small and medium scale projects. Even when they do they place stinger measures than what they will impose on more established firms.
Business environment: A lack of a sufficiently developed infrastructure and business environment has had a negative influence on
References: • Www. ciuci-bankreport-full-version.htm, Nigerian banking: the way forward, July 2010. • Akpan P.E (2oo6) ‘Developments in the Nigerian Banking System’, Department of Banking Supervision, Central Bank of Nigeria. • Sama’íla. A (2010) ‘Reformation In The Banking Industry: Challenges And Prospects’, thi