Find Banking and Financial Services expertise in Nigeria
- Banking system
- Regulatory bodies
- Development
There are more than 80 banks and over 1000 registered financial institutions operating in Nigeria (2012). These include commercial banks, discount houses, community banks, foreign exchange bureaus, finance companies and mortgage institutions. Banks dominate the financial services sector, accounting for some 90% of total assets (2012). In addition, community banks have been established to provide credit and banking facilities to low-income families, especially in rural areas, under a programme organised by the state-sponsored National Board of Community.
The Central Bank of Nigeria (CBN) is the main regulatory body within the country. It is responsible for the supervision of financial institutions such as microfinance banks, foreign exchange bureaus, primary mortgage institutions and finance companies. The introduction of the Whole Sale Dutch Auction System (WDAS) in 2006 liberalised and stabilised to a great extent the foreign exchange market. Following this, steps have also been taken to increase the access of foreign exchange services to small-end users. The World Economic Forum’s Global Competitiveness Report (2012-13) gives Nigeria a score of 3.9 out of 7 for soundness of banks, below the world mean of 5.1.
The World Bank Ease of Doing Business Index (2011) reports that Nigeria ranks 15th out of 46 sub-Saharan countries in overall ease of doing business. It also comes well within the top 25% of countries in terms of getting credit and protecting investors. The World Economic Forum’s Global Competitiveness Report (2012-2013) gives Nigeria a score of 3.8 out of 7 for availability of financial services, similar to the score given to its neighbour Cameroon and falling below the world mean. With regards to affordability, Nigeria scores only just short of the world mean and above both Cameroon and Ghana. In 2011, 30% of adults aged 15 and over held an account with a formal financial institution. In ease of access to loans the WEF’s score is again low but in line with comparable countries in the region. The World Bank reports that in 2011 2% of adults aged 15 and over had taken out a loan from a financial institution in the last year.
The CBN is heavily involved with community development projects such as the Nigerian Universities Capacity Building Programme, which improves basic building infrastructure in first and second generation Nigerian universities. It is also involved with other development financing, which is principally aimed at rural development and the agricultural sector in micro, small and medium sized enterprises. The past decade has seen a major development in modernising the payments system with the automation of the cheque clearing system, and a gradual change to electronic payment methods including debit and credit cards, real-time gross settlement system (RTGS) and eftpos (electronic fund transfer as point of sale). Financing through local equity market is scored at 3.8, above the world mean of 3.5. Nigeria also has a well-established stock market.