The Evolution and Development of the Banking Industry in Nigeria, 1892 – 2015

Abstract

The banking sector has become an integral part of the economic development of any country. In Nigeria, the banking industry anchors strategic roles and basic functions that Centre on its financial intermediary function, saving mobilization from surplus economic units and channelling same to deficits units and many more. This paper takes an overview of the trajectory of the evolution of banking in Nigeria since 1892. It traces the history of the banking industry in the country from the rudimentary banking practices of pre-colonial Nigeria to the emergence of a semblance of the European banking system in colonial Nigeria and the many catastrophic (bankruptcies) distresses and failures to statutory regulatory reforms that characterized it under different eras. It reveals that the emergence of indigenous banks in Nigeria in 1902 was a reaction to the discriminatory practices of foreign-owned banks during the colonial period. The study establishes that failures and reforms in the industry, particularly the consolidation of 2005, served to facilitate the emergence of a more sound, stable and strong banking sector capable of driving investment and unlocking critical sectors. It recommends a further strengthening of regulatory laws to forestall future distresses, engender healthy financial sector and restore public confidence.

Keywords: Banking, Evolution, Trajectories, Distress, Reforms, Development, Nigeria.