An Evaluation of the Performance of Indigenous Banks in Nigeria

This papcr has composed of an evaluation of the performance of indigenous
banking system in Nigeria. Indigenous banks are those banks owned wholly by
indigenous investors. Also they represent hanks in which the governmcnt controls
all or the majority of the bank shares. 'The Nigerians decided to found their own
banks when credit nccds wcre not met by the expatriate banks. Rather
discriminatory attitudes were shown to them using rigid rules in the assessment of
their credit risks.
Another perspective of indigenous banking era came when independent
African govcrnrnents legislated to nationalize bank shares wholly or partly in order
to influence banking policics and management with a view to securing large bank
lending for productive sectors of the economy. This brought about what is now
called mixed banking system in Nigeria. Virtually through Indigenization Decree of
1972 and 1977 all banks in the country became indigenously owned - mixed or
purely indigenous.
Nigerian indigenous banks (i.e. wholly) are state owned. The ownership of
these banks further subdivided into single and interstate indigenous commercial
banks. To save them from collapse State Governments bought over all these banks.
The banking system has a lot to offer jn the Nigcrian economy. LJntil such
time as all of the financial institutions in Nigeria have been thoroughly studied, it
will not bc possible to assess the significance of the banking system in a precise
manner. What follows is tlierefore imprcssionistic and ten1ntivc and may well have
to be podified when acldi1ional information becomes available.
Therc is not in Nigeria a wide range of overlapping institutions racing the
potential borrower. The various development agencies offer very little competition
to the banks as they usually have fairly rigid limitations to thcir Icnding ability
which effectively limit their potential clientele to small groups with limited overlap
bctwccn tlwn. I'hcir loans arc thc no st 1 ~ 1 - tlo ng-tcl-111a nd many havc at prcscrit
committed all of thcir available resources.This papcr has composed of an evaluation of the performance of indigenous
banking system in Nigeria. Indigenous banks are those banks owned wholly by
indigenous investors. Also they represent hanks in which the governmcnt controls
all or the majority of the bank shares. 'The Nigerians decided to found their own
banks when credit nccds wcre not met by the expatriate banks. Rather
discriminatory attitudes were shown to them using rigid rules in the assessment of
their credit risks.
Another perspective of indigenous banking era came when independent
African govcrnrnents legislated to nationalize bank shares wholly or partly in order
to influence banking policics and management with a view to securing large bank
lending for productive sectors of the economy. This brought about what is now
called mixed banking system in Nigeria. Virtually through Indigenization Decree of
1972 and 1977 all banks in the country became indigenously owned - mixed or
purely indigenous.
Nigerian indigenous banks (i.e. wholly) are state owned. The ownership of
these banks further subdivided into single and interstate indigenous commercial
banks. To save them from collapse State Governments bought over all these banks.
The banking system has a lot to offer jn the Nigcrian economy. LJntil such
time as all of the financial institutions in Nigeria have been thoroughly studied, it
will not bc possible to assess the significance of the banking system in a precise
manner. What follows is tlierefore imprcssionistic and ten1ntivc and may well have
to be podified when acldi1ional information becomes available.
Therc is not in Nigeria a wide range of overlapping institutions racing the
potential borrower. The various development agencies offer very little competition
to the banks as they usually have fairly rigid limitations to thcir Icnding ability
which effectively limit their potential clientele to small groups with limited overlap
bctwccn tlwn. I'hcir loans arc thc no st 1 ~ 1 - tlo ng-tcl-111a nd many havc at prcscrit
committed all of their available resources.