In this paper,
we have examined the probable impact of the on-going banking sector reform on
the Nigerian economy. In the process, we drew attention to the challenges
facing operators in the banking industry that need to be addressed for the
industry to make desired contributions to the orderly growth of the economy. These challenges
encompass those of unethical and unprofessional behaviour, poor corporate
governance practices, weak capital base, and over-dependence on public sector
deposits.
From the
analysis, it is clear that the consolidation programme will impact positively
on the economy for a number of reasons. First, the development is expected to
have long-term beneficial effects on the level of employment considering that
it will facilitate enhanced production in diverse sectors of the economy. The
reform programme will also redefine the nature of competition in the banking
industry such that each institution will have no choice but to assign priority
to its capacity to deliver superior value to its clients, since this is what will
ultimately make the difference between losers and winners. By denying banks
access to public sector deposits, the reform will make it imperative for them to
shift focus to those market segments that were largely unbanked and untapped hitherto.
Furthermore, it is envisaged that the consolidation programme will have salutary
effects on corporate governance practices in the industry.
In concluding
this discussion, it is important to reiterate that the realization of these
outcomes would depend on the effective implementation of the programme. In
particular, it would depend on how the banks that have embraced mergers and acquisition
handle the post integration challenges that will face them. Where these issues
are not properly handled, the anticipated synergy may become elusive.
BIBLIOGRAPHY
Central Bank of
Nigeria, Annual Report and Statement of Accounts, (various issues)
Nigeria Deposit
Insurance Corporation, Annual Report and Statement of Accounts, (various
issued)
Mckinnon, R. I.
(1973), Money and Capital in Economic Development
Washington,
D.C.: The Brookings Institution.
Oboh, G. A. T.
(2005), Selected Essays On Contemporary Issues In The Nigerian Banking System.
Ibadan: University Press Plc.