Banking Industry and Nigeria Economy, Positive or Negative Impact?
The Banking system in Nigeria is a very critical sector towards gearing the growth of our economy especially these era of recession in the country. Nigeria economy has proven to be so pigheaded towards being effected positively irrespective of the impacts of the various sectors of investors both private or government sectors.
Before the year came thus far, we had high hopes towards the economy as it really affects all sector in Nigeria both young and new industries felt the heat from the storm of high dollar rate.
What is banking industry?
Banking Industry is a financial institutions that performs bank and banks functions such as deposit and withdrawal, provision of loans and mortgages, exchange currencies, save foreign currencies, manage people’s wealth and devise an appropriate means of savings for individuals. These industry controls the financial sector of the country and tells when the economy is favorable enough to carry out sales.
In as much as most banks are privately owned, but they are guided by high governmental policy which puts things in place when setbacks surfaces. These article houses the impacts (positive and negative) towards Nigeria economy. Listed below are the banking industries in Nigeria and their functions.
- Developmental Banks
- Specialized banks
- Commercial banks
- Central bank of Nigeria (CBN)
- Merchant banks.
Developmental Banks practically functions to provide loans to companies either private or governmental sectors in order to boost their productivity and gross earnings.
They also assists merchant’s banks in carrying out their functions. They provide both short and long term loans to investors. Device policies which controls the actions of most private sectors in business to guide them from witnessing sudden liquidation or dissolution of business.
Examples of the developmental banks seen in Nigeria are as follows:
- Nigerian Industrial Development Bank (NIDB).
- The Nigerian Bank For Commerce And Industry (NBCI)
- Federal Mortgage Bank Of Nigeria (FMBN)
These banking industry is specialized at providing micro loans to individuals, small scale businesses and small cooperative society. They are micro finance banks or you can term them a mortgage bank.
The mortgage bank sector is specialized at providing or offering housing funds in respect to the act guiding national housing fund in the constitution.
Also among the specialized banks is the non-interesting banks which the banking system is contrary to the normal banking system as it forbids interest generation. Example of such bank is the Stanbic IBTC. These bank is known to provide special function.
Commercial banks are mostly private banks that are owned by individuals. They offer conventional banking services. They issue loans and mortgages, accepts deposits, deals with cheques a, nd drafts, supports international trades through currency exchange, they finance people trade, encourages digital banking system etc.
Examples of commercial banks are firstbank of Nigeria, United Bank of Africa (UBA), Unity Bank, Zenith Bank, Access Bank, First City Monument Bank, Skye Bank, Heritage Bank, Wema Bank, Key stone Bank, Stanbic IBTC, Diamond Bank, Sterling Bank, Eco Bank, Fidelity Bank, Guaranty Trust Bank (GTBank) etc.
Central Bank of Nigeria (CBN)
This is known as the Apex Bank, the banker’s bank in Nigeria. Control other banks activities by optimum checkmates of banks statistics, customers and banks relationship. The Central Bank of Nigeria is regarded as the mother bank of other banks because they maintain stable price in Nigeria, maintain foreign reserves to protect our Naira value in the international market.
They also perform advisory function to government and other banks on the right ways to follow banking ways to initialize a stable economy.
These are banking industry that solely operates with shares. They encourage customers to obtain capital in for of shares. They offer financial advice, providing mutual funds and are large brokers of stock, they manage securities and individuals portfolio.
Examples of merchant banks are Stanbic Merchant Bank Nigeria, Investment Banking and Trust Company ltd, and Indo Nigeria Bank Ltd. Etc.
Following the lists of different banking industry in Nigeria, let’s look at the positive impacts of those banks to Nigeria economy.
- Provision of loans to both private and government sectors
- Provision of mortgages to private sectors.
- Issues shares to companies as capital
- Facilitates foreign currency exchange for easy transactions.
- Generates platforms where foreign trade and payment are made so easy, convenient and reliable.
- Encourages international trade
- Advices both government and non-governmental sectors.
- Implements policies that stabilizes the price of goods in Nigeria.
The positive impacts of the banking industry in Nigeria is so massive that it almost over shadows the negative impacts which more or less affects Nigeria economy. Some of the predisposing negative impacts are as follows:
- Due to unstable government policies, the baking system are sometimes altered and these causes more harm to Nigeria economy.
- As a result of most banking system, it has create room for scammers and fraudsters to operate on and has liquidated most private sector businesses.
- Banking operatives tends to impose more charges to banking activities and sometimes affects the masses at large.
- Companies that couldn’t meet up with high loans and mortgage interest rates tends to meet there quick dissolution.