Your Nigerian Economist

Your Nigerian Economist

Inclusive growth lies at the heart of Nigeria's development. From macroeconomic policies to energy resources; trade to development topics, Your Nigerian Economist engages the citizenry in discussing relevant economic issues and proffers solutions towards a fairer, more developed economy.

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Improving regulation in Nigeria's financial system

Mma Amara Ekeruche

Mma Amara Ekeruche

Amara works as a Research Associate at the Centre for the Study of the Economies of Africa (CSEA). She holds a BA (first class) in Economics from Kwame Nkrumah University of Science and Technology, Ghana and an MSc in Economic Policy from University College London.

In just over a decade, between 1994 and 2000, 35 Nigerian banks folded up. After 2000, 10 more banks followed, among which were the popular Savannah and Fortune Banks. By 2004, the Central Bank of Nigeria (CBN) made efforts towards strengthening the country’s financial system, what the experts term as ‘macroprudential regulation.’ 

These regulations seek to reduce the risk to the financial system as a whole. What that meant for Nigeria was the CBN mandating commercial banks operating across the country to increase their minimum capital base from ₦2 billion to ₦25 billion.

This was to ensure that the financial system can withstand economic shocks and absorb losses. Another reason for increasing the capital base was to increase loans; as a more secure banking system translates to increased confidence in the sector, and more loan origination with banks raising more deposits. Real sectors such as manufacturing, technology and entertainment sectors that produce goods and services, and employ Nigerians were to benefit from this.

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