FACULTY OF ADMINISTRATION
DEPARTMENT OF ACCOUNTING
AUDIT MANAGEMENT ACCT 707
USENI YUSUF ONWUDE
SOLUDO.C (2004: 4) The Nigerian banking system has undergone remarkable changes over the years, in terms of the number of institutions, ownership structure, as well as depth and breadth of operations. These changes have been influenced largely by challenges posed by deregulation of the financial sector, globalization of operations, technological innovations and adoption of supervisory and prudential requirements that conform to international standards. It is widely believed that savings and investment must go hand in hand for sustained economic growth.
The challenges solutions and prospects for the development growth and progress of the banking industry in Nigeria can be analyzed from eight dimensions.
Political environment: The political instability in our country especially every electioneering year (1993, 1999, 2003, 2007 and 2011) contributed in no small way to the worsening of the financial situation of our banks and other financial institutions. These periods experienced massive panics withdrawals from banks, economic activities were at their lowest and there is a general sense of insecurity.
Economic environment: Most banks were highly exposed to the oil and gas sector by offering lines of credit to boost financing of local projects/companies. In the process they were consequently burnt when oil prices crashed. A significant number of banks were also involved in margin lending which arose as a result of the growth of the stock market while giving little or no attention to the small and medium scale projects. Even when they do they place stinger measures than what they will impose on more established firms.
Business environment: A lack of a sufficiently developed infrastructure and business environment has had a negative influence on the banking industry. The absence of reliable credit rating agencies and poor infrastructure all contributed to non-standard banking practices. It’s quite a shame that this sector of the industry is totally provided by the banks themselves thereby increasing their overhead cost in the name of corporate responsibilities.
Regulatory, Supervisory and legal environment: Sanusi S.L. (2010), Lack of co-ordination among regulators and supervisory bodies prevented the CBN from having a comprehensive consolidated bank view of its activities. In addition, regulations concerning the major causes of the crisis were often incomplete. Regulations governing the issues that caused the crisis were incomplete. A comparison of Nigerian regulations with those of international regulators indicated the Nigerian set of regulations was not as comprehensive.
Corporate governance: Ebong B.B (2006). Banks within Nigeria had no regard for the existing corporate code of ethics. They were seen engaging in such activities such as: disagreements between board and management, overbearing influences of chairman or MD/CEO, especially in family controlled banks, weak internal control, insider abuse, poor risk management practices resulting in large quantum of non performing credits including insider credits and technical incompetence, poor leadership and administrative ability
Employee environment: Abdullahi S. A. (2003). There were no adequate experienced personnel to cope with the rapid expansion of the industry. The few experienced hands went for the high pecked jobs thereby creating opportunities for both inexperienced and those who had no business being in banking to flood the industry. This led to the dilution of standards and professionalism was thrown to the wind. Training of bank staffs were on the down low thereby depriving them of the most common trends in their industry.
Technology and information: Sanusi S.L. (2010). Banks made public information on their operations on a...