Firstly, since independence in 1960, the Nigerian political system has been volatile, there have been 7 military coups, and this has made the investment climate unattractive because the nation appears insecure for the foreign investor.
Secondly, they are too many arbitrary and sudden changes in government policies and regulations which have led to a great deal of uncertainty. Foreign banks are scared from funding any project with a long gestation period. With this fear, most of these banks are now turning to major cash centres, that is, they are basically involved in deposits and disbursement of funds without getting involved in long term project financing.
Thirdly corruption is endemic and has spread to every facet of the economy. It is widely prevalent in many government and public agencies and foreign banks believe that business operations may come to a halt if they is “no greasing of palms’’
Another major finding is that of weak legal system, the legal system has also has had its shortfall arising from the executive meddling in their affairs. Those who contravened the laws are not easily brought to book, those involved in trade malpractice or breach of contractual agreements are not properly prosecuted to serve as a deterrent to others. Based on these, most foreign banks tend to be worried about validity and enforcement of contractual agreements.
Foreign banks require healthy private sector that can earn reasonable rate of return in a stable economic environment, that is, when the private sector is healthy, this is a good indicator for the foreign investor that the economy is, stable, thriving and can be a good investment opportunity. Government is too involved in the regulatory approvals .None is even left in the hands of the private sector through organised bodies as it is the case in the UK through the Financial Service Authority (FSA). The FSA regulates both prudential aspect and conducts of business. It is funded by industry levy and governs by a board of overseers. This board of overseers are mostly people in the financial sector not necessarily in government Llewellyn (2000).
5.2 CONCLUSION
For any economy to measure to international standard there must be the presence of some foreign banks, the Nigerian economy has witnessed such presence. However, a number of these banks tends to vary from time to time and from region to region.
The analysis of the research has brought out the challenges being faced by foreign banks in Nigeria.
After World War II, many nations were left with weak economy and financial instability. Offshore banking became a method to escape national regulation as many national regulators turned a blind eye on deposits in currencies other than their own. The offshore market became popular due to its ability to facilitate new finance innovations and keeping transaction costs low. Eurodollar market for example is a product of this trend. As offshore banking became competitive, the U.S. had to remove limits on national banking and the division between commercial and investment banking. Canada also benefitted from this new trend as it appeared to be very promising for international expansion. However, differing from the United States, Canadian Banking Act was in place to protect domestic banks from new foreign entrants and also effectively manage risk. With the increase of international investment, not only does funding needs were satisfied but new business information systems were also developed due to the increased need for more centralization and a variety of services. New regulations such as The International Banking Act of 1978 was formed to level the playing field between foreign and American banks by requiring mutuality from any country whose banks are seeking permission to enter the United States. The Gramm-Leach-Bliley Act also removed barrier for commercial banks, investment banks,
The development of a country depends generally on the work and values of its society. The image of a country can be severely damaged by certain actions and behavior of their citizens, like bribery. When a country is known as a corrupt nation, not only will the facade of the country be affected, but also the economy. Establishing measures to eradicate corruption are urgently necessary. Corruption has been around since the begging of time, but currently is more common in business, more specifically, international business. Although some organizations have been formed, and conventions have been signed in order to end it, corruption is still one of the mayor problems around the world. An ethical view might bring more insight to why bribery and corruption is not a moral act and why more severe measures should be taken into consideration.
oil in Nigeria. Nigeria’s large supply of high quality crude oil helped Shell climb to the top,
The runaway corruption in the country harms the business environment and causes collapse of various established institutions and industries.
Some other cons and challenges of doing business in Nigeria that also affects this group are; lack of infrastructure, poor power supply, inadequate security, inconsistent government policies, transportation challenges, inability to access funds and lack of government support.
In 1884 and 1885, the European powers met as the Conference of Berlin. Here, they decided to seize all of Africa and divide it into spheres of influence. After negotiations, imperialist wars, and conquests, the Europowers were successful. In 1900, the Colony of Lagos and the Protectorates of Northern and Southern Nigeria were formed. In 1914, these protectorates, including Lagos, were brought under a single colonial administration. However, the well-educated southern elite dominated this administration. The British believed it was best to not play a role in Nigeria’s everyday life. They decided to let the administration handle things to an exte...
The bank failure in Jamaica illustrates how negative mindsets and behaviors can devastate the financial system and disrupt economic growth. The primary role of any bank is to safeguard its customer’s money, offer interest rate on deposits, lend money to creditworthy individuals, and make sound investment decisions to maximize shareholder value. Because of rapid economic growth between the late 1980s and early 1990s in Jamaica, the Central National Bank (CNB) and Worker’s Savings and Loans Bank (WSLB) loosened their monetary policies, provided preferential interest rates and extended credit beyond what was reasonable to members of its own board of directors, managing directors, and officers of the bank. These actions posed significant risks to the bank and its future.
According to the Yetunde Omowunmi Adeuja, examined the Impact of IFRS on the Performance of Banks in Nigeria. The result of his analysis showed a reduction in liquidity ratio computed under IFRS.
In the country’s early post-independence era, foreign enterprises were seen by some as a form of “neo-colonialism” and deterred (Gaur 2006. No pagination). That has now changed and the investment climate is more positive, although still challenging.
Majecodunmi, A., & Adejuwon, D. (2012). Globalization and African political economy: The Nigerian experience. International Journal of Academic Research in Business and Social Science, 2(8), 189-205.
...those wealthy people that have offshore accounts with the sole purpose of avoiding taxes, laundering money or keeping money offshore are also responsible and also breaking the law. Nigeria is one of the principal suppliers of oil to the United States, the most populous country in Africa is yet homed the biggest single thief in the world in the 1990s who was almost certainly the late military dictator Sani Abacha, with $12 to $16 billion passing out of Nigeria in corrupt and tax-evading money during his murderous five year regime, most of this to the personal accounts of Abacha and his immediate family members. Offshore banking attracts criminals and opportunist but that does not mean that it is bad in nature, the purpose of offshore banking could be very valuable for the common men but sadly white collar criminals are the ones that are use and misuse this privilege.
Kearney, A.T. (2001). Corruption and the Globalization Index. Last access on 27 March 2005 at URL: http://www.globalcorruptionreport.org/download/gcr2001/data_and_research.pdf NAIM, Mois´s (1995). Corruption Eruption. Last accessed on 2 April 2005 at URL: http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=648 MORAN, Robert T. and RIESENBERGER, John R. (1994)
At the same time, the amount of non-performing loan ratio has also increased from 1.9% in 2015 to 2.4% in 2016 that requires banking institutions to pay more attention and to raise caution on risky sectors in order to strengthen the effectiveness of assets quality management (Supervision Annual Report, 2016). This can be resulted from the lack of sufficient legal framework for the institution governance and its operation monitoring. Therefore, this has brought the central bank to pay more attention to the performance of the banking and financial institutions in order to avoid the bankruptcy. To deal with the doubt concerned, there are few questions the study is going to figure out what are the problems of the banking supervision at the National Bank of Cambodia and how the central bank do to manage this issues.
Montesh, M. (n.d.). Conceptualizing Corruption: Forms, Causes, Types and Consequences. Retrieved May 4, 2014, from
Banks sector is playing an important role in economies. The banking industry, as the classic and the most influential of financial intermediaries, facilitates economic operations. Financial sector in the worldwide country has been changes over these years by looking the changes of financial structure environment and economic conditions. Thus, banks are a very important point to financial system and play an important role as control and contribute growth to the economic sector.