Banking
From The Report: Nigeria 2012
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Nigeria had seven banks with total assets in excess of N1trn ($6.4bn) as of end-2011, with the top four accounting for 55.62% of the sector’s net profits. Yet although the continent’s most populous nation boasts some of its largest banks by assets, just 21% of Nigeria’s population of about 165m people is banked, according to a 2011 study by the Central Bank of Nigeria (CBN). Bank credit remains skewed towards corporate borrowers, with about 80% of the top 14 banks’ income coming from corporate banking in 2011. The mortgage market remains small, with total lending in this segment equivalent to less than 1% of GDP. While the sector fell short of expectations of a full turnaround in 2011, first-half results for 2012 marked a turnaround in the industry’s profitability.

This chapter contains interviews with Lamido Sanusi, Governor, Central Bank of Nigeria; and Razia Khan, Head of Research for Africa, Standard Chartered.

Articles from this Chapter

Overview

Corner turned: The worst of the 2009 crisis is now behind them, but Nigeria’s banks remain cautious when it comes to lending
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Its demographics, low banking penetration and rapid economic growth relative to developed markets should make Nigeria fertile ground for financial services. Yet although the continent’s most populous nation also boasts some of its largest banks by assets, just 21% of its population of about 165m is banked, according to a 2011 study by the Central Bank of Nigeria (CBN). Some 93% of Nigerians cannot access a loan, while 74% have never banked, leaving roughly one-third of the population served…

Interview

OBG talks to Lamido Sanusi, Governor, Central Bank of Nigeria
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Interview: Lamido Sanusi To what extent does public expenditure jeopardise price stability and what is being done to control it? LAMIDO SANUSI: Although $72 per barrel of oil in the 2012 national budget may seem on the high side, we have largely steered clear from excess spending. In fact, we have seen a marked increase in capital expenditure. To mitigate the negative impact of domestic spending, our focus should be on stabilising our exchange rate. As such, it is important that we rebuild…

Interview

OBG talks to Razia Khan, Head of Research for Africa, Standard Chartered
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Interview: Razia Khan What factors currently pose the biggest risks to Nigeria’s credit rating? RAZIA KHAN: There are a number of issues to consider. First, some investors are concerned about the vulnerability of Nigeria’s economic future. Despite the level of achievement already attained, debate over the constitutionality of generating funds for the sovereign wealth fund undermine investor confidence in the country’s political commitment towards building a buffer for a potential collapse…

Analysis

A bridge to profitability: The government looks to sell three nationalised banks
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Following the August 2011 acquisition of three so-called bridge banks by the Asset Management Corporation of Nigeria (AMCON), the federal government now finds itself the largest single owner of bank stock in the country. With foreign investors and mid-tier domestic banks having expressed interest in purchasing these formerly distressed assets, AMCON is currently weighing its sale options. Although the agency has said that it is in no rush to sell these banks, AMCON could find itself under pressure…

Analysis

A lighter wallet: The central bank tries to reduce the use of cash
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While the economy of Nigeria remains largely cash-based, a concerted push is under way to reduce inefficient cash transactions. According to the Central Bank of Nigeria (CBN), excessive currency in circulation has undermined its efforts to ensure price stability. Moreover, high costs associated with currency sorting, cash management, transport and frequent printing have also kept bank service fees and lending rates high. Despite resistance from various quarters, the apex bank is pushing ahead…

Analysis

Scaling up: A fragmented market of microfinance lenders looks to consolidate
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While the banking sector is certainly sizeable in Nigeria, access to finance at the small end of the scale has only started to be addressed in a more structured way over the past decade. Although the number of microfinancial institutions (MFIs) has grown in recent years, with commercial banks joining donors, non-governmental organisations (NGOs) and the government in funding such schemes, progress has been constrained by issues of trust, reach and affordability. However, with the Central Bank…