Banking in Nigeria: a study in colonial financial evolution

Abstract

The article attempts “to show how existing currency and banking systems of Nigeria have evolved since the last decade of the nineteenth century, to point out that their nature results in the territory lacking monetary autonomy, to suggest that such development as has taken place has done so in response to the needs of expatriate (mainly British) enterprise, using expatriate (mainly British) capital, and to hint that, from the point of view of domestic capital formation through African enterprise, the system of the West African Currency Board buttressed by the two British banks, might not be ideal”. Hence “the fundamental need was to modify the banking system in such a way as to allow native enterprise to play its proper part in the development of the country”. This adaptation has led to the foundation of African banks with their special features and operational systems. As a consequence, however, the banking system as a whole now exhibits a paradoxical dichotomy that leads not only to a maldistribution of finance but also to a dangerous distribution of risks.