Without sugar-coating the situation, a new Aljazeera report has exposed many problems plaguing the Nigerian banking sector; problems that could potentially become the sector’s undoing unless an immediate solution is provided.
These problems range from inefficient service delivery, people’s distrust for the banking sector, rising bad loans, and extreme poverty which makes it difficult for the average Nigerian to deposit money in banks.
According to the report, economists have specifically warned that bad loans and low savings are the most serious threats facing the banking sector in Nigeria. And many commercial banks may not survive the situation unless an urgent solution is provided.
Note that it is only a tiny percentage of the country’s population that have significant savings in their bank accounts. Moreover, most wealthy Nigerians now prefer to invest their money in other opportunities outside the country, instead of merely depositing in banks.
Furthermore, only some 350 individuals (out of a population of nearly 200 million people) are responsible for 80% of the country’s bank debts.
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All of these factors combine to become the most serious challenge which must be addressed in order to guarantee the sector’s future.
This is very important, bearing in mind that within the past decade, quite a number of banks have failed; no thanks to some of the problems mentioned above.
“Millions of people do not deposit their savings in banks and the wealthy choose to invest elsewhere.
The country’s central bank says just two percent of Nigeria’s 190 million people have savings of at least $1,400, and just 350 individuals are responsible for 80 percent of the country’s bank debts.”
In light of this situation, a lot is expected from both the banks and the regulatory authorities.
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- First, banks should always endeavour to ensure that customers are satisfied. This is a major issue which most banks seem to have taken for granted. As one of the respondents in the Aljazeera report stated, he decided to stop depositing his money in the bank simply because he wasn’t satisfied with the services he received.
- Banks also need to provide easy access to loans for their customers and ensure better returns on savings.
- Banks also have a huge role to play in terms of financial inclusion. The report identified that many Nigerians currently do not operate bank accounts, even as some “have never stepped foot in a bank.” This should be a challenge to banks.
- Meanwhile, seeing as poverty has also been identified as a major factor in this regard, the Government has a huge role to play towards ensuring that extreme poverty in Nigeria is alleviated if not completely eradicated.
- Most importantly, the Central Bank of Nigeria and other regulatory agencies need to intensify their oversight function.