This research work will take a look at the traditional role of
central bank of Nigeria in the Nigerian economy. A good knowledge of the
strategies the bank uses in implementing and in restructuring the dwindling
economy will be identified. It will also cover the constraints the bank faces
in implementing the government programmes. The importance of central bank of
Nigeria in developing the Nigeria economy cannot be over stressed to
looked. The central bank being the bankers bank and the lender to last
resort is a mirror that reflect the nations economy. As development proceeds,
the structures and organization of economy becomes increasingly complex, while
the central bank roles becomes increasingly complex. Now that Nigeria is faced
with a depressed economy, mass unemployment, low rate of exchange, high rate of
foreign debt, high rate of inflation, fall in foreign reserve, a fall in oil
output, and high cost of living, the central bank has got a lot of extra work
to do in order to help to recover the dwindle economy. This research will take
a look into some journals of how far the central bank of Nigeria has been of
help in past years trying to make a successful implementation in recovery the
depressed economy of the country.
TABLE OF CONTENTS
1.1Statement of the problems
1.2Rationale of study
1.3Significance of the study
1.4Back ground of the study
1.5Definition of terms
Review of related literature
2.1Definition of central bank
2.2Evolution of central bank in Nigeria
2.3Establishment of central bank of Nigeria
2.4Reasons for central bank existence in Nigeria
2.5The structure of the CBN
2.6Structure of Nigeria roles towards economic
development of Nigeria.
Hypothesis, research design and methodology
3.2Method of data collection
3.3Location of data and sources of data
3.4Limitation of the study
Data presentation, analysis and discussions
4.2Data analysis and discussion
Summary, conclusion and recommendation
1.1BACKGROUND OF THE STUDY
Central banks in West African owned their origin to the political
development in rest African.
The Central bank of
Nigeria (CBN) was established in 1958, after the dissolution of West African
currency board set up in 1912 where the colonial monetary system had its
foundation which began to disintegrate with the attainment of political
independence in Ghana in 1957, because the median of exchange were multi -
farious and not very conducive to the operators of a modern monetary system.
One could ask why
Nigeria had no monetary system until the establishment of West African of
simple currency system for the West African in 1912.
The (W.A.C.B) West
African currency board retained the services of the bank of British West Africa
(B.B.W.A) as its currency centers in Lagos (Nigeria), Accra (Ghana), Freetown
(Sierra lore) and Bathurst (Gambia) and Ghana being the first to get her
independence in 1957 decide to have her own currency and other country that had
here own currency, and Nigeria as one of the independent country objected to
this, for which (C.B.N) central bank of Nigeria was established discuss its
collaboration with other financial institution in implementing macro economic
policy measure designed to facilitate efficient management of Nigeria economy.
The W.A.C.B created an
incentive for the establishment of modern financial system in Nigeria because
W.A.C.B could hardly be described as a monetary authority in terms of using any
discretion power to control the growth of credit and money supply in the
economy which made to known that the W.A.C.B is simply a “passive monetary
changes” the establishment of W.A.C.B provided the basis for agitation in
favour of the creation or establishment of Central bank of banks, not only in
Nigeria but in other countries operating under W.A.C.B system.
The first formal move
towards the establishment of central bank in Nigeria was in April 1952, when
the private members motion was proposed in the then house of representatives,
calling for the establishment of a central bank in Nigeria to perform
essentially those functions generally associated with central bank, but the
motion was not passed by the house because, the then colonial government termed
the establishment as premature in view of the relative under development of the
local financial system, and the house passed on mended motion asking the
government to examine and report back to it in the possibility of establishing
a central bank in Nigeria.
Mr. J.D Fisher, the
adviser to the bank of England was accordingly given the task for examining
their possibility, but his report did not favour the establishment of central
bank in the country, in the near future, for he did not recommend the three
step programme which was proposed to lead to the establishment of the central
bank of Nigeria.
One of the steps was
the transfer of the West African currency board (W.A.C.B) headquarters from
London to West African, which were hoped would allow the local people to be
more closely with the board and provide them with the opportunity of acquiring
The second step was
that a Nigeria currency Board to issue Nigeria currency to be established to
replace the W.A.C.B) currency.
The third being the
establishment of our band of issue which would later be development into a
central bank, but all these motions did not receive Fishers recommendation and
were not taken to the house of representative either, rather what led to the
establishment of the C.B.N was the J.B Loynes recommendation who was also an
adviser to the bank of England, as the suggested for the establishment of C.B.N
and it was approved to perform a traditional function of the central baking and
to serve a private in national financial institution and in the development of
The federal government enacted a law called bank of
Nigeria ordinance as earlier mentioned in 1958 establishing the central bank of
Nigeria which started functioning on July 1, 1959, when the prime minister
Tafawa Balewa in a colorful ceremony declared the building open in Lagos, this
made central bank to be a bank as a major financial institution in any modern
economy and very important to the functioning of both the private section and
the fiscal operations issuing the country’s currency and helping the government
in the formation and execution of the country’s monetary policies central bank
in over all developing country is basically set up by its government to perform
at least these roles generally associated with central banks which its roles in
Nigeria, economy like other countries are fairly wide in indeed.
The central bank being
bestowed with some traditional function aimed at promoting rapid economic
development through it developmental roles.
1.2 STATEMENT OF THE
As a matter of facts Central Bank of Nigeria has been experiencing
series of problems overtime, in attending to develop Nigeria economy.
These problems ranges from inability of commercial banks to here strictly to
the laid down rules and regulations as may be stipulated be Central Bank.
development and growth as in these research work is a joint effort of the
central bank and commercial banks.
In addition Central
Bank may bring out stringent measures in order to control economy. These
measures may not be feasible or fully executed as a result of such policy to
the economy in question.
For instance, Nigeria
economic team may employ American, Italian, Spanish economic policy to achieve
a certain level of development.
It might not work with
Nigeria because of Nigeria attitude and the environment etc. These and
many more are the problems facing development in Nigeria.
1.3 OBJECTIVES OF THE
To findout if the Central Bank of Nigeria has aided or hampered
the development of the economy.
To examine whether
Central bank of Nigeria has assisted in the growth and development of Nigeria
To evaluate strategies
or methods taken by the central banks in recent time to restructure the country’s
To ascertain the actual
rule of central Bank and how it has contributed to the growth and development
of Nigeria economy.
1.4 RESEARCH HYPOTHESIS
In this study, the researcher decided to test three hypothesis.
Central Bank of Nigeria does not aids the growth and development of banking
industries in Nigeria.
Central Bank of Nigeria aids the growth and development of banking industries
Central Bank of Nigeria does not encounter problem in the growth and
development of banking industries of Nigeria.
central bank of Nigeria encounter problem in the growth and development of
banking industries in Nigeria.
central bank of Nigeria does not encounter problem in that growth and
development of banking industries in Nigeria.
That central bank of Nigeria have solution to these problems that are facing
growth and development of banking industries in Nigeria.
1.5 SIGNIFICANCE OF THE
The importance of this project will enhance the economic
development of Nigeria through the following ways.
This project work will make commercial and other financial
institution to understand when customers are not operating in their banks.
This project work will
enable federal government to be active in participation in the banking system.
This project work will
enable the banker to known that minimum and maximum amount of money their
customers respect to deposit in the bank.
This project work will
enable the student both National Diploma and Higher National Diploma who studies
banking to acquire knowledge on their studies.
This project work will
motivate central bank of Nigeria’s staff to work actively in order to promote
sound financial system and it helps to establish and maintain lines of
communication in a bank.
1.6 SCOPE OF THE STUDY
Central bank of Nigeria out line how use monetary and fiscal
policy to achieve full employment and they also have surpluses in balance of
payment and by exchange control.
Central Bank of Nigeria
have s strong economic growth and development in Nigeria. They
subordinate to the planning ministry, were to use their money creating
authority and their regularity powers to direct flows of bank credit to
favoured industries and to support the economic plan.
1.8DEFINITION OF TERMS
of probable future income and expenditure
Clearing House: place
where banks exchange cheques and settle accounts: the balance being paid in cash
of slow or bond pledge as security for payment of a loan.
cooperation of a number of banks for a common purpose.
Development Plane: is an
ideal way of setting out a country’s economic development objectives and to
demonstrate initiative in tackling the country’s economic developments.
Sinking fund: funds
built from period transfer usually twice a year from government review for the
redemption of a maturing solves
Moral suasion: pursuance
based on moral grounds not force.
the exchange of securities for cash
of getting goods and other contra – band goods secretly and usually into and
out of a country
grants of money in e.g. federal government grant or subventions to states
TERMS AND CONDITIONS APPLY
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