CHAPTER
ONE
INTRODUCTION
Background of Study
The central bank of Nigeria CBN was
establishing by the central bank of Nigeria act of 1958 and commences
operations on the 1st of July 1959.
The principal objectives of the
central bank of Nigeria was basically on the issuance of legal tender currency
in Nigeria and the central bank of Nigeria is also saddle with the
responsibility of maintaining the nations external reserve and value of the
legal tender currency in other to safeguard the international value of the
nation’s currency.
Some of the functions of the central
bank of Nigeria also include promoting monetary stability and a sound financial
system. They also serve as the banker and the financial adviser to the federal
government on economy decisions. The CBN also serve as bankers to other banks
within Nigeria and abroad.
The central bank of Nigeria play a
major role in the development of Nigeria economy, the bank has been saddle with
various responsibilities to ensure economy development.
The CBN has played a major role in
the development of agriculture in the country through the Agricultural Credit
Guaranty scheme Fund (ACGSF). The scheme was established by decree no. 20 of
1977, and started operation in April, 1978. Its original share capital and
paid-up capital were one hundred million naira and eighty six million and six
hundred thousand naira respectively. The federal government of Nigeria holds
60% and the central bank of Nigeria 40% of the shares. The capital based of the
scheme was increase to three billion naira in March 2001. The funds guarantees
credit fertilities to farmers. The fund is solely managed by the central bank
of Nigeria which handles the day to day activities of the scheme.
The central bank of Nigeria has also
play a vital role in the development of small and medium enterprises trough the
establishment of the small and medium enterprise equity investment scheme. The
scheme is a voluntary initiative of the bankers committee approved at its 26th
meeting held on the 21st of December 1999. The initiative was in responsive of
the federal government concerns and policy measures for the promotion of small
and medium enterprises (SMEs) as vehicle for
rapid industrialization, sustainable
economy development, poverty alleviation and employment generation.
The scheme require all bank in
Nigeria to set aside ten (10) percent of their profit after tax for equity
investment and promotion of small and medium scale enterprises. The ten (10)
percent of the profit after tax to be set aside annually shall be invested in
small and medium scale enterprises as the banking industry contribution to the
government effort towards stimulating economy growth, developing local
technology and generating employment. The central bank is saddle with the
responsibility of ensuring absolute compliance of the banks towards the successful
realization of the scheme.
The central bank of Nigeria
established the infrastructure finance office on March 01 2010. The mandate of
the office is to among others; evolve a sustainable financing frame work to
stimulate long-term financing for infrastructural development in the country.
The bank has undertaken some steps to improve the sectors as follows;
The bank provided three hundred
billion fertility for investment in debentures to be issued by the bank of
industry in accordance with section 31 of the CBN act 2007, for investment in
power and aviation projects. As part of measures by the CBN to further
encourage banks to lend to the real sector of the economy, particularly SMEs,
infrastructural and agriculture, the board of directors of the bank has
approved the amendment of the prudential guidelines on loan loss provisioning
and rule and regulations on margin lending.
We can’t talk about the role the
central bank of Nigeria has played on the Nigeria economy without mentioning
the impact the CBN bank consolidation. The central bank recent reform
(consolidation) that employed certain measure to strengthen the Nigeria banking
system by drastically increasing the minimum capital requirement from two
million naira to twenty-five billion naira. Through review of policy documents
official report and economic information on the banking sector, it became
evident the consolidation of banks led to a remarkable reduction of banks from
89 to 25 by merge, acquisition, initial public offer and other means. The bank
consolidation has resulted in making banks more efficient and reliable and
also, their intermediary potentials have also been revised.
Statement of Problem
The central bank of Nigeria must
ensure its streamline the number of project in its entire department in other
to ensure adequate funding of those projects. Funding of major project could
serve as a limitation to the central bank in actualizing the implementations of
it various projects that are expected to enhance the Nigeria economy.
Corruption as we all know is the
order of the day in Nigeria, so, for the successful management of funds the
central bank must makes sure it does not allow corrupt persons into its system
of operations.
The activities of the central bank
must not be politicized in any way in other to ensure equity in the
disbursement of funds and in taking on special project across the six
geo-political zones of the country.
Purpose of Study
The central bank on Nigeria must
adhere to it policies in other to enhance economy growth in Nigeria and also in
the banking and financial sector of the nation’s economy.
Hence, the fundamental purpose of
this study is:
Ø To access the impact of the central bank on the banking
industry
Ø To examine the impact of the central bank of the nation’s
economy
Ø To identify the benefit of the central bank so far.
Ø To identify the effect of the central bank and other
financial institution in sustaining the Nigeria economy
Research Questions
This study attempt to provide
answers to the following research questions:
·
How do you view the central bank in relation to economic development?
·
Do you think the central bank policy on the Nigeria economy has had any impact
on the economy?
·
Has there been any improvement in the country economy ever since the central
bank was created
·
Are the Nigeria banks strong and trusted enough in spite of the CBN policy on
consolidation?
·
In your own view do you think the central bank has affected the nation’s
economy positively or negatively?
·
How would you rate the impact of the central bank on the manufacturing sector
of the economy?
·
How does the attitude of Nigerians affect the policies of the central bank?
Hypothesis
Looking at the main purpose of this
research, it will be reasonable to propose that:
1) Ho: the state of the Nigeria
economy has not improve since the establishment of the central bank
Hi: the state of the Nigeria economy
has improve since the establishment of the central bank
11) Ho: the central bank is not
strong and trusted enough to fully implement all its proposed economy policies.
Ho: the central bank is strong and
trusted enough to fully implement all its proposed economy policies.
Significance of Study
·
The significance of this study is to add to the general body of knowledge,
enlighten the general public on the following:
·
The impact of central bank on the Nigeria economy
·
The impact of the central bank in reducing the poverty level of the nation’s
economy
·
To bring to light the activities of the central bank in general.
·
To show to investors and the general public that the state of banks has
undergone a lot of changes through the consolation policy of the central bank.
Limitation of study
This research works is basically on
the impact of central bank in the development of Nigeria economy. The study
will concentrate and will not go beyond the showing the impact of the central
bank on the Nigeria economy.
TABLE OF CONTENT:
CHAPTER ONE
INTRODUCTION
1.1
Background of the Study
1.2
Statement of the Research Problem
1.3
Objectives of the Study
1.4
Significance of the Study
1.5 Research
Questions
1.6 Research
Hypothesis
1.7
Conceptual and Operational Definition
1.8
Assumptions
1.9
Limitations of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1 Sources
of Literature
2.2 The
Review
2.3 Summary
of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research
Method
3.2 Research
Design
3.3 Research
Sample
3.4
Measuring Instrument
3.5 Data
Collection
3.6 Data
Analysis
3.7 Expected
Result
CHAPTER FOUR
DATA ANALYSIS AND RESULTS
4.1 Data
Analysis
4.2 Results
4.3
Discussion
CHAPTER FIVE
SUMMARY AND RECOMMENDATIONS
5.1 Summary
5.2
Recommendations for Further Study
Bibliography
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