Banking system in Nigeria rife with regulatory and structural defects
Banking and legal experts in Nigeria have attributed the challenges in Nigeria’s finance sector to inefficiencies and defects in the structure and design of banking regulations.
Sadiq Abu, Chief Operating Officer, Barclays Bank Nigeria, in a lecture delivered at the public presentation of the book ‘Banking: Theory, Regulation, Law and Practice’ in Lagos recently, said the current architecture of Nigeria’s banking regulation had some critical inefficiencies and thus urged a robust debate on some of these critical issues in the industry.
“The system is currently riddled with multiple regulators, organised around the regulation of banks, securities firms, Insurance companies, and Pension Funds; each with responsibility for prudential and consumer protection regulation as pertains to their respective spheres of influence,” he said.
Responding to the question as to whether prudential and consumer protection regulation should be combined within the same agency, Abu said financial crises were no respecter of regulatory architecture, adding that Nigeria’s current banking architecture “has shown significant issues/inefficiencies and we must thus create a design framework that takes into cognisance our financial sector peculiarities”.
Gabriel Olawoyin, SAN, foremost professor of business law, attributed the shortfalls in the sector to unrealistic regulatory controls, saying a banking system not subjected to realistic regulatory controls could easily trigger very serious financial and economic problems for any country.
“I consider it appropriate to emphasize the fact that over-regulation in the banking sector is as dangerous to the system as under-regulation. This then brings to play the obvious need for an approach that encourages entrepreneurship within the context of a well structured and decently supervised banking system,” Olawoyin said. According to the professor, the book “Banking: Theory, Regulation, Law and Practice” would give readers valuable insight into those parameters that underscore the fundamental importance of banking in the economic fortunes of any country.
Tunde Lemo, former deputy governor of the Central Bank of Nigeria (CBN), urged the government to take a look at the content of the book if it required answers or solutions to any financial disasters in the economy.
“The intellectual work put in place to make this book is very important and necessary because regulations are meant for good government and stability so that Nigeria as a nation could reserve its wealth,” he said.
Dr. Oladapo Olanipekun, the author and general editor of the book, noted the current dearth of literature offering either legal perspective or practical regulatory perspective on the subject of banking and this according to him prompted the idea of a book on banking theories.
“There is a grave dearth of writings and literature on the subject of banking and I daresay that this has resulted in a very low understanding of the subject. Again, it is a very important subject, critical to human life. It is also critical to national life. It is the most critical aspect of our economy. So that has not been reflected in literature, in terms of writing. That is what inspired me,” he explained.
In his foreword of the book, Honourable Justice John Okoro-Inyang, JSC who has presided over and decided a long list of banking cases, looked at banking issues from a judicial perspective noting that the legal framework to banking has not been growing at the same pace with the developments in banking generally.
The book is a compilation of essays written by experienced members of the Bar and edited by the learned Senior Advocate, Dr. Oladapo Olanipekun SAN.
The book reviewer, Uche Nwokedi SAN, described it as a well-written collection of essays. “The language is clear and easy to understand. The book is rich and covers virtually every aspect of banking law and practice in Nigeria and beyond the shores. It is easily the most comprehensive publication on banking regulation and supervision in Nigeria that I have come across in 32 years of legal practice,” he said.
“More importantly, it gives us the benefit of the experience of 25 seasoned legal minds from active practice, academia and the Bench. All the contributors and most especially the Editor have been extremely generous with their experiences and with their knowledge of the subjects they treat. It is a comprehensive one-stop shop on banking law and practice. I think that the Editor and the authors all deserve a resounding round of applause. This book is excellent work and a major contribution to the development of the law as it relates to banking supervision and regulation,” Nwokedi added.
The launch and book presentation was attended by key stakeholders in the legal and finance sectors, including respected members of the judiciary. Amongst these were Justices Chinwe Iyizoba and Chidi Uwa of the court of appeal, Justice Olateru-Olagbegi, Justice Lawal Akapo, Prof Gbolahan Elias SAN, Osaro Eghobamien SAN, Dayo Akinlaja SAN, Dele Adesina SAN, Dr. Biodun Layonu SAN, Kemi Balogun SAN, Dr. Joseph Nwobike SAN, Kemi Pinheiro SAN, SAN, Rickey Tarfa SAN, Norrison Quakers SAN, and Chief Wole Olanipekun SAN.
Theodora Kio-Lawson and Joy Ushie