Ethics in Nigerian banking
| DOI | https://doi.org/10.1108/13685200510621226 |
| Pages | 66-74 |
| Published date | 01 January 2005 |
| Date | 01 January 2005 |
| Author | Chibuike U. Uche |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control Ð Vol. 8 No. 1
Ethics in Nigerian Banking
Chibuike U. Uche
INTRODUCTION
Ethics in Nigerian banking remains one of the most
discussed issues in the Nigerian ®nancial system
today.
1
At every banking seminar, in recent times,
this has always been the preferred topic of discussion.
Increasingly also, most banks have started to develop
ethical codes of conduct for their sta. Others have
incorporated the promotion of ethical values as an
important cornerstone in their various mission state-
ments. The regulatory authorities have also not been
left out. More than ever before, ethical issues are con-
stantly tackled in laws, guidelines and circulars ema-
nating from these regulatory agencies. Even the
Chartered Institute of Bankers of Nigeria (CIBN)
under the aegis of the Bankers Committee, has now
established a code of ethics and professionalism for
the Nigerian banking industry. Despite all these,
unethical practices in the banking industry have
grown in leaps and bounds. Indeed the lack of trans-
parency and professionalism that have permeated the
Nigerian banking industry has now become a matter
of grave concern to all. It appears that the bankers
have simply been paying lip service to the whole con-
cept of ethics. According to one of the most respected
bankers in the country:
`Sometimes, it would appear that in spite of the
lofty goals contained in their mission statements,
banks really have only one mission: that is to
make a pro®t at any cost. The core values of integ-
rity and professionalism are set-aside in the pursuit
of ever increasing pro®ts. Are we bankers willing
to do the right thing ethically and forego the prof-
its? My belief is that many of us pay lip service to
ethics but are not willing to take the pain that it
entails.'
2
This paper discusses some of the unethical practices of
banks in Nigeria from a historical perspective. The
objective of this approach is to show how unethical
practices have led to the emergence of banking laws
and why it has been dicult for the plethora of
regulation in the ethics arena to enforce ethics. To
achieve its objective, the paper is divided into three
sections. The ®rst section will examine unethical
practices, especially among indigenous banks in the
pre-regulation banking era in Nigeria. It will also
analyse the various regulations aimed at promoting
banking ethics prior to the introduction of the
Structural Adjustment Programme (SAP) in 1986.
The second section will analyse the causes and conse-
quences of the various unethical practices of Nigerian
banks especially after the introduction of the SAP. The
third part concludes the paper.
BANKING ETHICS IN THE
PRE-SAP ERA
Contrary to widespread opinion, concern over
unethical behaviour by Nigerian banks predates
both the attainment of political independence and
even the ®rst banking law in the country: the Banking
Ordinance of 1952. In fact, it dates back to the
emergence of indigenous banks in colonial Nigeria.
Commercial banking was introduced in what later
became colonial Nigeria in 1891. This was when the
African Banking Corporation opened an oce in
Lagos. In 1894 the bank metamorphosed into the
Bank of British West Africa (BBWA). In 1899, a
second foreign bank Ð the Bank of Nigeria Ð was
established. This bank was absorbed by the BBWA
in 1912. In 1916, the Colonial Bank established its pre-
sence in Nigeria. Barclays Bank entered the Nigerian
banking arena in 1925 through the merger between
the Colonial Bank, the Anglo-Egyptian Bank and
the National Bank of South Africa to create Barclays
Bank (Dominion, Colonial and Overseas). In 1948,
the British and French Bank for Commerce and
Industry was established (later to become the United
Bank for Africa). Essentially, these foreign banks
were established, at least initially, with the objective
of providing services for the British commercial
enterprises then operating in the colony. These
banks therefore did not aim at meeting the needs of
the Africans. In their eyes, Africans were in general
too primitive to merit banking services and were not
creditworthy. It was therefore not surprising that
they seldom established operations in territories
without British commercial interests.
3
Africans argued otherwise and accused the colonial
banks of overtly discriminating against them with the
aim of perpetrating colonial interests. One prominent
Page 66
Journalof Money Laundering Control
Vol.8, No. 1, 2004, pp. 66± 74
#HenryStewart Publications
ISSN1368-5201
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