The evolution and history of banking in Nigeria

Last Updated on April 21, 2024 by admin

Nigeria’s banking sector has a rich history that has played a pivotal role in the country’s economic development. From traditional financial practices to the establishment of modern banking institutions, the evolution of banking in Nigeria reflects the nation’s journey towards financial inclusion and economic growth.

The history and evolution of banking in Nigeria can be traced back to the colonial era when the first bank, Bank of British West Africa, was established in 1892. Since then, the banking sector in Nigeria has witnessed significant changes and growth, with the establishment of more banks and the introduction of innovative banking practices and technologies.

Bank of British West Africa, Limited BBWA was established to take over the activities of African Banking corporation.The Bank of British West Africa Limited opened its first branch in Lagos in 1894, in the later part of the same year ,the name of the bank was changed to Standard Bank of Nigeria known as the First Bank of Nigeria limited [now a public limited company PLC.

The second bank to be established in Nigeria  was Barclays Bank DCO [Dominion colonial and oversea] which opened its first branch in Lagos 1971 Now Union Bank of Nigeria and it has branches in many parts of the country . In 1949,the British and french Bank was opened [Now United bank for Africa Limited UBA]

In 1933, the first indigenous bank ,National Bank of Nigeria was opened due to discrimination suffered by Nigerians in the hands of foreign banks , businessmen who, being denied credit facilities in these banks, were effectively excluded from the mainstream of the economy.,some patriotic Nigerians came together for the purpose of breaking the foreign monopoly in the banking business .

In 1945, Agbonmagbe Bank [now Wema Bank Plc ] was established. The period between 1892-1952 were regarded by central bank authorities as a period of ” Free of all “banking.This was because at that time there were no regulation to restrict movement and there were no licensing in banking operations in Nigeria which led  bank failure as well closure of banks and losses to depositors.

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The bank failure prompted and hastened the first banking legislation in Nigeria called the banking landmark between the period of non regulated banking financial system in Nigeria.


The Period of Regulation

After gaining independence in 1960, Nigeria began to develop its own banking sector with the establishment of several new banks. The Central Bank of Nigeria was established in 1959 to regulate the banking industry and promote economic development in the country. The Central Bank of Nigeria played a key role in the development of the banking sector in the country and helped to create a stable financial system that facilitated economic growth.

In the 1970s and 1980s, Nigeria experienced a boom in the banking industry with the establishment of several new banks. Many of these banks were established by wealthy individuals and families who saw the potential for growth in the sector. However, the banking sector in Nigeria also faced challenges during this period, including instability in the financial system and the collapse of several banks due to mismanagement and fraud.

In the 1990s, the Nigerian government introduced a series of reforms to strengthen the banking sector and enhance its stability and resilience. The reforms included the introduction of prudential regulations, the consolidation of banks, and the recapitalization of the banking sector. These reforms helped to create a more stable and resilient banking sector in Nigeria and laid the foundation for sustainable economic growth.

The Banks and Other Financial Institutions (BOFI) Decrees 24 and 25 of 1991, which repealed the Banking Decree 1969 and all its amendments, were, therefore, enacted to strengthen and extend the powers of CBN to cover the new institutions in order to enhance the effectiveness of monetary policy, regulation and supervision of banks as well as non-banking financial institutions.

This served as the main banking regulation in the country until 1986 when the structural adjustment programme (SAP) was introduced by Ibrahim babagidda led administration

During this period of review ,many economic activities took place [1971-1980) it was characterized by economic reconstruction and development.

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Two development banks were opened namely the Nigeria bank of commerce and industry established by Degree in may 1973 and Agricultural and co-operative Bank which was established in March 1973 many indigenous banks were opened especially by various states of the federation.

About 124 commercial banks and merchant Banks with 2076 branches were opened throughout Nigeria as at December 1994. The deregulation helped to remake some administrative control in the system and promote a greater reliance of the market mechanism in the determination of interest rate.

During the post structural adjustment period, there were emergence of new institutions such as Nigeria deposit insurance corporation which was established as a result of the banks distress and aimed at insuring bank deposits against distress.

The Nigeria Deposit Insurance Corporation (NDIC) was set up in 1989 to make sure that banks observe sound and safe banking practices . Also to aid the effective monitoring and supervision of the banks in collaboration with the central bank of Nigeria (CBN).

This was part of the economic reform measures taken by the then government, to strengthen the safety net for the banking sector following its liberalization policy and the introduction of the 1986 Structural Adjustment programme (SAP) in Nigeria.

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Today, Nigeria has a diverse and vibrant banking sector with several local and international banks operating in the country. The banking sector in Nigeria plays a crucial role in the country’s economy by providing financial services to businesses and individuals, facilitating trade and commerce, and promoting economic growth and development.

The history and origin of banking in Nigeria have been shaped by colonialism, independence, economic reforms, and technological advancements. The banking sector in Nigeria continues to evolve and adapt to changing economic conditions and regulatory requirements. The future of banking in Nigeria looks promising, with opportunities for growth and expansion in a dynamic and competitive market.


In conclusion, the history and origin of banking in Nigeria are a testament to the country’s resilience and determination to build a strong and stable financial system that supports economic growth and development. The banking sector in Nigeria has come a long way since its inception in the colonial era and continues to play a crucial role in shaping the country’s economy and financial landscape.


Meet Ogbeide Frank, popularly known as perere, a blogger who loves writing about finance and Tech. He studied Business administration at the Ambrose Alli University Ekpoma and Mobile Communication at Orange College Malaysia .Frank have worked as a banker and consultant in variety of Nigeria agencies

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Ogbeide Frank loves writing and research about finance and Tech. He studied Business administration at the Ambrose Alli University Ekpoma and Mobile Communication at Orange College Malaysia .Frank have worked as a banker and consultant in variety of Nigeria agencies For Advertisement, Content marketing and sponsored post: contact :
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