Introduction to Financial
Understanding Public Finance
Financial Institutions and
Central Bank and Others
book, Financial Public Relations, attempts to address the notable
existing interrelationship between two global issues of importance to mankind -
economic activities and communication. It is a known fact that human beings
struggle for survival by exploring available information, through communication,
for the purpose of acquiring wealth to cater for their needs and wants.
information or communication processes which public relations stand for, are
sources of encouragement on how best to achieve our needs and wants which
largely depend on our financial capabilities.
public relations is therefore the application of public relations by financial
organisations in reaching out to the public, finance-wise, in achieving
financial goals. Financial institutions play greater roles in the economic
activities of any nation, which must be correctly understood by the targeted
public. With the world reaching the peak of the envisaged global village, where
advancement in communication technology such as Internet, E-mail and satellite
broadcasting make nonsense of interpersonal communication, mass communication
and by institutions too, must be suited to respond to the dynamism of the
society. Therefore, the emergence of financial public relations should be seen
as good tiding to financial reports and communication.
the social and economic development in Nigeria, some business magnates, public
figures and institutions, have carved out niches for themselves and have become
household names that even the young ones are inspired to look up to, due to
their effective communication skills.
that ring bell in business circles are financial wizards like Hakeem Bello
Osagie, Atedo Peterside and Mohammad Kari, among others. The millionaire club of
reputable businessmen has the like of the Dangotes, Jobi-Feles, Abiolas and
Iwuanyanwus who are in multi-million Naira businesses. Notable bankers cannot be
listed without the mention of Pascal Dozie, Muhammed Hayatudeen, Segun Agbetuyi,
and the Bulamas. There are also
female personalities, the like of Cecilia Ibru and Dr. Ndi Okereke-Onyiuke, the
amazon of Nigeria’s Capital Market who transformed the relatively unknown
Nigerian Stock Exchange to an enviable force with international standard.
business concerns that receive constant media attention include First Bank,
NICON Insurance, Federal Discount House and even Lagos Business School, among
people and institutions have become popular because of their competence as well
as quality products and services, which are similarly provided by others. The
latter, however, may have directly or indirectly failed to utilise effective
business communication to achieve public acceptance.
organisations have come to grip with the stern modern reality that only through
proper and articulate communication system, can
receive the support and patronage of their target audience. This does not
only obtain in private businesses, but also in the public sector where top
public functionaries have successfully built confidence into the spectrum of
their organisations. Anthony Ani and Abu Gidado, former Ministers of Federal
Ministry of Finance, for instance, during their tenure, showed how figures and
data could be interpreted for better public understanding. Regular press
conferences and media interviews were some of their innovations. These publicity
strategies were emulated by their successors, Ismail Usman and Akpan Etukudo.
Knowing the power of the media in a democratic dispensation, the Finance Minister under president Obasanjo, Alhaji Adamu Ciroma, uses media relations appropriately to build enough confidence in the Nigerian economy. Apart from establishing mutual relationship with the legislative arm through acceptable political lobbying, the Minister of State, Martins Kuye, makes a monthly ritual the issuance of press releases on allocations to all tiers of government from the Federation Account. Even at the state level, some commissioners of finance, especially David Edevbie, Aliyu Tukur, Wole Edu, Shuaib Ahmad, Dr. Hafiz Abubakar, Evangelist SO Durojaiye and Suleiman Hunkuyi, were described as Apostles of Revenue Formula for their persistent media activities through interviews, articles and publications to win public supports on the demand for favourable, equitable and just revenue formula.
a decade of its existence, the Revenue Mobilisation Allocation and Fiscal
Commission was only known in few government circles. Until its inauguration in
1999, when its new chairman, Hamman Tukur revitalised
the body to conform to democratic norms by building mutually beneficial media
relationships that have made it a pride of all tiers and arms of government
which receives wider public recognition.
public officer who used the media appropriately, is the acclaimed authority in
Nigerian Tax System, the former Chairman of Federal Inland Revenue Service,
FIRS, Kayode Naiyeju. He knew when to organise seminars, book launches, etc, to
make some sterling points on development in the organisation and improvements on
Value Added Tax (VAT) and its benefit to the populace. His efforts greatly
influenced the desire of companies to comply with the law, and thus tremendously
improved the yearly VAT allocation to the three tiers of government.
Relations, involves continuous campaign and getting favourable mention in
credible and responsible media for names and services to register in the minds
of the public. With the new names after the changes and improvements in their
operations, First City Monument Bank and Omega Bank featured regularly in the
financial pages of newspapers in announcing their mission statements and new
expectations. They do these by promoting new products, announcing fresh
appointments and supporting public-spirited activities by instituting prizes for
academic excellence, and rewards for individuals who exhibited high level of
honesty and patriotism in the society.
operators of Global System for Mobile communication, GSM, particularly the MTN
and Econet Wireless, are remarkable investors who know their targets and use all
media techniques to get regular patronage of customers on their friendly
services. Within a short period, mobile phones became very popular and pushed up
their profits in the competitive environment.
Trust Bank and International Trust Bank have been performing creditably well in
the financial market through extensive lobbying techniques, which they
complemented with the recruitment of professional communicators to take charge
of their publicity.
news items on Central Bank of Nigeria in the media, could be linked to its
ebullient spokesman, Tony Ede. The regulatory bank, which some years ago found
it difficult to make any public disclosure on its operations, has found it
compelling to keep the public informed in its efforts to get the support of the
moment mention is made of financial public relations, the Association of
Corporate Affairs Managers, which has Kabir Dangogo as its founding president,
would definitely be mentioned. This is the umbrella body that regulates and
assists members on better ways of dealing with the public through the media.
you ever wondered the motive behind the new appointments and promotions
published in the media? The story is not precisely on individuals but on their
contributions to the business success of the organisation, and on the favourable
expectation in the business climate in the years ahead. Whichever way it is
examined, effective financial public relations boosts the image of an
organisation as a reliable entity, and makes societal heroes and heroines of the
personalities involved in shaping the image of such a financial institution.
must be understood here that this book is neither exhaustive on the topic nor is
it an end to the continued search for solutions to many problems of financial
every given environment, whether large or small, it is easy to observe different
economic functions taking place on continuous basis. To maintain a healthy and
acceptable interaction among several economic units, a nation has its laid down
rules and expected roles to be played by the citizens and other investors.
nation would ever survive without a sound financial system, which is the law and
environment with an interchange of wealth, asset and liabilities on regular
basis for economic growth. In fact, in the words of Herggott Beckhart, financial
system is defined as “the family of rules and regulations and the congeries of
financial arrangements, institutions, agents and the mechanism whereby they
relate to each other within the financial sector and with the rest of the
related activities are grouped, so also is the grouping of all financial
entities and agents, under the financial sector. This sector is briefly defined
as the grouping of all financial agents whose transactions determine
qualitatively, the financial flow in the economy. (Okigbo P23) .
from political reasons, a country is said to join the international financial
system for social intercourse with other nations, so as to obtain some
assistance for new development efforts. Some
of these financial institutions include the International Bank for
Reconstruction and Development (World Bank), International Monetary Fund (IMF),
International Finance Corporation (IFC), International Development Association,
African Export Import Bank and African Development Bank.
Specifically, the foreign exchange department is responsible for the
formulation of exchange control policies and procedures of the Central Bank.
finance as a discipline, is concerned with the allocation of resources,
distribution of income and wealth and stabilisation of the economy (A.O. Akerele,
1998, P.21). All nations’
economies depend on the public and private sectors’ full participation in
addressing social and political issues through efficient allocation of
resources. Therefore, there is the
need for free competition, enabling environment for investments, availability
and utilisation of resources and adequate information for public awareness for
greater participation of all at achieving macro-economic stability.
It is in view of this, that the Ministry of Finance has intensified
efforts at announcing and publicising some incentives like deregulation,
commercialisation and privatisation, tax relief and indeginisation, for
achieving more participation.
public finance institutions as state organs are to maintain the financial
integrity of the government and create the necessary machinery for monitoring
the activities of profit makers and preventing unwholesome financial disruption.
But where the private sector is unable to establish and provide economic
facilities which are commercially unprofitable but otherwise essential for the
efficient working of the economy, the public institution as government policy
maker, will recommend and implement appropriate measures at providing such
action of the Government in stepping in, may not necessarily indicate that the
public sector is more efficient than the private sector.
The public sector cannot be ignored when it comes to providing essential
economic social overheads, which include providing an enabling environment for
investment such as accessible road network, hospitals, security and flexible
fiscal policy, among others.
is not desirable to leave the production of social overheads in the hands of the
private sector alone, and thus deprive the economy of the extra benefits which
it can derive from these essential economic facilities.
Government parastatals are expected to provide conducive economic
environment out of public funds acquired through other agencies and provide
this, occasionally, on commercial loss.
In view of this, in the
word of Bhatia HL (Public Finance,
Vikes Publishing House 1976, P.21), it is considered best that the public sector
should only help and supplement the private sector and should never supplant it.
According to him, the problems of capital formation and economic growth
are supposed to be tackled adequately by the private sector itself.
The market forces of demand and supply, which basically means obeying the
law of consumers’ sovereignty, would guide the private investors and savers.
federal government through its appropriate ministries, makes vital budget
breakdown annually, which comprises fiscal and monetary policies aimed at
achieving certain macro-economic targets like reducing inflation, increasing
employment and maintaining a stable exchange rate regime.
The budget breakdown serves as guidelines to investors, financial
institutions, businessmen and other tiers of government to explore with the
overall aim of maximising interests.
government, as the major determinant of the direction of public spending through
monetary and fiscal policies, has the task of addressing issues that have direct
impact on the entire citizenry, including all operators within the system. Some
of these issues are government taxes and expenditure; resources allocation in
the economy; economic incentives and capabilities to perform the basic economic
functions of working, saving, risk taking and spending for consumption; total
government expenditure; the levels of production, national income and
employment; total consumption expenditure and the distribution of wealth; the
standard of living of the people, economic growth and stability; public debts;
and foreign debts. (Peter
Arize, 1998, P5)
government, in view of the above, therefore, has the largest public, viz its
three tiers of government, public and private sectors and the ordinary citizens
who must either enjoy or suffer the effects of the policies’ direction.
State, as the major instrument that addresses social welfare and provides
infrastructure and enabling environment for economic growth, needs to keep the
public fully informed about the facts and those policies as they have direct
bearing on individual lives and the economy as a whole.
is in view of keeping the public well informed about the fiscal and monetary
efforts of the government at addressing the major economic problems, that the
Information and Public Relations Units are charged with the responsibility of
giving out the facts and promoting the economic programmes of the government.
the word “finance” is mentioned, the first thing that comes to mind is
money. But the word is more than
money. Finance is the art and science of managing money.
Therefore, the word ‘finance’ is closely related to economics, since
every profit-making organisation or enterprise operates within the economy to
manage the use of money.
economy may not be different from others except in its policies and
implementation, which surely have direct effects on day-to-day businesses.
expert believe that the Nigerian economy is nose-diving, unpredictable all the
time with solutions daily proffered but to no avail.
According to Mr. Akingbola, the Managing Director of International Bank
Limited, in an article published in Thisday (22/9/99 p.20): “the state
of the economy as at the beginning of this year (1999) was anything but
encouraging as all key performance indicators went crashing, inflation was again
on the rise, interest and exchange rates had resumed pendulum with budget
deficit ballooning”. Mr. Akingbola’s observation as a banker illustrates the
unfavorable position of the economy, as it requires a dynamic redirection,
reorientation and possibly, an effective fine-tuning of existing policies for
efficient implementation towards the benefit of the generality of the citizenry.
situation has persistently remained the same from the beginning of the 90s, a
period of military regimes when no concrete democratic institution was set up.
It must be admitted here that even though some progress was noted, bad
management and unwholesome activities of the leadership had become a cog in
wheel of the nation’s growth.
journalist, Mr. Akin Olaniyan, in an article published in the Punch,
entitled “Economy: Abubakar’s unfinished Business”(28/5/1999) decried the
performance of the economy when he wrote that “by 1995, the negative growth of
the Gross Domestic Products (GDP) the total value of goods and services produced
within the time by the country, had been reversed and in fact, had grown by
2.2%” . He added that this rose
to 3.25 % in 1996 and 3.77% in 1997 but fell in1998 to 2.36% and that surplus
deficit in 1995 was N1 billion. By
1996, it was 37 billion but this had, by 1997, fallen to a N5 billion deficit
and N57 billion in 1998. The
interest rate, which can be used to control growth between 1995 and 1998, was
generally stable between 18 and 21 per cent.
closely at the government’s commendable publicly announced measures at that
period, one might wonder what the problem is with the system due to the obvious
instability in the economy, even when exchange and interest rates are stabilised.
In fact, capacity utilisation in 1997 dropped from 34.32% to 31.30% in
1998. It is the prayer on every lip that with emergence of the elected
democratic government of Chief Olusegun Obasanjo, the new regime would squarely
address the comatose economy. The
good tidings is that, a democratic government always opens doors of
opportunities for business-conscious investors to come in.
his first budget presentation to the National Assembly in 2000, the President
admitted that his administration inherited a prostrate economy characterised by
declining capacity utilisation in the real sector, poor performance of major
infrastructural facilities, unsustainable liquidity position and rising level of
unemployment and inflation (Vanguard
25/11/1999). Even though an elaborate and decisive mechanism was employed by the
administration at tackling the persistent inflation, the rate only declined by
budgetary estimates of revenue from oil were based on $18 per barrel for the
revised supplementary budget of 1999 and Budget 2000.
Despite the macro-economic achievement of the administration, the
President admitted that basic structural imbalances persisted.
The inadequacies are noticeable from the lingering problem of import
dependence, reliance on a simple economic sector - oil, weak industrial base
level of agricultural production, a weak private sector, high external debt
overhang, inefficient public utilities, low quality of social services and
un-abating unemployment. In outlining the basic thrust of the budget, christened
“People’s Budget,” President Obasanjo announced that the administration
would lower the inflation rate, lay a solid foundation for private sector - led
economic growth, pay profound attention to education and agricultural
production, and consequently reduce unemployment and poverty.
The emphasis of the fiscal policy of the regime for the period was to
vigorously pursue effective mechanism to increase the level of government
revenue and promote overall
emergence of financial public relations has provided the focus for a
wide-ranging discourse concerning the role of financial institutions in
imparting adequate knowledge to the public, not only in developed economies but
also in developing nations.
starting point for the acceptance of the new field of Mass-communication
as part of public relations functions, is the greater awareness that
financial institutions have roles to play in reaching the public at establishing
or retaining their confidence for reciprocal appreciation and beneficial
is discovered that while financial institutions have a range of services to
offer, little is known because no effort is made at getting the public well
informed on those services. Often times, there is need to refute insinuations, correct
misrepresentations and wrong impressions.
public finance institution as a sensitive agent of government, has tremendous
responsibilities at addressing fiscal and monetary policies
as they affect the citizenry, through a simple, unambiguous term that
could easily be deciphered by all. Their various publics, including financial
institutions, government agencies and the citizens, need to be adequately
informed about the emerging trends in the economy which has direct impact on the
lives of the society, since macro-economy is defined as a “broad aggregate
such as total employment, national income, total volume of savings, investment,
consumption, expenditures and money supply” (Aiyedun 1998). Like with other
financial institutions, statements and expressions are more often than not
measured in figures and laced with financial terms, which may be too technical
to the understanding of a large section of the public.
is widely held, financial system consists of a network of financial links
between economic units, while financial institutions deal in or trade on the use
of money. This will clearly
differentiate, for instance, the government institutions dealing with the
economy from other financial institutions which are profit-making and issue
financial instruments of their own aimed at acquiring funds from savers and
allocating accumulated services to firms in the form and amount suitable to
them. The purpose of public
relations practice, where the financial public relations emerged, is to
establish a two-way communication at seeking common grounds or areas of mutual
interests and to establish an understanding based on truth, knowledge and full
information (Sam Black). Financial public relations as a subject in
communication, therefore, can be vividly comprehended by juxtaposing financial
system/institutions with public relations.
the light of the above, financial public relations is only possible, if the
institutions concerned will use the process and method of public relations for
financial reporting for effective information dissemination that could establish
mutual and beneficial relationship between the economic operators and their
has been observed, over the years, that financial institutions make efforts at
creating public awareness on the economic activities but unfortunately, little
is known and it creates rooms for misinformation and bashing in the media. These
problems of inadequacy of effective and proper public enlightenment make the
public skeptical, doubting any programme of the government and services provided
by private companies.
its establishment in 1988, for instance, many Nigerians were not aware of the
existence of Revenue Mobilisation Allocation and Fiscal Commission, until after
its inauguration in 1999, when Engr. Hamman A. Tukur, the Chairman of now
constitutional body, took the bull by the horn, and takes the strategic public
relations steps before the public comes to be aware that, it is responsible for
monitoring the accruals and the disbursement of revenues from the Federation
Account to Federal, States, Local Governments and other special agencies on
monthly basis; and also responsible for determining the remuneration packages
for all the public and political office holders. The strategic public relations
campaign earns the organisation a lot of respect from the country’s leadership
and the populace.
the other hand, the annual federal budget, which is prepared by the government,
always receives condemnation even before its release.
The positive effect of maintaining foreign reserves and the benefit of
some government fiscal policies towards revamping the economy, hardly receive
public goodwill even though they receive media attention. The authority
concerned needs to brace up and monitor the trend to respond positively before
the public makes any anticipated outcry.
these problems are borne out of ignorance and lack of adequate information
management techniques from the organisation whose duty is to enlighten the
public about the economic direction.
Because of the absence of
effective publicity on the finances of the government for public appreciation,
it creates problems that deserve to be studied, in order to find out the level
of public ignorance and how to address it.
Though several studies might have been conducted in the area of public
relations, only few works are available on financial public relations.
This study is yet another attempt at finding solutions to social problems
relating to public finance and mass-communication.
MINISTRY OF FINANCE
Federal Ministry of Finance of the Federal Republic of Nigeria is perhaps the
most sensitive ministry in the country. It
occupies a prime position in the socio-economic development of the nation, as it
responsible for the formulation and implementation of economic policies of the
government, both fiscal and monetary, through direct and indirect guidelines and
directives. It is also the government’s fiscal institution that is responsible
for the fiscal and monetary policies of the nation and general economic policy
formulations by preparing and implementing annual government budgets.
responsibilities of the Federal Ministry of Finance are stated in clear terms by
legislation, acts and official gazettes. According
to the Bank Act 1969, the Minister of Finance, for instance, has the power to
licence banks and revoke their licenses, reacts to the Central Bank of
Nigeria’s meeting and banking policy, currency or proposals; and receive
copies of the report of the bank examiners of CBN (Agere16). In addition, the
Federal Government Gazette of July 1975 stated other responsibilities bestowed
on the Honourable Minister of Finance to include banks and banking, capital
issues, public debts, Nigeria Security Printing and Minting NSPM, internal
borrowing, monetary policy, credit control, currency, coinage and exchange
Ministry is structured with eight departments in addition to three
extra-ministerial agencies. It has
statutory three service departments of finance and supply, planning research and
statistics and personnel management. The
operational departments that handle the general finance and economic matters of
the nation are the departments of Home Finance, African Bilateral and Economic
Relations, Multilateral Institution, External Finance, and Foreign Exchange.
There is also the office of the Accountant General of the Federation,
Budget Office, apart from other government financial agencies, which report
to the Ministry. These include the Federal Inland Revenue Service,
Nigeria Customs Service and National Insurance Commission (formerly known
as National Insurance Supervisory Board). The
Internal Audit Unit, Legal Unit and Public Relations and Information Unit, are
integral parts of the Hon. Minister’s office.
Ministry regulates the entire economic direction of the government by
coordinating the activities of the Central Bank, National Insurance Commission,
Nigerian Printing and Minting Company, disbursements of funds from the
Federation Account and that of Value Added Tax (VAT) to all tiers of government,
monitor all the revenues accruing to the government from relevant agencies,
i.e., Federal Inland Revenue Service and Nigeria Customs Service.
The Ministry also regulates the activities of all the financial
institutions in the country.
ministry is a non-monetary and non-profit-making financial institution.
Through its departments, the Ministry recommends to other agencies of
government that oversee the activities of other financial institutions. For
instance, the Department of Home Finance which has a banking division, receives
recommendations from the Central bank, Nigeria Deposit Insurance Corporation
(NDIC), Securities and Exchange Commission (SEC) and National Insurance
Commission (NAICOM) on actions to be taken on the banking and insurance sectors
of the economy. The Foreign
Exchange and Multilateral Department are responsible for establishing favourable
and profitable relationships with international finance institutions. They also
study the trends in the International Monetary System (IMS), which is defined as
“the rules, institutions, policies and practice regarding the adjustment
and/or financing of external balances, the creation and distribution of
international liquidity and determination of exchange rate”(UNDP/UNCTAD, 1983)
people always have the perception that financial institutions end with profit
making. There are several institutions operating within the financial system,
engaging in financial activities but are not operating like the popular banking
sector. A renowned Nigerian economist, Dr. Pius Okigbo(1998) notes that
“Financial institutions and entities perform a wide set of functions.” He
observed that there are those who ensure that there is an adequate stock of
money to service the need of the economy. Such institutions are called monetary
financial institutions, e.g. the Central Bank, and commercial banks. He argued
further that not all financial institutions, however, perform these roles for
this function applies only to those institutions that can increase or decrease
the stock of money through their actions. There are others, the non-monetary
institutions, whose function is
to facilitate the transfer of money between economic units. The actions of both
types of financial institutions affect the level of employment, income and
Public Relations is viewed vis-à-vis the financial institutions operating
within a dynamic financial system. A Financial Institution is defined as “any
institution that deals or trades in the use of money”(Agene 1990). Financial
institutions are responsible for the introduction, utilisation and protection of
financial instruments as well as engage in borrowing and lending of money.
objective of employing public relations in well-established financial
institutions is to establish
and maintain effective contact with the stakeholders. Firstly are their
customers, shareholders, and employees who directly influence the major
decisions of the companies. Then, there are the government, regulatory bodies,
the legislature, the media and the general public. The understanding and
cooperation of all the stakeholders is essential to success. Effective
strategies are planned towards securing and promoting organisations and
indirectly, their services and products in a highly competitive world.
institutions require the application of public relations attitude and practice.
The correct attitude is necessary towards securing favourable public
opinion by the conduct of the employees to the customers. That is why a
comprehensive code of conduct on good bahaviour, training
in the art of communication and adequate knowledge of the economy and the
financial terrain are must for public relations man in financial organisation.
financial institutions in the country include the Ministry of Finance, revenue
agencies, central bank, commercial and merchant banks, development banks,
insurance firms and the stock exchange.
roles of financial public relations cannot be over-emphasised when we examine
the number of financial institutions springing up everyday and the dynamism of
the media in digging into any organisation’s operation, activities and
programmes and reporting their findings without clearance.
may take clear distinction between products and services offered by the
financial institutions before one can differentiate their individual roles to
the economic advancement of a nation. The services come in various shapes and
degrees. Most of the time, the services, unlike products, which are visible and
physical, are intangible and invisible. Some of these services offered to the
public include current, fixed and short deposit accounts transactions; loans,
advances and overdraft facilities; money transfer and signing of performance
bonds, financial advisory roles and several others. On the public sector, the
financial services are the economic policies of the government, which may
include those geared towards addressing price control, salaries and wages,
credit restriction, fiscal and monetary policies, among others.
is there a news medium that does not allocate space or time to financial
reports, feature articles on economic issues or business programmes (electronic
media) on a regular basis, as the public develops unprecedented interest in
economic activities around.
sponsored seminars, conferences, annual general meetings, press briefings and
social activities organised by financial institutions toward creating public
awareness, fail to achieve expected results, the intervention of a professional
public relations person with adequate knowledge of economic matters becomes
fully understand the roles of financial institutions in the country, it becomes
imperative to examine briefly some of them and their functions in the financial
REVENUE AND REGULATORY
government relies solely on its revenue agencies to achieve its fiscal goals, it
has the entire citizenry as its customers and clients. Any levy or tax imposed
on them must be widely acceptable to avoid mass evasion. Notable government
revenues are attainable through its established relevant revenue generating
agencies. Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service
(NCS) are the major government agencies that monitor and collect revenues for
the government. Their responsibilities go a long way in determining the
country’s annual budget. Even though it may be argued that FIRS is charged
with collection of VAT and the Nigerian Customs Service with collection of
import duties, there are other levies and taxes, which are under their control.
Such taxes besides VAT, include income tax, export tax, excise tax, import
duties, expenditure tax and sales tax, among others.
the fact that other government agencies are charged with collecting revenues on
their behalf, FIRS and NCS have an existing cordial relationship that ensures
tremendous revenue generation to the government coffers from the non-oil
to J. K. Naiyeju, in his book, Value-Added Tax: the Facts of a Positive Tax
in Nigeria, the cooperation of the two agencies is very unique and lends
greater support to the success of the VAT scheme in the country. He added that
it was possible to harness the technical skills and professional experience of
the two collection agents for the success of their task.
importance of public awareness in influencing the taxable and leviable
individuals and groups to cooperate with the agencies is glaring. Tax imposition
on the public can only succeed once the reasons and benefits derivable by the
citizenry are made known to them. In fact, in the observation of Naiyeju, any
tax can easily be misconstrued as a strategy by government to squeeze life out
of certain individuals and industries to raise money unduly or to promote
inflation if there is no adequate information to allay their fears.
the other side are also the regulatory bodies that monitor the activities in the
financial environment. Notable are the Securities and
Commission (SEC), which regulates the capital markets, viz the Nigerian Stock
Exchange, the Commodities Exchange, and the Nigeria Deposit Insurance
Corporation (NDIC) which monitors the banking sector’s compliance with the
rules on investors funds. On the insurance industry, the National Insurance
Commission ( NAICOM) has been very active in promoting good ethics of the
profession and strikes whenever necessary, if any insurance firm defaults in its
dealing with its clients or fails to abide by the statutory provisions.
Central Bank of Nigeria, which was established by the Central Bank Act of 1958,
to formulate and execute monetary policies, provides financial services ranging
from issuing and destroying legal tender currency as necessary.
is a banker to the government, bankers’ bank and participates in contracting
external loans for the country. The
bank likewise floats and underwrites loans on behalf of the government.
It plays significant roles in the efficiency and success of clearing
houses and facilitates banks’ interactions.
notable objective of the Central Bank is providing sound monetary policies such
as relative price stability, interest rate structure, reserve requirement,
banking supervision, protection of the financial system, employment growth,
curtailing inflation, determining the liquidity and asset ratio and developing
specialised financial institutions in the public sector.
banks are institutions authorised to provide retail-banking services to the
public. The first commercial banks
in Nigeria were Bank of British West Africa (First bank) and Barclays Bank
(Union bank), which operated between 1894 and 1933 before the first indigenous
bank- National Bank of Nigeria came in 1933.
banks, over the years, are noted for providing services including savings,
current and term/fixed deposit accounts, lending, payment and transfer of money
now facilitated by recently introduced online banking.
The commercial banks in the country are also facilitating the
transformation of rural areas by extending banking services there.
also offer professional advice to their clients on viable businesses and
international trade. Apart from
being the channels for the implementation of monetary policies from the Central
Bank, they also act as authorised foreign exchange dealers in providing such
facilities. Customs agencies,
Nigeria Telecommunications Limited (NITEL), Federal Inland Revenue Service
(FIRS), as well as other government and non-governmental agencies, use the bank
to collect their dues from their respective clients and customers.
With the sophistication of the financial system in the country, some
commercial banks sponsor companies seeking quotation on the Nigerian Stock
Exchange. They buy and sell securities on behalf of their customers and
boost the securities in the capital market.
banks started operations in 1961 with the establishment of Philip Hill (Nigeria)
Limited which later merged with Nigerian Acceptances Limited in 1969.
Other merchant banks later followed suit.
Due to the non-recognition of universal banking then, the merchant banks
in Nigeria operate wholesale banking, which involves loan syndication, equity
and debt issues, ventures capital and equipment leasing. They play prominent roles in pooling a consortium of banks,
where the borrowing required exceeds availability of funds from commercial or
any other bank. They also introduce
their big clients to the Nigerian Stock Exchange and handle international
transactions through a global network of affiliated banks. The banks are usually
sited at urban areas and provide services to large organisations and extremely
recently when the Federal Government introduced the Universal Banking concept,
operators of merchant banks had complained that their poor performances over the
years was due to a banking system that they claimed favoured commercial banks.
The clamour for one-stop-supermarket bank became noticed in the mid 1990's when
the financial system was swept by the distress in the banking sector. This
virtually wrecked havoc on the economy. Many people have observed that the
distinction between commercial and merchant banking is out-dated and no longer
fashionable in other developed countries.
harmonised banking service is seen as cost-effective for providing a level
playing field, where a customer can open an account and engage in all banking
and insurance transactions from one bank to the other. The new banking concept
offers a wider range of banking services, which include retailed banking,
capital market activities and insurance business. The banking environment will
no longer be restricted to certain functions. The new banking services commenced
in January 2001.
firms provide financial compensations for a specified loss or damage resulting
from risk of any sort by a customer who pays regular premiums on contracts.
They are the undertakers of life and general risk of financial loss in
return for the receipts of a premium, which they charge clients, depending on
the class of insurance required.
first insurance company in Nigeria was Royal Exchange Assurance, established in
1921. Insurance providers go by
many names, which include insurers, re-insurers and loss adjusters.
banks were established by the government, to promote national economic
development. They tend to address issues of low income, insufficient savings and
inadequate investment. The
government and multilateral agencies sponsor the banks.
The first development
finance institution is the Nigerian Local Development Board, which was
established in 1946 and charged with the responsibility of giving loans and
grants to native authorities, cooperative societies and other public bodies for
prescribed development projects (Agene 1990). Notable development banks include,
Nigerian Industrial Development Bank, Federal Mortgage Bank of Nigeria, Nigerian
Bank for Commerce and Industry, Nigerian Agricultural and Cooperative Bank,
Peoples Bank of Nigeria and Nigerian Educational Bank. Others include, National
Economic Recovery Fund (NERFUND), Community Banks, etc.
are other companies that are big and profit-oriented which are quoted on the
stock exchange. Such companies are also requested to publish their annual
statement of account and have a large public which they must communicate with
regularly. Some of those firms include those dealing in manufacturing,
conglomerate, pharmaceuticals, agro-allied, telecommunications and Information
Technology. Others are into food and beverages, industrial and domestic
products, printing and publishing, construction and engineering and petroleum