* Introduction  to Financial

            Public Relations


* Financial Environment


*            Understanding Public Finance                      


*            Financial Institutions and

            Revenue Agencies


*            Central Bank and Others











































This 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.  Therefore,  refined 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.


Financial 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.


With 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.


Names 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.


The business concerns that receive constant media attention include First Bank, NICON Insurance, Federal Discount House and even Lagos Business School, among others.


These 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.


Many 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.

For 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.


Another 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.


Public 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.


The 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.


Standard 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.


Complimentary 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 stakeholders.


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.


Have 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.

It 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 organisations.



In 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.


No 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 world.”


As 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) .   

Apart 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.


Public 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.


Therefore, 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 social overheads.


The 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.


It 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.


The 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.


The 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)


The 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.


The 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. 



It 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.



Whenever 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.


Nigerian economy may not be different from others except in its policies and implementation, which surely have direct effects on day-to-day businesses.


Many 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.


The 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.


A 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.


Looking 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.


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 about 10.5%.


The 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 economic development.





The 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.


The 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 relationship.


It 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.  


The 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.


As 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.


In 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 beneficiaries.


It 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.


Since 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.


On 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.


All 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.



The 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

is 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.


The 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 control.


The 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.


The 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.


The 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) Agere P.45.


Many 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 prices.


Financial 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.


The 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.


Financial 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.     


Notable 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.


The 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.


It 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.


Hardly 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.


When 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 inevitable.


To 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 sector.




Since 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.


Despite 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 sectors.


According 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.


The 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.


On the other side are also the regulatory bodies that monitor the activities in the financial environment. Notable are the Securities and


Exchange 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.  



The 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.


It 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.


Another 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.



Commercial 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.


Commercial 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.


They 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.



Merchant 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 wealthy individuals.



Until 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.

The 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.



Insurance 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.


The 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.



Development 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.



There 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 marketing.