Back to top

Banking in Africa


Nigeria has enjoyed significant growth in recent years. This, along with promising projections for the near future, go some way in establishing the nation and its thriving banking industry.

Banking in Africa

Nigeria is classified as an emerging market and has shown great growth potential. According to the World Bank, Nigeria has already attained middle-income status. Nigeria offers an abundant supply of oil resources, well-developed financial, legal, communications and transport sectors, and a sophisticated stock exchange (the Nigerian Stock Exchange), which is the second largest in Africa.

The projected rate of economic growth for Nigeria in 2012 is about 8.1 percent. From 2005 to 2011 Nigeria’s economic growth rate averaged 6.86 percent. In the past banking in Africa has not always satisfactorily supported domestic or foreign investment there, but the situation in Nigeria is much more positive and investors there have every reason to see their banks as allies.

Today, Nigeria has a highly developed financial services sector, with a number of local and international banks, asset management companies, brokerage houses, insurance companies, private equity funds and investment banks. The size of the Nigerian population, the enormous oil industry and the wealth that industry generates, and its sophisticated consumers, means that Nigeria is amongst the most important centres for banking in Africa.

The Nigerian banking industry is currently witnessing transformations involving recapitalisations, management turnarounds, mergers, policy reforms and other changes. This will make banking in Africa even more attractive to potential investors. The changes are expected to strengthen the Nigerian banking scene overall, and give Nigerian banks, such as Guaranty Trust Bank, an opportunity to gain market share by offering new products and services both to existing customers and to previously unbanked clientele.


The mandate of the Central Bank of Nigeria (CBN) is derived from a 1958 Act of Parliament, subsequently amended six times. The latest amendment, the CBN Act of 2007 of the Federal Republic of Nigeria, charges the CBN with the overall control and administration of the monetary and financial sector policies of the federal government.

The objectives of the CBM are:

  • ensuring monetary stability
  • issuing legal tender currency in Nigeria
  • maintaining external reserves
  • and acting as central national banker and providing economic and financial advice to the federal government.

As part of these duties, the CBN is charged with the responsibility of administering the Banks and Other Financial institutions (BOFI) Act (1991), with the aim of ensuring high standards of banking practice and financial stability through its surveillance activities, and the promotion of an efficient payment system.

The CBN’s aim is to be one of the most efficient and effective central banks in the world, promoting and sustaining economic development. This ambitious aim makes the CBN an encouraging example of how a powerful and meticulous regulatory authority can be a reliable central governor for banking in Africa.

The supervisory function of the CBN is structured into three departments:

  • Financial policy and regulation: develops and implements policies and regulations aimed at ensuring the stability of the financial system. It also licenses and approves grants for banks and other financial institutions.
  • Banking supervision: supervises deposit money banks and discount houses.
  • Supervision department of other financial institutions: supervises other financial institutions such as micro-finance banks, finance companies, bureaux de change, primary mortgage institutions and development finance institutions.

Today, most Nigerian banks offer financial services and products up to an international standard. Nigeria is still largely a cash economy, although the use of credit and debit cards, while still limited, is growing. Cheques take three to seven days to clear.

Most Nigerian banks have a nationwide network of branches and also offer internet banking. Many Nigerian banks provide what are known as domiciliary accounts that hold balances in foreign currencies such as dollars, pounds or euros. The amount required to open a domiciliary account tends to vary between banks but is usually around $100.

Investors in shares listed on Nigeria’s Stock Exchange have recently enjoyed very high returns. Some Nigerian banks operate stockbroking subsidiaries.

Banking in Nigeria

Generally, Nigeria is an interesting – indeed even exciting – nation for foreign investors interested in exploring the potential of investment and banking in Africa. This is equally true for such investors seeking to take part in direct investment or indirect investment via the stock exchange.

Several internationally-known financial institutions, including JP Morgan and Credit Suisse, have been increasing their presence in Nigeria in recent years. The efficiency and reliability of banking in Africa is clearly essential to all investors in the continent, and especially in Nigeria, which is demonstrating so much growth potential.

A member of OPEC since 1971, Nigeria is currently the 12th largest producer of petroleum in the world and the eighth largest oil exporter. It has the world’s 10th largest proven oil reserves. As one might expect, oil plays a massively important role in Nigeria’s economy, accounting for about 40 percent of GDP and 80 percent of government earnings.

In February 2011, Citicorp projected that Nigeria would enjoy the highest average GDP growth in the world between 2010 and 2050. Nigeria is one of only two African countries listed among Global Growth Generators’ 11 countries whose economies have been identified as sources of growth potential and of profitable investment opportunities.

Just one of many examples of the commitment within Nigeria to growth, progress and economic development was the formation in 1996 of the Nigerian Economic Summit Group (NESG), created as a platform for public-private sector cooperation on Nigeria’s economic development. The summit has been held annually since then. The NESG aims to foster open and continuous dialogues on Nigeria’s economic development.

Regulations and reforms

CBN governor Lamido Sanusi has been busy creating a Nigerian banking environment that is fair, secure and where the interests of customers and investors are paramount. With his help the CBN ensured the adoption of Basel III regulations by all financial institutions operating within Nigeria.

The CBN is aiming for a situation where, in the first months of 2013, Nigerian banks will start with the Basel III standardised approach and will graduate into determining higher minimum capital requirements. The CBN will also be taking steps to improve liquidity and its monitoring of leverage ratios. This quality-focused approach could lift the standard across the continent, contributing positively to the reputation of banking in Africa.

Industry expert

Guaranty Trust Bank is one of the leading banks in Nigeria, providing advice to customers in connection with investment and banking in Africa generally, and particularly investment and banking in Nigeria, where Guaranty Trust Bank has its key jurisdiction.

In any analysis of the competitive strengths of Guaranty Trust Bank, the expertise and knowledge of the bank’s people usually receive particular attention. The bank implements an employee recruitment strategy that is regarded as world class and which puts into practice Guaranty Trust Bank’s belief that the core of any bank is its people. Guaranty Trust Bank is fully aware that it is only as strong as its workforce and it very consciously ensures that it has first-rate people working for it at every level and area of its operations.

The products and services offered by Guaranty Trust Bank are central to its competitive power. The bank devotes itself to getting to know its customers well and takes pride in tailoring these products and services to match their needs.

Some of the new accounts that Guaranty Trust Bank has introduced recently are: a card account for undergraduates; a card account for salary earners, and a mobile phone application that enables customers to carry out most of their transactions on the move. The bank’s Bank-on-Wheels is a mobile bank used at public events such as conferences and trade fairs, while GTConnect is a 24-hour interactive internet banking facility.

Since its earliest days Guaranty Trust Bank, has recognised the essential role played by state-of-the-art technology in furthering a bank’s competitive energies. Investment into technological infrastructures has been another reason why Guaranty Trust Bank has stayed at the top of the game in Africa. The banks technological advances help it support its continuously increasing customer base and provide them with the reliable, customer-focused systems they expect.

In the 2012 World Finance Banking Awards, Guaranty Trust Bank was recognised as the Best banking Group and Best Commercial Bank in Nigeria.

Case study

Guaranty Trust Bank’s ‘Orange Rules’ (deriving from its corporate colour), focus on the bank’s core approach to doing business. Guaranty Trust Bank of course seeks to maximise profitability for its shareholders; but it strives to do this while being an ethical and responsible member of the communities in which it operates.

The Orange Rules, the key tenets on which Guaranty Trust Bank bases its operational philosophy, are:

  • simplicity
  • professionalism
  • service
  • friendliness
  • excellence
  • trustworthiness
  • social responsibility
  • innovation

Corporate social responsibility is a vital part of Guaranty Trust Bank’s philosophy, and it is embedded in its business strategy. Guaranty Trust Banks has, for example, sponsored numerous projects to build fundamental infrastructure in Nigeria, such as classrooms, laboratories and libraries. It has moreover structurally renovated buildings and provided water supply and sanitation.

Pursuing these Orange Rules with vigour, resourcefulness and sincerity, Guaranty Trust Bank has been the most profitable bank in Nigeria since 2009. Despite vigorous and aggressive competition from rivals, Guaranty Trust Bank has succeeded in maintaining this important position at the peak of banking profitability in Nigeria.

Guaranty Trust Bank has created exceptional value for its shareholders through consistent dividend payouts and bonus issuances. It is one of the few financial institutions in Nigeria that pays dividends twice a year and presents its financials using the Nigerian Generally Accepted Accounting Standards and International Financial Reporting Standards. It is a noteworthy example of quality banking in Africa.

Guaranty Trust Bank opened a new chapter in Nigerian banking history in 2007 when it achieved the accolade of becoming the first bank in Nigeria to carry out a $350m Eurobond issuance as well as a $750m Global Depository Receipts Offer. When the GDRs were listed on the London Stock Exchange (LSE) in July that year, Guaranty Trust Bank became the first Nigerian corporation and African bank to achieve a listing on the London’s main market. In the 2011 financial year Guaranty Trust Bank’s profit reached $393m, earned from a capital base of $1.5bn and total assets of $9.7bn.

The list of international awards that Guaranty Trust Bank has won since its foundation in 1990 is an eloquent testament to the calibre of its products and services and its professionalism and expertise.  Just some of these awards are:

  • World Finance Best Banking Group Nigeria 2012 and Best Commercial Bank Nigeria 2012
  • KPMG Banking Industry Customer Satisfaction Surveys — 2011 Most Customer-focused Bank: Corporate
  • EMEA Finance Awards — 2011 Best Bank in Nigeria
  • Social Enterprise Reports and Awards (SERA) — 2011 Best Company in CSR: Corporate Governance, 2011 Best Company in CSR: Human Rights and Gender in Nigeria