Nigeria gets back on track

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22 June 2010

The Nigerian trade and export finance market is getting back on track following last year's banking shake-up.

Nigeria is an import dependent country, with significant reliance on credit from the local banks for import finance activities. Accordingly, absence of credit from the banks, often leads to a corresponding decline in import levels. This was certainly the case in the latter part of 2009 and early part of 2010 following the Q3 2009 Central Bank of Nigeria (CBN) special examination of banks.

The CBN special audit of Nigerian banks included a review of risk assets portfolio, capital adequacy, liquidity levels, and corporate governance. Following the audit, gaps were found in 10 out of the 24 banks in the industry with the CBN intervening in eight of these 10 banks. The CBN actions included the sacking of the executive management in the eight identified banks and injection of tier II capital to provide liquidity, while also guaranteeing their foreign correspondent banking obligations.

The consequent decline in aggregate demand for...

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