This research work will take a look at the traditional role of central bank of Nigeria in the Nigerian economy. A good knowledge of the strategies the bank uses in implementing and in restructuring the dwindling economy will be identified. It will also cover the constraints the bank faces in implementing the government programmes. The importance of central bank of Nigeria in developing the Nigeria economy cannot be over stressed to looked. The central bank being the bankers bank and the lender to last resort is a mirror that reflect the nations economy. As development proceeds, the structures and organization of economy becomes increasingly complex, while the central bank roles becomes increasingly complex. Now that Nigeria is faced with a depressed economy, mass unemployment, low rate of exchange, high rate of foreign debt, high rate of inflation, fall in foreign reserve, a fall in oil output, and high cost of living, the central bank has got a lot of extra work to do in order to help to recover the dwindle economy. This research will take a look into some journals of how far the central bank of Nigeria has been of help in past years trying to make a successful implementation in recovery the depressed economy of the country.
1.1 BACKGROUND OF THE STUDY
Central banks in West African owned their origin to the political development in rest African. The Central bank of Nigeria (CBN) was established in 1958, after the dissolution of West African currency board set up in 1912 where the colonial monetary system had its foundation which began to disintegrate with the attainment of political independence in Ghana in 1957, because the median of exchange were multi - farious and not very conducive to the operators of a modern monetary system. One could ask why Nigeria had no monetary system until the establishment of West African of simple currency system for the West African in 1912. The (W.A.C.B) West African currency board retained the services of the bank of British West Africa (B.B.W.A) as its currency centers in Lagos (Nigeria), Accra (Ghana), Freetown (Sierra lore) and Bathurst (Gambia) and Ghana being the first to get her independence in 1957 decide to have her own currency and other country that had here own currency, and Nigeria as one of the independent country objected to this, for which (C.B.N) central bank of Nigeria was established discuss its collaboration with other financial institution in implementing macro economic policy measure designed to facilitate efficient management of Nigeria economy.
The W.A.C.B created an incentive for the establishment of modern financial system in Nigeria because W.A.C.B could hardly be described as a monetary authority in terms of using any discretion power to control the growth of credit and money supply in the economy which made to known that the W.A.C.B is simply a “passive monetary changes” the establishment of W.A.C.B provided the basis for agitation in favour of the creation or establishment of Central bank of banks, not only in Nigeria but in other countries operating under W.A.C.B system.
The first formal move towards the establishment of central bank in Nigeria was in April 1952, when the private members motion was proposed in the then house of representatives, calling for the establishment of a central bank in Nigeria to perform essentially those functions generally associated with central bank, but the motion was not passed by the house because, the then colonial government termed the establishment as premature in view of the relative under development of the local financial system, and the house passed on mended motion asking the government to examine and report back to it in the possibility of establishing a central bank in Nigeria.
Mr. J.D Fisher, the adviser to the bank of England was accordingly given the task for examining their possibility, but his report did not favour the establishment of central bank in the country, in the near future, for he did not recommend the three step programme which was proposed to lead to the establishment of the central bank of Nigeria. One of the steps was the transfer of the West African currency board (W.A.C.B) headquarters from London to West African, which were hoped would allow the local people to be more closely with the board and provide them with the opportunity of acquiring some expenses. The second step was that a Nigeria currency Board to issue Nigeria currency to be established to replace the W.A.C.B) currency. The third being the establishment of our band of issue which would later be development into a central bank, but all these motions did not receive Fishers recommendation and were not taken to the house of representative either, rather what led to the establishment of the C.B.N was the J.B Loynes recommendation who was also an adviser to the bank of England, as the suggested for the establishment of C.B.N and it was approved to perform a traditional function of the central baking and to serve a private in national financial institution and in the development of the economy.
The federal government enacted a law called bank of Nigeria ordinance as earlier mentioned in 1958 establishing the central bank of Nigeria which started functioning on July 1, 1959, when the prime minister Tafawa Balewa in a colorful ceremony declared the building open in Lagos, this made central bank to be a bank as a major financial institution in any modern economy and very important to the functioning of both the private section and the fiscal operations issuing the country’s currency and helping the government in the formation and execution of the country’s monetary policies central bank in over all developing country is basically set up by its government to perform at least these roles generally associated with central banks which its roles in Nigeria, economy like other countries are fairly wide in indeed. The central bank being bestowed with some traditional function aimed at promoting rapid economic development through it developmental roles.
1.2 STATEMENT OF THE PROBLEM
As a matter of facts Central Bank of Nigeria has been experiencing series of problems overtime, in attending to develop Nigeria economy. These problems ranges from inability of commercial banks to here strictly to the laid down rules and regulations as may be stipulated be Central Bank. Meanwhile, economic development and growth as in these research work is a joint effort of the central bank and commercial banks. In addition Central Bank may bring out stringent measures in order to control economy. These measures may not be feasible or fully executed as a result of such policy to the economy in question. For instance, Nigeria economic team may employ American, Italian, Spanish economic policy to achieve a certain level of development. It might not work with Nigeria because of Nigeria attitude and the environment etc. These and many more are the problems facing development in Nigeria.
1.3 OBJECTIVES OF THE STUDY
i. To findout if the Central Bank of Nigeria has aided or hampered the development of the economy.
ii. To examine whether Central bank of Nigeria has assisted in the growth and development of Nigeria economy.
iii. To evaluate strategies or methods taken by the central banks in recent time to restructure the country’s economy.
iv. To ascertain the actual rule of central Bank and how it has contributed to the growth and development of Nigeria economy.
1.4 RESEARCH HYPOTHESES
In this study, the researcher decided to test three hypotheses.
H0: Central Bank of Nigeria does not aid the growth and development of banking industries in Nigeria.
H1: Central Bank of Nigeria aids the growth and development of banking industries in Nigeria.
H0: Central Bank of Nigeria does not encounter problem in the growth and development of banking industries of Nigeria.
H1: Central bank of Nigeria encounter problem in the growth and development of banking industries in Nigeria.
H0: Central bank of Nigeria does not encounter problem in that growth and development of banking industries in Nigeria.
H1: Central bank of Nigeria have solution to these problems that are facing growth and development of banking industries in Nigeria.
1.5 SIGNIFICANCE OF THE STUDY
The importance of this project will enhance the economic development of Nigeria through the following ways. This project work will make commercial and other financial institution to understand when customers are not operating in their banks. This project work will enable federal government to be active in participation in the banking system. This project work will enable the banker to known that minimum and maximum amount of money their customers respect to deposit in the bank. This project work will enable the student both National Diploma and Higher National Diploma who studies banking to acquire knowledge on their studies. This project work will motivate central bank of Nigeria’s staff to work actively in order to promote sound financial system and it helps to establish and maintain lines of communication in a bank.
1.6 SCOPE OF THE STUDY
Central bank of Nigeria out line how use monetary and fiscal policy to achieve full employment and they also have surpluses in balance of payment and by exchange control. Central Bank of Nigeria have s strong economic growth and development in Nigeria. They subordinate to the planning ministry, were to use their money creating authority and their regularity powers to direct flows of bank credit to favoured industries and to support the economic plan.
1.8 DEFINITION OF TERMS
Budget: Estimate of probable future income and expenditure
Clearing House: place where banks exchange cheques and settle accounts: the balance being paid in cash
Collateral: property of slow or bond pledge as security for payment of a loan.
Consortium: temporary cooperation of a number of banks for a common purpose.
Dearth: A scarcity or lack of something.
Development Plane: is an ideal way of setting out a country’s economic development objectives and to demonstrate initiative in tackling the country’s economic developments.
Sinking fund: funds built from period transfer usually twice a year from government review for the redemption of a maturing solves
Moral suasion: pursuance based on moral grounds not force.
Rediscount: involves the exchange of securities for cash
Smuggling: act of getting goods and other contra – band goods secretly and usually into and out of a country
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