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Background of Study

The central bank of Nigeria CBN was establishing by the central bank of Nigeria act of 1958 and commences operations on the 1st of July 1959.

The principal objectives of the central bank of Nigeria was basically on the issuance of legal tender currency in Nigeria and the central bank of Nigeria is also saddle with the responsibility of maintaining the nations external reserve and value of the legal tender currency in other to safeguard the international value of the nation’s currency.

Some of the functions of the central bank of Nigeria also include promoting monetary stability and a sound financial system. They also serve as the banker and the financial adviser to the federal government on economy decisions. The CBN also serve as bankers to other banks within Nigeria and abroad.

The central bank of Nigeria play a major role in the development of Nigeria economy, the bank has been saddle with various responsibilities to ensure economy development.

The CBN has played a major role in the development of agriculture in the country through the Agricultural Credit Guaranty scheme Fund (ACGSF). The scheme was established by decree no. 20 of 1977, and started operation in April, 1978. Its original share capital and paid-up capital were one hundred million naira and eighty six million and six hundred thousand naira respectively. The federal government of Nigeria holds 60% and the central bank of Nigeria 40% of the shares. The capital based of the scheme was increase to three billion naira in March 2001. The funds guarantees credit fertilities to farmers. The fund is solely managed by the central bank of Nigeria which handles the day to day activities of the scheme.

The central bank of Nigeria has also play a vital role in the development of small and medium enterprises trough the establishment of the small and medium enterprise equity investment scheme. The scheme is a voluntary initiative of the bankers committee approved at its 26th meeting held on the 21st of December 1999. The initiative was in responsive of the federal government concerns and policy measures for the promotion of small and medium enterprises (SMEs) as vehicle for

rapid industrialization, sustainable economy development, poverty alleviation and employment generation.

The scheme require all bank in Nigeria to set aside ten (10) percent of their profit after tax for equity investment and promotion of small and medium scale enterprises. The ten (10) percent of the profit after tax to be set aside annually shall be invested in small and medium scale enterprises as the banking industry contribution to the government effort towards stimulating economy growth, developing local technology and generating employment. The central bank is saddle with the responsibility of ensuring absolute compliance of the banks towards the successful realization of the scheme.

The central bank of Nigeria established the infrastructure finance office on March 01 2010. The mandate of the office is to among others; evolve a sustainable financing frame work to stimulate long-term financing for infrastructural development in the country. The bank has undertaken some steps to improve the sectors as follows;

The bank provided three hundred billion fertility for investment in debentures to be issued by the bank of industry in accordance with section 31 of the CBN act 2007, for investment in power and aviation projects. As part of measures by the CBN to further encourage banks to lend to the real sector of the economy, particularly SMEs, infrastructural and agriculture, the board of directors of the bank has approved the amendment of the prudential guidelines on loan loss provisioning and rule and regulations on margin lending.

We can’t talk about the role the central bank of Nigeria has played on the Nigeria economy without mentioning the impact the CBN bank consolidation. The central bank recent reform (consolidation) that employed certain measure to strengthen the Nigeria banking system by drastically increasing the minimum capital requirement from two million naira to twenty-five billion naira. Through review of policy documents official report and economic information on the banking sector, it became evident the consolidation of banks led to a remarkable reduction of banks from 89 to 25 by merge, acquisition, initial public offer and other means. The bank consolidation has resulted in making banks more efficient and reliable and also, their intermediary potentials have also been revised.

Statement of Problem

The central bank of Nigeria must ensure its streamline the number of project in its entire department in other to ensure adequate funding of those projects. Funding of major project could serve as a limitation to the central bank in actualizing the implementations of it various projects that are expected to enhance the Nigeria economy.

Corruption as we all know is the order of the day in Nigeria, so, for the successful management of funds the central bank must makes sure it does not allow corrupt persons into its system of operations.

The activities of the central bank must not be politicized in any way in other to ensure equity in the disbursement of funds and in taking on special project across the six geo-political zones of the country.

Purpose of Study

The central bank on Nigeria must adhere to it policies in other to enhance economy growth in Nigeria and also in the banking and financial sector of the nation’s economy.

Hence, the fundamental purpose of this study is:

To access the impact of the central bank on the banking industry

To examine the impact of the central bank of the nation’s economy

To identify the benefit of the central bank so far.

To identify the effect of the central bank and other financial institution in sustaining the Nigeria economy


Research Questions

This study attempt to provide answers to the following research questions:

 How do you view the central bank in relation to economic development?

 Do you think the central bank policy on the Nigeria economy has had any impact on the economy?

 Has there been any improvement in the country economy ever since the central bank was created

 Are the Nigeria banks strong and trusted enough in spite of the CBN policy on consolidation?



 In your own view do you think the central bank has affected the nation’s economy positively or negatively?

 How would you rate the impact of the central bank on the manufacturing sector of the economy?

 How does the attitude of Nigerians affect the policies of the central bank?



Looking at the main purpose of this research, it will be reasonable to propose that:

1) Ho: the state of the Nigeria economy has not improve since the establishment of the central bank


Hi: the state of the Nigeria economy has improve since the establishment of the central bank

11) Ho: the central bank is not strong and trusted enough to fully implement all its proposed economy policies.

Ho: the central bank is strong and trusted enough to fully implement all its proposed economy policies.

Significance of Study

 The significance of this study is to add to the general body of knowledge, enlighten the general public on the following:

 The impact of central bank on the Nigeria economy

 The impact of the central bank in reducing the poverty level of the nation’s economy

 To bring to light the activities of the central bank in general.

 To show to investors and the general public that the state of banks has undergone a lot of changes through the consolation policy of the central bank.


Limitation of study

This research works is basically on the impact of central bank in the development of Nigeria economy. The study will concentrate and will not go beyond the showing the impact of the central bank on the Nigeria economy.





1.1     Background of the Study

1.2     Statement of the Research Problem

1.3     Objectives of the Study

1.4     Significance of the Study

1.5     Research Questions

1.6     Research Hypothesis

1.7     Conceptual and Operational Definition

1.8     Assumptions

1.9     Limitations of the Study




2.1     Sources of Literature

2.2     The Review

2.3     Summary of Literature Review




3.1     Research Method

3.2     Research Design

3.3     Research Sample

3.4     Measuring Instrument

3.5     Data Collection

3.6     Data Analysis

3.7     Expected Result



4.1     Data Analysis

4.2     Results

4.3     Discussion



5.1     Summary

5.2     Recommendations for Further Study





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Author: daniel

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