Traditional Banking in Africa: The Nigerian historical Perspective
A popular African traditional system of banking was found in the Yoruba nation of the Great Oyo Empire called the “Esusu” or “Eesu” which was also adopted in the other regions. Taiwo Seun writes on historical perspective of the discourse.
Western outlook on Banking
The banking industry is a financial institution that has the statutory power to accept deposits from the public and creates credit. It performs lending activities directly or indirectly through capital markets.
The banking industry is crucial to the healthy economy of a nation as it aids in the financial stability of a country in which banks, are regulated and institutionalized through a system known as fractional reserve banking through which banks hold liquids assets equal only to a portion of their current liabilities.
In addition to this, there are regulations by the apex bank of a nation that ensures liquidity through the requirements of a bank to have a minimum capital base which is under an international set of capital standards, known as the “Basel Accord”.
It is a general knowledge that banks play a pivotal role in the contemporary process of economic growth and development as it’s a veritable vehicle for the mobilization of financial resources from surplus savings channeling them to be made available for investment purposes.
A brief incisory look at the history of banking takes us back to the temporal setting of the 14th century shows that it evolved in the prosperous cities of renaissance Italy which had the concept of credit and lending channels of a number of banking dynasties notably the Medicis.
This transcended down to the Fuggers, the Weslers, the Berenbergs, and the Rothschilds. They did play crucial roles in the development of banking across the world at large. The oldest retail bank is the Banca Monte dei Paschi di Siena while the oldest existing Merchant bank is the Berenberg bank.
Banking history in Nigeria
There has being very little documentation of early forms of banking in Africa as most of her historical events are passed down orally.
A popular African traditional system was found in the Yoruba nation of the Great Oyo Empire called the “Esusu” or “Eesu” which was also adopted in the other regions called “Utu” or “Esusu”, the Eastern part of Nigeria Adashi and Etibe in the North Central and South -South Nigeria respectively.
It is a local system o0f savings in which people constituted themselves into savings group, as they contributed money on a particular period over a specific period of time. All the respective members of the group had a specific code and rules guiding them.
This may look very primitive to the contemporary mode of economic activities; it has provided a foundation upon which contemporary financial and economic activities are based.
Esusu is a method of a traditional African saving system which ingrains individual and societal behavior as regards their daily economic activities’.
It has formed an age-long economic system for occupational sustainability in that, the savings after collection was mostly used to start or expand an existing business in ; farming, pottery, craftwork, sculpture, etc which were major sources of income and financial sustenance. This mode of traditional banking is still relevant at grassroots communities as it aids in the accumulation of funds for SME’s (Small and Medium Scale enterprises). This is crucial to economic development and growth at grassroots level in the modern day economy.
The role of the Esusu can’t be over flogged but it gives ample opportunity for fund creation and accumulation made readily available for investment purposes, which in turn transcends to utility creation and satiation of human wants.
How Banking Evolved in Nigeria (Extract from Toluwani Alexander Ajayi LLB (Hons), LL.M)
The evolution of banking in Nigeria dated back to the period between 1892 and 1894 when African Banking Corporation and First Bank of Nigeria (which was formerly known as the Bank of British West Africa (BBWA) was established.
There was no doubt that along the line of history, the Colonial Banks established their presence in Nigeria. They ran commercial affairs, affected financial activities, and influence trade and commercial transactions throughout West Africa, from Nigeria.
Barclays bank entered into financial operation in Nigeria around 1925, through merger between the Colonial Bank, the Anglo-Egyptian Bank and the National Bank of South Africa to create Barclays Bank (Dominion, Colonial and Overseas).
In 1948, the British and French Bank for commerce and industry was established (later to become the United Bank for Africa).
These banks therefore did not aim at meeting the needs of Africans. In 1949, Dr. Nnamdi Azikwe established the bank with an African heritage (the African Continental Bank).
He decided to establish the bank all in the name of Pan Africanism because foreign banks discriminated against him and his group of companies.
It is a fact that ACB was actually not the first Nigerian Bank to be founded. In 1929, the Industrial and Commercial Bank became the first indigenous bank to be established, but an anaemic existence and therefore went into liquidation fifteen month later, specifically in 1930.
Its failure has been attributed to mismanagement, accounting incompetence, embezzlement, even though economic repression of that period also contributed to its failure.
Banking in Africa has emerged speedily hence, owing to economic development and civilization.