Quick Stats on Nigerian and South African Banks

I am posting this for the statistical content, and not in support of the viewpoint being expressed by its author via Business Day.

While I am on the topic of Business Day, there were a few months there where the quality of their sites and their journalism mysteriously weakened. But they appear to be returning to form as a, if not the, leading business publication in the Federal Republic.

I do think they need a little less coverage of random foreign business news culled from foreign news outlets, and a little more coverage of Nigerian business specifics. Seriously though, is the GDP in Jigawa or Taraba growing or shrinking? Farm output in Benue or Yobe going up or down? River transporation demand in Bayelsa going up or down?

Yeah, I know, it is easy for me to talk.

Anyway, I don't agree with the point that there should be fewer banks in Nigeria. What we need are stronger banks, regardless of the number. Soludo's consolidation of banks did little or nothing to affect the governance problems (among other problems) at our banks; it didn't help that Soludo's CBN was extremely lax in oversight and enforcement of the rules, partly by choice and partly because the banking grandees were untouchables, members of the PDP and supporters (funders) of President Obasanjo.

Philosophizing and ideologizing are neither here nor there in the practical world of economics, but it always bothered me that Soludo's idea of compelling Nigeria to have banks the size of South Africa consisted of dividing the same-sized pie among fewer banks, rather than increasing the size of the pie and the size of each banks' slice as a result.

I know we are a lot poorer than Japan, South Korea, Germany, France and the United Kingdom, but there is no fundamental reason why this should be the case. Sure, there is a lot of literature from a lot of people who purport to explain the discrepancy, but much of that (if not all of it) suffers from the same ailment that affects writings on history. In terms of this blog (and this blog post), the important thing to say is what I have already said: There is no fundamental reason why the Federal Republic of Nigeria should be poorer than the aforementioned. Whatever you assert to be the cause for this state of affairs is by definition something that can be corrected (and that should have been corrected a long time ago). We should plan our banking sector based on achieving that aim, as opposed to aiming at a destination (South Africa's economy) that is actually (with due respect) smaller than what we should be aiming for.

Besides, there are reasons why the South African banking industry is an oligopoly, and those reasons have nothing to do with free market determinism. In fact, one might be tempted to argue that the banking oligopoly is as problematic to the South Africa's long-term economic (and political) future as the oligopoly in land ownership and commercial agriculture.

You know what I mean.

Feel free to disagree with me. Nigerian politics would be a lot more relevant to Nigerian development if we engaged in serious debates about the banking industry, rather than asking ourselves which geopolitical zone, senatorial zone or other zone has the next chance in the rotation to produce the executive or legislator.

Anyway, here is the statistical diagram, courtesy of Business Day. You might have to click on it to see the full thing: