I am a student of Nigerian (business) history especially in the years 1986-1992. That period, in my opinion, represents an era of immersive entrepreneurship. Some of our finest companies were started during that period. If not for the great recession, which resulted to the failure of many banks, the impact of this era would be more evident today.
Under the military rule of former President Ibrahim Babangida (IBB), Nigeria made many policy moves, starting in 1986. The impact is huge – between 1987 and 1992, some of the finest (old) technology and (modern) financial institutions in Nigeria were founded. In my analyses, I have zero’d in on Second-Tier Foreign Exchange Market (SFEM) which made it possible for banks to make huge profits on foreign currency transfer/trading, as catalytic.
SFEM brought alternative foreign exchange which made dealing on foreign currency very lucrative in banking. Before then, Naira was largely stable and there was no money to be made, except fees, on forex. The float on treasury transfers was marginal. But SFEM, changed Nigeria. It gave us bureau de change, making trading Naira a product of itself. Nigerian Naira is yet to recover from the impact.
SFEM was one of the policy recommendations of the IMF (and World Bank) which introduced the structural adjustment program. One of the goals was to open the private sector and subsequently diversify the economy.
In one way, the policies internationalized Nigeria despite making it possible for institutions to make so much money from government. It is arguable, that if Nigeria had eliminated corruption, we could have done better on the outcomes. Around 1989, IBB cracked another policy with profound impacts on finance. He made it possible that people could open Finance Houses withe ease. He waived most requirements. Most of those firms would later collapse and many people lost their investments in them. But the survived ones flourished and created a new class of super-rich Nigerians. The financial institutions including banks made money on forex with the alternative exchange where Nigeria maintained official and black market rates.
Simply, buy dollars from Central Bank of Nigeria (CBN) for say Nx; in the evening sell to traders at N(x+y) where y is your profit. You do this without any risk. With so much lapses, CBN transferred our commonwealth to banks and finance houses .
But behind the mess, there is something good from that period. We ended up having great companies which are still very critical in modern Nigeria. Sure, most of those companies survived and flourished through innovation, but one thing unites them – they were born when Nigeria was run by a maradona (yes, IBB) and the chaos provided unbridled wealth with many lapses on control and enforcement. Yet, you need to give these institutions credits. The banks changed Nigeria for good. Without them, we might still be waiting for 5 hours to get our money from the old generation banks.
Today is July 1 2017 and it is the 30th year anniversary of the beginning of the era of immersive entrepreneurship in Nigeria. I have chosen July 1987 as the mid-time of that moment.
These are some samples of companies starred during this time. In short, the phrase “New Generation Banks”, came into the lexicon during that era.
- Diamond Bank Plc – born 1990
- Zenith Bank – 1990
- Fidelity Bank – 1988
- Access Bank – 1989
- GTBank – Jan 1990
- (STB for modern UBA) – 1990
- Access Bank – 1989
- SystemSpecs – 1992
- CWG Plc – 1991