Public Administration

An Appraisal of the Impact of Government Reforms Policies on Financial Institutions in the Economic Development of Nigeria

An Appraisal of the Impact of Government Reforms Policies on Financial Institutions in the Economic Development of Nigeria




Over the years, Nigeria’s economy has witnessed a lot of dynamic changes in its economic policies to attain macroeconomic stability. Each administration has come up with different economic policies that are believed to be suitable for the economic environment of that particular period. It has been observed with keen interest over the years that some of these economic policies are not realistic in a depressed and battered economy as what is obtained in Nigeria. It could be formulated and analyzed in a theoretical framework but not in practice because of the implementation processes or lack of it. More so, some of these policies were not fully implemented. In some cases, the federal government and the authority involved in the formulation and implementation of these policies did not adhere to the laid down rules and regulations while implementing these policies. And this inefficiency on the part of the administrators provides a major reason why these sound economic policies designed to solve our macroeconomic problems have continuously failed to yield the desired results.

In this research, it is not only the formulation and implementation of these policies that matters but also the impacts and implications of these policies on financial institutions in Nigeria. Here, the changes and modifications in these policies and how they affect managerial decisions of these financial institutions to achieve their aims and objectives and also to achieve a general economic development of the country would be looked into. Also, the impact of these government economic policies on project financing, production, capacity utilization, sales, and revenue of the institutions would be examined. Most financial institutions find it difficult to make long-run projections into their activities in the future. This is because of the changes in government economic policies. Although in any serious economy, the government must make some changes in its economic policies, there must be some elements of consistency in these policies which are best determined by the prevailing economic situations in such a country.

All these policies were formulated and implemented to increase employment opportunities, reduce inflation, increase capacity utilization, price stability, and the general economic well-being of the citizens. But in most cases, the reverse is the case in Nigeria.

Most financial institutions (especially banks) were completely closed down due to a harsh economic climate which must have been a result of a lack of adequate capital to remain in business.


The Nigerian Monetary Authority (Central bank) in conjunction with the federal government and its executive arm, has made it difficult for an average investor to understand the fundamental government macroeconomic policies. This is due to the dynamic changes and the inconsistency observed every year in government economic policies (both monetary and fiscal policies) which in most cases, are included in the year’s budget.

Governments at various levels (federal, state, and local governments) are often being criticized for their failure in adhering to long-term economic policies with little adjustments to suit the changing economic climate. And this inconsistency in government economic policies has made it difficult if not almost impossible, for private and public sectors alike to make a long-run projection into their organizations’ activities or operations in the future with utmost certainty.


The aims and objectives of this study are as follows:

1. To trace the development of government policies over the years and the survival or sustainability of these policies.

2. To examine the implementation of these policies or lack of it and what could be done to ensure full implementation of subsequent policies.

3. To identify the impacts of these government policies on financial institutions in the general economic development of the country.

4. To identify the financial institutions mostly affected or touched by the government reforms policies particularly banks and small and medium scale enterprises.

5. To suggest ways of making sure that subsequent policies help in the attainment of government goals and objectives in developing the country’s economy.


There has been little work or inadequate research carried out on this particular study in recent times. This study will be useful to all staff and students of Kaduna Polytechnic and also to those in other institutions of higher learning across the country, who will eventually go into private business or find themselves working in or heading financial institutions. It will also be useful to business managers and those who have a particular interest in the study. This study will serve as a guide to further research.


This study covers majorly, the government’s macro-economic policies (monetary and fiscal) and the various measures employed in implementing these policies towards the economic development of the country. It looks into the various macro-economic policies of the government and the impacts of these policies on financial institutions.

However, the study was conducted not without some limitations. The limitations of the study include the following:

1. Some problems were encountered in trying to get relevant materials that could help in carrying out the research. Where available some were exhaustive or inadequate.

2. Also, the time to carry out this research was also limited. This was due to the several academic activities like lectures, tests, and preparations for the examination.

3. Another constraint is distance. The place of the study was situated far away from the school which meant that so much was needed in terms of transport fares to get to the place of the study.

4. Also, some problems were encountered in getting data and information from financial institutions especially banks. This was because they maintained a high level of secrecy making it difficult for them to release some of their documents for this study.


Macro-economic policies: These are those policies designed to accelerate the pace of economic recovery of a depressed economy.

Monetary Policies: These are the combination of measures designed to control the stock of money in pursuit of specified economic objectives. Specifically, they are applied to regulate the availability, and reduction of credit, which is called “discretionary control of money supply and credit which is made at the instance of a central monetary authority e.g. the central bank.

Fiscal Policies: These refer to the use of government expenditures and taxes to control the level of economic activities.

Central Bank: This is the government bank. Its main task is to effectively assist the government in carrying out monetary and fiscal policies.

Financial institutions: These are establishments that issue financial obligations (such as demand deposits) to acquire funds from the public. They are divided into:

i. Bank financial institutions, e.g. commercial, development and Merchant banks; and

ii. Non-bank financial institutions; e.g. insurance companies, savings and loans associations, pension funds, discount houses, etc.

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