Techniques Of Improving Community Banking Services In Nigeria

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Techniques Of Improving Community Banking Services In Nigeria


Community banks were established in Nigeria to help remedy the rural development problem that has been facing Nigeria since after World War II.

The fundamental concepts of a community bank is of a self sustaining financial institution, owned and managed by community or a group of communities for the purpose of providing credit deposit, banking and other financial services to its members.

The objectives of the research work therefore covered the pace of providing financial and banking services and other facilities to communities that were inadequately supplied with such services, the rapid enhancement of the development of productive activities in rural areas, the promotion of emergence of an effective integrated national financial system that responds to the need of the whole economy from individual and grassroots community level through level of local government areas and states to the national level.

The study also covered the problems encountered by these banks in carrying out their functions and then the recommendations of the possible solutions.

Chapter One


1.1 Background of the Study

The federal government of Nigeria in 1990 budget speech decided to establish community banks in order to strengthen its programmes of grassroots economic development.

The fundamental concept of a community bank is of a self-sustaining financial institution, owned and managed by a community or a group of communities for the purpose of providing credit, deposit banking and other services to its members largely on the basis of their self-recognition and credit worthiness. This is in contradiction to the near total reliance by the orthodox banks on viable and negotiable collaterals as the basis for giving credit.

It is designed to ensure that a community or group of communities may establish a community bank for the purpose of promoting rural development through the provision of finance and banking services, improving the economic status of small-scale producers both in the rural and urban areas, enhancing the rapid development of productive activities especially in the rural area to support desirable and sustainable rural economic growth in Nigeria.
A bank licensed under the community bank decree shall accept from persons various types of deposits including savings and time deposits. Receive or collect on behalf of its customers, money or proceeds of banking instruments, provide ancillary banking services to its customers, maintain and operate various types of accounts with other banks, and perform such none banking functions as may promote grassroots development within the banks geographical areas and also operate equipment leasing facilities designed to ensure access of its customers to form inputs purchase on a consignment basis for group of client.

Community banks in Nigeria banking system dates back to 1990 when budget speech was delivered by the president, commander in-chief of the armed forces, General Ibrahim Babangida. Since them each state of the federation now has a minimum of at least twenty (20) community banks. Even the federal capital Territory has four. These banks are in all part of the country.

National board for community banks is established for monitoring, promotion, development and general supervisions of the community banks. Hence the banks are under the control of national board for community banks (NBCB) and the Central Banks of Nigeria.

As we move into the 21st century, community banks all over the world realize that only those that overhaul the whole of their service delivery systems and operations are likely to survive and prosper in the new millennium. This is due to the pressure of globalization, consolidation, delegation and rapidly changing technology. In order to properly place themselves in favourable positions for competition and be one of the corporations to be reckoned within the new century, community banks are making use of information technology (IT). They have not only started ensuring that their PC per capital use is one for every staff, they have also started bringing PCS together to form local and wide area networks.

Many community banks have installed a modern computer inter-connectivity backbone that would enable them achieve community of data and multimedia over intranets, extranets, and with the whole world, over the Internet. They also realize that they have to achieve not only management/staff wide computer literacy, but what could e called information literacy, i.e. knowing how to locate, analyse, store and use information. All staff and managers in a modern community banks need to be able to search and gather data from several different types of sources, analyse them, select the relevant ones and organize them in such a manner to allow them to make decisions based on the organized data.

Community banks of the future realize that the banking of tomorrow requires more of electronic manipulation and shuffling of bits-based money and other banking transactions, instead of paper.

1.2 Statement of the Problems

The fact that the rural areas are under developed when compared to the urban areas in true and the fact that there are untapped material and financial resources in these rural communities is also true. The major problems therefore is how to harness these abundant resources for the development of the rural area through the improvement of banking services based on staff important bearing in mind that these resources are minutely held by the vast population of the rural dwellers.

The banking sector as the prime mover of the nations economic life is seen as the most viable sector to make this dream a reality. But then, given the Nigerian situation especially Enugu Metropolis with vast area of land and low income base, the task before the community bank are quite enormous with the problem of ignorance and illiteracy of the majority of people whom the banks are dealing with and also the problem of infrastructual facilities which includes good roads, water, electricity, office equipment and residential accommodation for the bank staff who work in these rural areas.

But perhaps the most delicate of these problems is the lack of banking habit among the rural dwellers who still use old traditional ways of savings mobilization like the daily savings method or the “ISUSU” of the social meetings. How can the bank make the rural dwellers less apprehensive of the bank and use the services provided by them to enhance their welfare?

Among the problems include:

  1. Effects of these bank in national economic development.
  2. Lack of modern equipment in the community bank.
  3. Poor level and quality of services provided by this Ohha community Bank.
  4. It is difficult to know the extent discrimination of services has gone in the banking service.
  5. The contribution to growth of small scale industries in Enugu Metropolis.
  6. It is also difficult to know the extent of alleviating the urban economic development problems.

1.3 Objective of the Study

The objectives of this study is to analyse the techniques of improving banking services in Ohha Community bank.

These objectives includes:-

  1. To find out the effect of community bank in the national economic developments.
  2. To ascertain the extent to which lack of modern equipment effects banking services.
  3. To find out the extent to which the poor quality of services effect Ohha community bank.
  4. To ascertain the extent to which discrimination effects banking services in Ohha Community bank
  5. To determine to what extent contribution of Ohha Community bank to small scale industries in Enugu Metropolis.
  6. To ascertain the extent to which these developments effect in urban economic development problems.

1.4 Scope of the Study

This research work was chosen with the intention to analyse the techniques of improving banking services but with particular reference to Ohha Community bank, Enugu. This is with the view to determining how the bank has been able to change the economic situation of the people around the area.

In the analysis, attention will be focused on the contribution of this bank to the growth of small scale industries. The study covers ascertaining from the bank all necessary information and requirement that will be of help in achieving customers satisfactions.

1.5 Research Questions

The following research questions have been designed for analysis:

  1. To what extent does the establishment of community banks in Nigeria especially the Ohha Community bank affect national economic development?
  2. To what extent does lack of modern equipment affects banking in Ohha Community bank?
  3. To what extent does poor services affect the banking services of Ohha Community bank?
  4. To what extent does discrimination of services affect Ohha Community bank?
  5. To what extent are contributions to growth of small scale industries in Enugu Metropolis?
  6. To what extent does these services affect the urban economic development problems?

1.6 Significance of the Study

This research work will be of immense help to the government especially the rural development authority as it will give them the opportunity to access their performance in rural banking development. It will also be of great value to the community banks to access their performance in the area of services to their customers and improve in the area of poor performance. Hence it will be beneficial to the generality of the public. It will also be of great importance to people carrying out research in related topics.

To the economy at large, this study is of great value since rural economic development involves providing these social amenities in the urban areas to the rural areas. This will e some extent restrict the usual movement of rural dwellers to urban areas.

The movement restriction will lead to massive agricultural and industrial production, the promotion of rural financial and banking services and the promotion of emergence of an effective and integrated national financial system that responds to the need of the whole economy.

1.7 Definition of Terms


The bills of Exchange Act of 1882 defined a banker as a body of persons whether incorporated or not, who carry on the business of banking and having duly made a return to the commissioner of inland revenue, and also any savings bank certified under the Acts relating to savings bank and also any post office savings bank.

Community Banks

A community bank is a financial institution established to cater to the saving and credit needs of small scale producers throughout the country.

Bank Services

Bank service is a professional service, professional service marketing involves all organized activities and programme by professional services designed to retain present customers and attract new ones by sensing, serving and satisfying their needs through the delivery of appropriate service on a paid basis in a manner consistent with creditable professional goals and norms.


This is a manner of artistic execution, the part of artistic work that is reducible to formula, mechanical skill in art or the doctrine of the arts.

Chapter Five

Summary of Findings, Conclusions, Recommendation and Suggestions for Further Study

To bring this work to a logical conclusion, it is necessary to consolidate the novel discoveries made through the research procedures employed. These discoveries are basically around and within the spectrum of this work.

5.1 Discussion of Results

The first research question in these work was on the qualities of services rendered by Ohha Community Bank. In search for this, it was found that the qualities of services rendered by the bank were poor.

The second question was on the average time the customers spend before receiving service. From the information gathered from respondents, it was learnt that a customer spent 11/2 hours or more.

These can be said to be the chief research question, which is on the techniques of improving banking services in Nigeria. In search of this many information were gathered and all were pointing that the average time spent affect the services of this bank.

Another question was asked on whether there is discrimination in service of Ohha community bank. In this case, many instances were given by the respondents to prove their response.

In this case, suggestions have been made to stop this discriminatory service to customers. Some of the suggestions made by respondents were mainly in findings way to stop this discrimination by offering services to customer on the basis of first come, first serve. And by using computer instead of paper work in their services.

The last question was on how improvement on customer service helps in attaining corporate objective, respondents said that this can be attained through improvement on services of customer.

5.2 Conclusion

In the foregoing sections of this research, the problem and prospects of rural banking scheme have been examined. It is clear that most banks concentrate their offices in urban centers, which naturally have better infrastructural facilities, industries, commercial houses, recreational facilities and other amenities. Al these enhance profitability, an important objective of commercial banking.

In fact, it is because of the low profit potential of rural based bank branches that some banks refused to establish to total number of branches allotted to them by the central bank of Nigeria. By 1990, seven branches were yet to be established under the third phase whose official deadline was 1989 (CBN, 1990). It was precisely due to the failure of some of the commercial banks to co-operate and complete their branch allocations that the federal military government decided to shelve its earlier plan to extend the (RBP) rural bank planning to the fourth phase (Babangida, 1991).

Despite the unco-operative attitude of some banks and a host of other problems highlighted earlier in this research, there is no doubt that the practice of rural banking has come to stay in Nigeria. For one thing, (RBP) rural bank planning has fostered increased branch network all over the country.

5.3 Implication of the Research Results

The finding of this have some educational implications. This research work will be of immense help to the government especially the rural development authority as it with give them the opportunity to access their performance in banking development.

It will be of great value to the community to access their performance in the area of services to their customers.

The important of this study is that, it promote banking services and integrated national financial system that responds to the need of the whole economy.

5.4 Recommendation

  1. The federal military government should endeavour to set up at least a branch of PBN in all local government areas. This will further consolidate and complement the achievements already made in areas where the (PBN) is currently operating.
  2. The federal, state and local governments should offer commensurate financial grants to rural communities that have already set up community banks. Such as strategy will motivate other communities to establish their own and thereby foster national development.
  3. Government should use appropriate public enlightenment outfit to educate the rural people on the advantages of using bank services. Banker could improve their public image and therefore local patronage by being courteous to customers and by communicating with them in such a language as can be understood by them.
  4. The staffing policy of the banks should be reviewed so that willing individuals who are committed to the job and are ready to identify with the local concepts are posted to rural branches while frequent transfers of local staff should be discouraged.
  5. Banks should adopted aggressive marketing approach that could improve their deposit standing in rural areas. As a matter of urgency, government should encourage rural farmers to form co-operative societies. These societies should be made to benefit from rural branches credit facilities amongst others.
  6. Government and variable private agencies should help to rescue the rural farmers from the vagaries of commodity prices (especially the perishables, such as tomatoes, oranges, grains and vegetables) by establishing storage facilities for farm products. This will inevitably improve and regularize farm income throughout the year. Also vigorous attempts should be made to promote agricultural insurance schemes to cover adequately the different sub sectors of agriculture as well as the big and small farm enterprise.

Finally, banks should perceive themselves not merely as reapers of monetary profit but as effective partners in the rural development effort. Hence they should meet their social responsibilities of operating in the rural areas by complementing government and community development efforts in the construction of roads, water projects and other infrastructures needed in their areas of operation.

5.5 Suggestion for Further Research

Following the result of this study, suggestions for further research were given:

  1. Strategies for alleviating discrimination in banking services. (A case study of Ogui Urban Community Bank).
  2. Computer services as a techniques of improving banking service to the customer. (A case study of Ohha community bank).

5.6 Limitation of the Study

In the process of caring out the study, the researcher encountered some problems, which limited her ability to come out with a comprehensive report. Some of those limitations include time constraints, finance, unavailability of needed data and the biased attitude of the respondents whom the researcher interviewed.

The time lag between the approval of the research topic and the submission was virtually short to carry out a comprehensive research. Also due to economic hardship in the country, the researcher could not travel to far distances for collection of data.

Lack of availability of statistical data also posed its own problem. Even when the data are available, they are sometimes related to outdated information.

These limitations not withstanding, the researcher still came up with a well articulated study that will add to the stock of solutions to the poor banking services in Nigeria.

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