CASE STUDIES FROM AFRICA

Table 18: Banking Sector’s Contribution to GDP
Year Amount Contributed (N million) Percentage of GDP
1980 548.3 1.74
1985 3,171.7 1.58
1986 3,859.8 1.87
1990 11,260.0 4.21
1995 13,567.8 4.82
2000 16,601.8 5.04
2001 17,348.8 4.86
2005 21,430.3 3.81
2010 26,495.5 3.41
2012 28,537.6 3.21
Source: CBN Statistical Bulletin, 2011.
Given the intermediation role that banks are expected to play in the country, the credit
allocation of deposit money banks (an indicator of financial deepening) is used as another
measure of their contribution to the GDP. The contribution of banking services’ output to
the GDP can be regarded as low if we take into consideration the myriad of policies that
have been implemented in the banking sector. It increased from 12.56% in 1980 to 12.62% in
2005, and recorded the highest value of 36.71% in 2009 (Table 19). Perhaps as a result of the
contagion of the global financial crisis, the percentage contribution fell to 29.89 and 28.39 in
2010 and 2011 respectively.
Table 19: Bank Credit as a Percentage of GDP
Year Credit to Private Sector (N million)
GDP at Current Basic Prices (N
million)
CPS/GDP (%)
1980 6234.225 49632.320 12.560
1985 13070.342 67908.550 19.250
1990 33547.700 267549.990 12.540
1995 180004.760 1933211.550 9.311
2000 530373.300 4582127.290 11.570
2005 1838389.900 14572239.120 12.620
2006 2290617.800 18564594.730 12.340
2007 3668657.800 20657317.670 17.760
2008 6920498.800 24296329.290 28.480
2009 9102049.100 24794238.660 36.710
2010 10157021.000 33984754.130 29.890
2011 10660072.000 37543654.700 28.390
Source: CBN Statistical Bulletins.
Contribution of Banking Services to Company Profit Tax Revenue
Table 20 indicates that Nigerian banks contribute substantially to government tax revenues.
Though the tax revenues are huge in monetary terms, especially when stated in terms of the
amounts paid by individual banks, they nevertheless constitute a small proportion of total
government revenue from company profit taxes. In 2012, the total tax collected from banks
by the government was about 7% of all company profit tax in the country. One of the case
study banks in this study paid about 2%, which is the highest proportion relative to what
was paid to government by 17 banks. It is surprising that UBA, which has more Africa-wide
network and branches, paid only about 0.06% of taxes, whilst Ecobank paid 0.3%.
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