Turning Inward? Or Fighting the Crisis with Further Opening? Evidence from the Nigerian Banking System

The unprecedented global economic crises which have afflicted the whole world over the past two years have their origins in the advanced industrial economies of the West. While African countries bear no responsibility for this crisis, they are suffering its worst effects.

They have been hit with falling prices, especially those countries that trade in a few commodity exports, and reduced capital flows as foreign investors exit these markets to shore up their losses at home and the level of remittances fall as Africans who work abroad and send money home lose their jobs. Real GDP growth is now projected by the IMF to drop below 2 percent in 2009, down from an average of over 6 percent for the last few years. In light of the global crisis, the fear has been that African governments would introduce more protectionist policies as a response.

According to Moss (2009), with the major western powers facing their own economic crisis, confidence in the capitalist system is likely to come under pressure and there is a risk that momentum for reform may stall; and it would be a shame if governments gave in to the temptation to return to a command economy or use the crisis as a cover to re-nationalize companies or interject the state into the market in ways that has proved so harmful in the past. This fear may be unfounded. Interestingly, a number of African governments seem to be doing just the opposite and are introducing commerce-liberalizing measures, as can be seen from data on the Global Trade Alert website. One example of this is the proposed policy by the Governor of the Central Bank of Nigeria.

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