In an attempt to correct economic shortfalls, authorities in Nigeria deployed
consolidation as the main policy instrument in the 2004-2006 reform of the
banking industry. The Central Bank of Nigeria drew lessons from similar
challenges faced by Malaysian and Indonesian authorities. Nigerian banks
were given an 18 month window, to achieve an increased minimum capital
base of N25 billion. To survive, banks could either raise the new
requirements on their own or engage in mergers or acquisitions. The process
of consolidation resulted in the reduction of banks from 89 to 24 and the
emergence of three categories of banks namely: Stand alone, Common
ownership, and Common interest banks.
Primarily, this study examines change management practices of senior bank
managers directly involved in implementing consolidation in Nigeria, and the
impact of consolidation on credit availability to the private sector. Aggregate
secondary data on the Nigerian banking industry from 2001-2009 were
analysed and used to inform in-depth semi-structured interviews with
thirteen senior bank managers and a respected independent financial
analyst. Mixed methods were used to conduct further analysis. A conceptual
framework was developed through an extension of Pettigrew’s 1988 model,
while a modified Berger et al. 1998 model was deployed to test credit
availability. Findings indicate that most aspects of organisational change
were successful, but a lot more needs to be done to improve cultural
integration and employee motivation. The successes achieved by Nigerian
banks, resulted in higher levels of credit being made available to the private
sector. There is, however, scope for further improvement to be made. For
example, senior bank managers should deploy a more holistic approach to
planned change, and there should be an improved collaborative approach
between the government and private sector which could help enhance
alternative credit delivery channels such as micro finance firms, venture
capitalists and business angels.Robert Gordon University and Aberdeen Business School Overseas Research Students Awards Scheme