Question

Difficulty: Very hardMerchant, Development, and Specialized Banks

Match each Nigerian specialized development financial institution listed on the left with its primary operational mandate and economic objective on the right.

  • Bank of Industry (BOI)Providing long-term finance, debt restructuring, and equity participation to medium and large-scale industrial and manufacturing enterprises.
  • Nigerian Export-Import Bank (NEXIM)Granting export credit guarantees, buyer's credit, and trade risk insurance to promote non-oil foreign trade diversification.
  • Federal Mortgage Bank of Nigeria (FMBN)Mobilizing long-term funds through the National Housing Fund scheme to provide affordable residential mortgage financing.
  • Bank of Agriculture (BOA)Delivering micro-credit, micro-insurance, and concessionary agricultural development loans directly to primary producers and rural agribusinesses.

Answer

The Bank of Industry matches with providing long-term industrial and manufacturing finance; the Nigerian Export-Import Bank matches with granting trade risk insurance and export credit to promote non-oil exports; the Federal Mortgage Bank of Nigeria matches with mobilizing housing funds for long-term residential mortgages; and the Bank of Agriculture matches with providing concessionary loans and micro-credit to primary agricultural producers.
Each specialized bank operates under a distinct legal mandate designed to address market failures in long-term credit provision: the Bank of Industry supports industrial manufacturing; NEXIM facilitates non-oil export trade and risk management; the Federal Mortgage Bank of Nigeria administers national housing mortgage funds; and the Bank of Agriculture provides direct agricultural credit to rural producers.

Step-by-Step Solution

1
Analyze the core mandate of the Bank of Industry (BOI).
BOI targets real-sector industrial growth, offering long-term loans and equity for manufacturing.
Development banking requires distinguishing sector-specific mandates from general commercial deposit-taking.
2
Analyze the core mandate of the Nigerian Export-Import Bank (NEXIM).
NEXIM addresses international trade market failures by providing export credit guarantees and risk insurance strictly for non-oil trade.
Specialized export credit agencies reduce foreign trade risks for domestic exporters.
3
Analyze the mandate of the Federal Mortgage Bank of Nigeria (FMBN).
FMBN operates as a specialized mortgage institution administering the National Housing Fund (NHF).
Mortgage banks bridge long-term funding gaps for housing capital formation.
4
Analyze the mandate of the Bank of Agriculture (BOA).
BOA provides microcredit and targeted agricultural financing to rural farmers and agribusinesses.
Development institutions lower borrowing costs for high-risk economic sectors like agriculture.

Key Concept

Operational mandates of specialized and development banks in Nigeria
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