All the African nations implementing "Structural Adjustment Programs" (SAP) have seen a rapid increase in the number of new banks. At the end of 1983, Nigeria had 32 approved commercial banks of which 25 were functioning with a national network of 11,001 branches, there were 10 merchant banks and 22 development banks, including savings banks.5 By 1992, about six years after Nigeria has started implementing SAP, commercial and merchant banks had increased to 120, there were 500 finance houses, over 200 stock-brokers and brokerage houses, about 156 community banks, a people's bank with over 210 branches, and 85 savings banks. Similar increases in the number of financial institutions were experienced in Ghana, Zambia and Tanzania.
Monetizing African economies by the mere establishment of banks only increases speculation and discourages production and development. The effect of increased speculation is to increase the value of the inflation index and reduce the purchasing power of the local currency. It comes as no surprise that African nations implementing SAP have been experiencing hyper-inflation, high interest rates due to speculators' high demand for money, low productivity and increasing general economic distress.
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