Abstract
This research project aims to examine the impact of the Bank Verification Number (BVN) system in reducing corruption within the Nigerian banking sector. The BVN, introduced in 2014, is a unique identification code assigned to all bank account holders. The objective of this study is to assess the effectiveness of the BVN in detecting and preventing fraudulent financial activities, explore the perception of Nigerians regarding its impact on reducing corruption, and identify the challenges and opportunities associated with its implementation. The methodology involves a mixed-methods approach, including analysis of secondary data from relevant agencies, primary data collection through interviews and surveys, and data analysis using both qualitative and quantitative techniques. The expected findings will provide valuable insights into the effectiveness of the BVN system in combating corruption in Nigeria's banking Sector.
TABLE
OF CONTENT
Title
Page…………………………………………………………………….. …i
Approval
Page……………………………………………………………….…ii
Declaration……………………………………………………………………iii
Certification ……………………………………………………………….. …iv
Dedication……………………………………………………………………….v
Acknowledgement …………………………………………………………….vi
Table of Content………………………………………………………………vii
Abstract……………………………………………………………………….x
CHAPTER
ONE
1.0.
Introduction…………………………….………………………………..1
1.1 Background of the
study………………..……………………………….3
1.2 Statement of the
problem………………..………………………………4
1.3 Objective of the
study…………………..……………………………….5
1.4 Research questions……………………………………………………….6
1.5 Significance of the
study………………………………………………..6
1.6 Scope & Limitation of the
study……………………………………….6
1.7 Historical Background of the Study
Area……………………………..7
1.8 Definition of the key
terms…………………………………………….10
1.9 Organization
of the thesis……………..………………………………….10
CHAPTER
TWO
LITERATURE
REVIEW
2.1 Conceptual framework………………………………………………..11
2.1.1
BVN……………………………………………………………………..13
2.1.2 CBN
implements BVN identification system for customers…………14
2.1.3
Corruption………………………………………………………………..15
2.1.4 Financial transparency…………………………………………………15
2.2 Theoretical
frameworks……………………………………………………15
2.2.1
Institutional theory…………………………………………………….15
2.2.2 Technology
acceptance model (TAM)…………………………………15
2.3 Empirical
review…………………………………………………………16
2.3.1 Impact of
BVN on reducing corruption………………………………16
2.3.2 Perceptions
and challenges of BVN implementation………………….16
2.3.3 Roles of
regulations bodies and Anti-corruption Agencies………..…16
2.4 Synthesis
…………………………………………………………………17
2.5 Summary of the
Literature Review………………………………………17
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 Research
Design………………………………………………………19
3.2
Population of the Study……………………………………………..19
3.3 Sample
Size………………………………………………………….19
3.4 Sampling Technique…………………………………………………20
3.5
Method of Data Collection…………………………………………20
3.6 Method of Data Analysis………………………………………..…20
CHAPTER
FOUR
DATA
PRESENTATION AND ANALYSIS
4.0 Introduction…………………………………………………………….21
4.1 Data Presentation and Analysis
……………………………………….21
4.2 Demographic Data of the
Respondents……………………………….22
4.3 Responses, Presentation and
Analysis………………………………..25
CHAPTER
FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATION
5.1 Summary………………………………………………………………..29
5.2 Conclusion…………………………...………………………………….29
5.3 Recommendation………………………………………………………..29
References……………………………………………………………..32
Appendix………………………………………………………………35
Chapter One
1.0 Introduction
Corruption remains a pervasive challenge in Nigeria,
affecting every aspect of the nation's socio-economic and political landscape.
It erodes public trust, hampers economic development, and undermines social
justice. A crucial step taken by the Nigerian government to combat corruption
within the financial sector was the introduction of the Bank Verification
Number (BVN) system. The BVN, launched in 2014, was designed to enhance
transparency, reduce fraudulent activities, and promote accountability within
the financial industry.
The BVN system assigns a unique identification number
to every bank customer in Nigeria, facilitating the linkage of an individual's
identity to all their bank accounts. This system was introduced to address
issues such as money laundering, identity theft, and financial fraud, which are
common mechanisms for corruption in the country. However, the effectiveness of
the BVN system in achieving these goals and its broader impact on reducing
corruption in Nigeria remains a subject of inquiry. With the increasing
incidents of compromise on the conventional security system (password and pin),
there is a high demand for greater security on access to sensitive or personal
information in the banking system (Emefiele, 2015).The high rate at which
fraudulent activities are going on in Nigeria made the Federal Government (FG)
and the Central Bank
of Nigeria (CBN)
stand on their
toes i n other
to resolve the
issue of frauds
and to boost financial security in
the Nigeria Banking
Industry. Because of
this, theCentral Bank
of Nigeria on
February14, 2014 made it compulsory that all account holders should have
a Bank Verification Number (BVN) to
enable the account holder to have a single identity in all the banks in
Nigeria. Multiple account holders would
be covered with a single registration in any of the banks where they have
accounts; all he or she needs to do is
to link it with his or her accounts.
The essence of this system is to help the bank in the
protection of their customers from theft and other financial/economic crimes
growing in the financial system (Vanguard Newspaper, 2015). The Bank
Verification Number (BVN) is a great step taken by the Central Bank of Nigeria
(CBN) to strengthen the financial security and order in the banking sector of
Nigeria. One of the importance
of the BVN
is that transactions
will be safer
once all protocols are duly
observed. More also, the essence of this BVN exercise is to ensure that bank
transactions are safer and fraudulent transactions are minimized, if not
eliminated (Nweze, 2015).
The Nigeria society is bedeviled with so many corrupt
practices which have eaten deep into all fabrics in Nigeria as
a result of
the diversion of
funds and money laundering.
To address this corruption,
the Administration of
President Muhammadu Buhari Implemented Treasury Single Account(TSA) in
2015 and BVN in 2014 schemes with the aim of not only combating corruption
in Nigeria but also eradicate it. It is
therefore uncertain whether the
implementation of BVN
has helped to
prevent corrupt business
practices in the
United Bank for
Africa branches in Abuja or not despite government effort.
The objective of this study is to examine the impact
of Bank Verification Number (BVN) in combating corrupt business practices in
the United Bank for Africa and Access Bank Plc in Dutse. The specific
objectives are to: determine the impact of BVN on the prevention of Diversion
of funds in the United Bank for Africa in Dutse and determine the impact of BVN
on combating money laundering in the United Bank for Africa in Abuja.
From past works of literature, Odusina and Fowosire
(2014); Wisdom, (2015); Ehi (2015);
Odusina and Fowosire (2017); Nangih and
Davies (2017); Oluwalami (2018) and Olijo (2018) studied the variables but none
of this study used United Bank for Africa branches in Abuja. Also, none of the
studies reviewed and used in this study analyzed data using pre and post method
of data analysis to discover the impact of the variables.
This study is
restricted to the
impact of Bank
Verification Number (BVN)
in Combating Corrupt
Business Practices in the United Bank for Africa in Abuja. It focuses on the periods before
the introduction of BVN (2000-2014) and
a period before the introduction of BVN (2014 to 2017).The justification for
choosing the period that BVN was not
introduced in Nigeria
from 2000 to
2014 and it
was only introduced
in Nigeria by
President Goodluck led administration and
the full implementation of
BVN and its
compliance by the
Buhari led administration came to effect in the
period(Vanguard Newspaper, 2015).
1.1 Background of the Study
The rate at which fraudulent activities going on in
the country these days is becoming unbearable; the federal government of
Nigeria and the Central Bank of Nigeria have being on their toes to resolve the
issue of frauds and to boost a financial security in most of Nigerians banking
industry; because of all these issues, the central bank of Nigeria on February,
2014 made it compulsory that all account holders should have a bank
verification number so as to enable account holder to have a single account
identity in all banks in Nigeria; All he or she need to do is to link it with
his or her accounts. The essence of this system is to help the bank in the
protection of their customers from theft and other financial/economic crimes
growing in the banking industry (Orji, 2014).
The bank verification number (BVN) is a great step
taken by central bank of Nigeria, to strengthen financial security and order in
the banking sector in Nigeria. One of the importance of the BVN is that transactions will safer once all
protocols is duly observed. The essence of this BVN exercise is to ensure bank
transactions are safer and fraudulent transactions are minimized, if not
totally eliminated. The central bank of Nigeria have put in a lot of efforts to
see the success of this exercise, but the general public do not know the
importance of bank verification number; but they started seeing the importance
of bank verification number when the central bank of Nigeria made it clear that
the exercise will stop by October 2015.
The bank verification number system uses biometric
technology to register customers in the banking sector. It records these
physical features which are unique to individual’s fingerprints and the faces;
this technique was made very effective because every individual has his/her own
unique fingerprints. The record would be used to identify the person
afterwards. Once a person biometric have been recorded and BVN issued the
account would be accessed through BVN. The major objectives of the initiative
are to protect bank customers, reduce fraud and strengthen the Nigeria banking
system. Biometric enrollment is helpful to people who cannot read or write.
Their fingerprints and face would serve the same purpose as signatures.
1.2
Statement of the Problem
Corruption in Nigeria has been a deeply rooted issue,
permeating various sectors of society. It has resulted in the misallocation of
resources, hindered economic growth, and damaged the reputation of the nation
on the global stage. While the BVN system was introduced as a countermeasure to
reduce corruption within the financial sector, there is a need to
comprehensively assess its impact. This research project aims to address the
following critical questions:
i. To what extent has the BVN system succeeded in
reducing fraudulent activities and corruption within the Nigerian financial
sector?
ii. What are the perceptions and experiences of
Nigerian citizens and financial institutions regarding the BVN system, and how
do these perceptions influence its effectiveness?
iii. What are the challenges and limitations faced in
the implementation of the BVN system, and how can they be addressed to enhance
its impact on reducing corruption?
1.3
Objectives of the Study
This research project is guided by the following
primary objectives:
i.
To evaluate the effectiveness of the BVN
system in reducing corruption within the Nigerian financial sector.
ii.
To assess the extent to which the BVN
system has increased financial transparency and accountability among
individuals and organizations in Nigeria.
iii.
To analyze the perceptions, challenges,
and benefits associated with the BVN system among Nigerian citizens and
financial institutions.
1.4
Research Questions
i. What are the effects of BVN on the level of financial crimes in
Nigeria?
ii. What is the impact of BVN system on the financial system in the
Nigeria banks?
iii. What are the roles of Central Banks of Nigeria in
the implementation of the BVN?
1.5
Significance of the Study
The findings of this research hold significant
implications for various stakeholders in Nigeria. It can benefit policymakers,
financial institutions, regulatory bodies, and anti-corruption agencies by
providing empirical insights into the BVN system's effectiveness in reducing
corruption. Furthermore, it can guide improvements in the system and related
policies to enhance financial transparency and accountability. For scholars and
researchers, this study contributes to the existing body of knowledge on the
use of technology to combat corruption in developing countries.
1.6
Scope of the Study
This research focuses on the impact of the Bank
Verification Number (BVN) system specifically within the Nigerian financial
sector. The study encompasses both qualitative and quantitative assessments,
including surveys, interviews, and data analysis. It is essential to note that
the scope of the BVN system's influence on corruption in other sectors of
Nigerian society may be considered in subsequent research.
1.7
Historical Background of the Study
Jigawa state is one of the thirty six states that
constitute federal republic of Nigeria. It is situated in north-western part of
the country between latitudes 11:000N to 13:000N and longitudes 8: 000N to:
10:150E. Kano state and Katsina state border Jigawa to the west, Bauchi state
to the east and Yobe state to the northeast. To the north, Jigawa shares
international border with zinder region in the republic of Niger, which is a
unique opportunity for cross-border trading activities.
The state has to total land area of approximately
22,410 square kilometers. Its topography is generally characterized by
undulating land, with sand dunes of various sizes spanning several kilometer in
parts of the state. The southern part of Jigawa comprises the basement complex
while the northeast is made up of sedimentary rocks of the chad formation. The
main rivers are: Hadejia – Kafin Hausa Rivers traverses the state from west to
east through the Hadejia – Nguru wetland and into the Lake Chad Basin.
Most part of the state lie within the Sudan savanna with
element of Guinea Savannah in the southern part. Total forest cover in the
state is very much below national average of 14.5% due to both natural and
human factors, forest cover is being depleted, making northern part of the
state highly vulnerable to desert encroachment. The state enjoys vast fertile
arable land to which almost all tropical crops could adapt, thus constituting
one of its highly prized natural resources. The Sudan savannah vegetation’s is
also made up of vast grazing lands suitable for livestock production. The
socio-cultural situation of Jigawa state could be described as homogenous. It
is mostly populated by Hausa/Fulani, who could be found in all parts of the
state.
Kanuri are largely found in Hadejia emirate, with some
traces of Badawa mainly in its north eastern parts. Even though each of the
three dominant tribes have continues to maintain its ethnic identity, Islam and
a long history of inter-marriage have continued to bind them together.
About 3.6 million people inhabit Jigawa State. Life
expectancy as at 2001 was about 52 years with a total fertility rate of about
6.2 children per woman of child bearing age (a little above the national
average) although population of the state is predominantly rural (90%), the
distribution in terms of sex is utmost equal between male (50.8% and female
(49.2%). This pattern of population distribution is the same across various
constituencies in the state and between urban and rural areas.
In term of age distribution, the 2002 survey indicates
that 45.2% of the population was made up of young people below the age of 15;
490% between the ages of 15 and 59 while 5.2% were people aged 60 and above.
This survey reveals a dependency ration of almost one, meaning that there is
almost one dependent to every economically active person in the population.
Average household size was about 6.7 almost all of
which were headed by males. About 60% of household heads were self-employed
with agriculture as their main occupation, and nearly two-thirds of these
household were monogamous families. The overall literacy rate was about 73% in
2002 (22% for women and 51% for men). School enrolment ratio is fairly high
with very good improvements in the last few years, even though there is still
clear disparity between boys and girls. Basic indicators for water supply
factors shows that access to portable water is over 90% which is among the
highest in (the country. The survey however, indicated that while access to
high quality safe drinking water (pipe-born, hand pump, boreholes and protected
wells) is low it about 63%, nearly two-thirds of house hold have good means of
sanitation.
In term of health service, about two fifths of the
populations have access to medical services which is obvious in rural areas
where access was found to be 55%. The survey found that an average of 70% of
those who consulted health facility expressed satisfaction with the service
provided. Jigawa state created out of the old Kano state in August 1991 is one
of the 36 states, in federal republic of Nigeria; the state comprises 27 local
governments which are divided into 30 state constituencies, group into 11
federal constituencies and 3 senatorial districts. The state legislature has 30
elected members each representative one of the constituencies, to complete the
state government structure; there is an independent state judiciary as the
third arm of government.
Jigawa state has 27 local government areas namely:
Auyo, Babura, Birnin-kudu, Birniwa, Buji, Dutse, Gagarawa, Gwaram, Gwiwa,
Gumel, Kaugama, Kafin hausa, Garki,
Guri, Hadejia, Ringim, Kiri-Kasamma, Taura, Jahun, Malam Madori, Miga,
Sule-tankarkar, Roni, Kazaure, Kiyawa, Maigatari and Yankwashi.
The economy of jigawa state is largely characterized
by informal sector activities with agriculture as the major economic activity.
Over 80% of the population is agric goods livestock and other consumer goods.
Other informal activities includes: Blocksmithing, leather-works, tailoring
services, auto repairs, metal works, carpentary, tanning, dying, food processing,
masonry, etc. even though modern industrial sector is yet to gain a solid
footing, the seed for their development was planted through establishment of
small scale industries particularly in areas of food processing and other
agro-allied activities. Those industries have been helped by the information
communication technology program initiated by Saminu Turaki former governor.
1.8
Definition of the Key Terms
·
Bank
Verification Number (BVN)
The Bank Verification Number commonly called BVN is a biometric
identification system implemented by the Central Bank of Nigeria to curb or
reduce illegal banking transactions in Nigeria. It is a modern security measure
in line with the Central Bank of Nigeria Act 1958 to reduce fraud in the
banking system.
·
Corruption
Corruption is a form of dishonesty or a criminal
offense which is undertaken by a person or an organization which is entrusted
in a position of authority, in order to acquire illicit benefits or abuse power
for one's personal gain.
1.9
Organization of the Thesis
This research project is structured into five
chapters. Chapter One provides an introduction to the study, outlining the
background, statement of the problem, objectives, significance, scope, and the
organization of the thesis. Chapter Two reviews relevant literature on
corruption in Nigeria and the BVN system. Chapter Three presents the research
methodology, while Chapter Four reports the research findings. Chapter Five
concludes the study and provides recommendations based on the research
outcomes. This is Chapter One of the project. If you need more information or
further assistance, please let me know.
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