CNN's Marketplace Africa offers viewers a unique window into African business on and off the continent. This week the show interviews leading Nigerian banker Tony Elumelu, the former chief executive of the United Bank for Africa.
Watch the show on Wednesdays 1845, Fridays 0045, Saturdays 0715, Sundays 0615 (all times GMT).
Dar Es Salaam, Tanzania (CNN) -- One year after suffering a similar crisis as Wall Street did in 2008, Nigeria's banking system has significantly improved, according to one market expert.
"If I were an investor looking to invest in Nigeria today or a customer wanted to be in Nigeria, I'd be a lot more confident and comfortable to do business in the country," Tony Elumelu, the former chief executive the United Bank for Africa (UBA), told CNN.
In 2006, Nigeria's banks were rated as some of the fastest growing institutions in the world, boosted by consolidation efforts and changes to banking laws.
But the bubble they were living in burst in the months after the financial crisis when Nigeria's Central Bank discovered "huge amounts" of bad loans that had not been disclosed.
Five major banks in the country were in financial jeopardy as the stock market lost about 70 percent of its value from the peak after the crisis and oil prices plunged from around $170 a barrel to under $40 a barrel, according to officials
The unfolding financial turmoil prompted the country's Central Bank to step in in a bid to protect investors and the country's economy. In August 2009, it pumped in £2.5 billion into the ailing banks and removed their managing directors, vowing to hold bank officers to high professional and ethical standards.
But now, banking in Nigeria is again safe, according to Elumelu. "Today, risk management practices are being embraced by all Nigerian banks a lot more than they did before," he told CNN.
Elumelu, who was voted African Business Leader of the Year in 2006 by UK-based magazine Africa Investor, spoke to Marketplace Africa about the rise of Nigeria's banks, the country's relationship with South Africa and the potential benefits for businesses operating in a continent dominated by young people.
CNN: Why would you say that Nigerian banks have expanded so rapidly, from relative obscurity on the global stage to really significant players?
Tony Elumelu: It's a combination of factors; First, Nigerian banks are quite advanced in Africa. After South Africa, I think Nigerian banks come next in terms of human capital advancement, of technology, of understanding of banking and risk management.
The second reason is the regulatory support -- in 2005, the Central Bank of Nigeria decided that banks should consolidate and increase capital. So because of this capital increase, a lot of banks got capital and also decided to levy the capital geographically.
And the third reason is business opportunities. Nigerian banks following their customers beyond the shores of Nigeria.
CNN: UBA escaped sanctions because it was seen as a healthy bank, but was the image of Nigeria's banking system hurt by last year's crisis?
TE: If I were an investor looking to invest in Nigeria today or a customer wanted to be in Nigeria, I'd be a lot more confident and comfortable to do business in the country. So, if anything, I would say this country realized that they needed to correct the market system and it self-corrected. And the correction was by one of us in Nigeria. So it was not induced externally or imposed on us. I think that it shows there's strength in the regulatory environment in the country. Today, risk management practices are being embraced by all Nigerian banks a lot more than they did before.
CNN: There's a big push of South African banks into the continent and there's almost like a two-way battle right now between some South African and Nigerian banks. What would you say would give Nigeria the edge over South Africa?
TE: We believe that if we fix the power sector, if we improve legislation, it can transform the economy in a dramatic way. You can only compete effectively outside if your home base is strong.
But generally I think for Nigeria and South Africa, we should talk about collaboration -- institutions in the two countries finally have to collaborate because Africa depends on South Africa and Nigeria to help pull up the economies of the continent. So we should be thinking more about how to collaborate, both the private sector and the public sector in those countries.
CNN: You've said that you see the youthful population of Africa as an asset. In the past, the fact that this is a very young continent with a big population overall has been a problem.
TE: No, there's so much happening now in Africa. The GDP of Africa is going up, even now when things are tough. Africa did 4.7 percent last year, this year it will be about 5.8 percent, that's a good indication. If you look at the demographics, one billion population, one billion is huge. And out of one billion people, about 50 percent are under 29 years old.
That is potentially huge for consumer services and consumer products. So we need to take advantage of all of this -- Africa is becoming quite an interesting place to do business.
Teo Kermeliotis contributed to this report