National Wire About Nigerians, Nigerian Business and Other Stories
By Friday Ekeoba
At the inception of the current administration in 2023, the focus was on driving the domestic economy to achieve the status of a $1 trillion economy by 2030.
Although the federal government’s drive seems ambitious, considering the dearth of infrastructure and other economic indicators, its consistent high-level performance and large-scale investment in recent times show that it will achieve the set target.
In making this growth and development number realizable, the government has focused on non-oil export growth, expanding domestic oil refining, digitizing the economy, and initiating GDP re-basing to reflect the current economic reality.
To sustain the economy and synchronize all activities in the domestic economy in assisting the government attain this lofty idea of deepening growth, the Central Bank of Nigeria’s (CBN) pursuit of recapitalization in the banking sector deserves commendation.
The CBN’s objective was clear: stronger banks will anchor financial stability and support the country’s ambition of building a $1 trillion economy. The March 31st, 2026 deadline for recapitalization has ended, and 34 money depository banks have scaled the hurdle and are well-funded to do bigger business.
The reform, driven by CBN Governor Olayemi Cardoso, requires banks to significantly raise their capital thresholds, set at N500 billion for international banks, N200 billion for national banks, N50 billion for regional lenders, N20 billion for national non-interest banks, and N10 billion for regional non-interest banks.
According to available statistics and the Apex Bank, 33 banks leveraged the capital market through rights issues and public offerings, collectively raising N4.65 trillion. The program recorded strong participation from domestic and international investors, with 72.55% of capital sourced locally and 27.45% from international markets, reflecting sustained confidence in the Nigerian banking sector.
The strategy is straightforward: bigger capital means stronger banks, and stronger banks should finance economic growth. It will enhance the resilience, competitiveness, and lending capacity of Nigeria’s financial system, positioning it to support the Federal Government’s aspiration for a $1 trillion economy.
CBN’s Recapitalisation: A New Era for Nigerian Banking
The CBN recapitalisation exercise marks a significant milestone in the country’s banking sector reform. This initiative is the most substantial overhaul since 2005, aimed at modernizing regulatory and risk management frameworks.
The recapitalisation demonstrates strong collaboration among key stakeholders, including the CBN, Ministry of Finance, and capital markets. This unified approach is expected to yield enduring benefits, including enhanced stability, improved global competitiveness, and sustained GDP growth.
With stronger capital bases, Nigerian banks are poised to support individuals, businesses, and the economy at large. The CBN’s efforts aim to create a stable, transparent, and resilient financial system.
The recapitalisation strengthens resilience and supports long-term growth. Governance and risk management standards are also enhanced, positioning Nigerian banks to better serve the economy. The CBN assures that this initiative will ultimately benefit the economy and support growth.
Benefits of Recapitalisation
The CBN’s recapitalisation exercise is set to transform the country’s banking sector, driving economic growth and stability. The initiative yields numerous benefits, including stronger, more resilient banks with larger capital bases to absorb shocks and align with Basel III standards.
The recapitalised banks will have enhanced capacity for large-scale financing, supporting infrastructure, energy, manufacturing, and technology projects. This aligns with Nigeria’s industrialisation and export diversification agendas. Improved risk management and governance structures are being embedded sector-wide, boosting investor confidence and market stability.
The participation of foreign investors demonstrates international confidence in Nigeria’s financial reforms. Stronger balance sheets will enhance credit ratings and reduce systemic risk. The recapitalisation also aligns monetary policy with the Federal Government’s fiscal growth plans, bolstering policy transmission, liquidity management, and inflation control.
Long-Term Impact
In the long term, the recapitalisation is expected to anchor financial inclusion, broaden access to credit, and sustainably finance SMEs, export-oriented firms, and major infrastructure projects. By building banks “fit for purpose” in a trillion-dollar economy, Nigeria is poised for sustainable economic growth and development. The CBN’s initiative is a significant step towards a stronger, more resilient financial system.
Speaking recently on the recapitalization exercise, CBN Governor Olayemi Cardoso said, “Sustainable economic growth is unattainable without a resilient financial system. This recapitalisation ensures Nigerian banks can fund the scale of transactions needed to drive a $1 trillion economy.”
According to him, “The recapitalization programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
Policy makers and stakeholders, including SEC DG Dr. Emomotimi Agama, have lent their voice to the plausibility of recapitalisation for the Nigerian economy.
Dr. Agama said Nigeria needs to address critical sectors and leverage a recapitalized banking sector to unlock its potential and achieve a trillion-dollar economy.
According to the SEC DG, the nation needs to diversify the economy beyond oil exports, invest in infrastructure, human capital, and innovation, enhance the business environment, and reduce regulatory hurdles, as well as promote financial inclusion and access to credit for SMEs and individuals.
To ensure that banks do not rest on their laurels, the Apex Bank will ensure that deposit money banks stimulate economic productivity, stabilize the financial system, and expand access to credit for businesses and households.
