Nigeria’s banking sector is approaching a major deadline in the Central Bank of Nigeria’s (CBN) ongoing recapitalisation programme with banks across the country raising trillions of naira in fresh capital to strengthen their financial positions.
The exercise introduced under the leadership of CBN Governor Olayemi Cardoso is aimed at building stronger and better capitalised banks capable of supporting Nigeria’s long term economic development and responding more effectively to financial and economic pressures.
Industry estimates indicate that about ₦4.05 trillion has already been raised by 20 Nigerian banks as part of the recapitalisation drive. The total amount of new capital raised could reach as much as ₦6 trillion before the exercise is completed.
The CBN has positioned the programme as an important part of efforts to improve the resilience of Nigeria’s financial system. The regulator believes banks with stronger capital buffers will be better equipped to provide financing for major businesses, infrastructure projects and other areas considered important to economic growth.
Speaking on the condition of the banking sector, Cardoso said Nigeria’s banking system remains fundamentally sound and resilient. He also stressed the importance of maintaining strong compliance standards and effective risk-management practices across financial institutions.
According to the CBN governor, stronger banks would have greater capacity to participate in large scale transactions and provide financing to businesses and major projects. The recapitalisation is therefore expected to support the broader ambition of expanding Nigeria’s economy including the Federal Government’s target of building a $1 trillion economy.
The regulator has also continued to monitor potential risks within the banking industry. These include cyber threats, operational vulnerabilities and concentration of credit exposure, all of which could affect the stability of individual financial institutions and the wider financial system if not properly managed.
The process of raising capital also involves regulatory verification before newly raised funds can be formally recognised. Under the recapitalisation guidelines, banks are required to undergo a verification process designed to confirm that the capital raised meets the necessary requirements.
The verification exercise is being carried out through a tripartite committee involving the Securities and Exchange Commission (SEC), the Nigeria Deposit Insurance Corporation (NDIC) and the CBN. The arrangement is intended to improve transparency and ensure that funds reported by banks as newly raised capital are legitimate before they are added to their capital base.
Cardoso has also pointed to the results of stress tests conducted on Nigerian banks as an indication of the sector’s current stability. According to him, key financial indicators including the non-performing loan ratio, remain within the prudential benchmark of five per cent.
The recapitalisation programme has received support from financial-sector stakeholders and international development experts. Matthew Verghis, the World Bank Country Director in Nigeria, said stronger banks would be important in helping the country finance infrastructure, support small businesses and promote broader economic growth.
The Group Managing Director of United Bank for Africa, Oliver Alawuba, also described the recapitalisation policy as timely and important for strengthening Nigerian banks. He said stronger capital positions could help financial institutions withstand economic pressures, including inflation, currency volatility and disruptions arising from global geopolitical developments.
Beyond strengthening individual banks, analysts expect the recapitalisation exercise to improve the financial sector’s ability to provide funding to important parts of the Nigerian economy. These include oil and gas, agriculture, manufacturing, fintech and emerging areas such as green energy.
Small and medium sized businesses could also benefit if the stronger capital positions translate into greater access to credit. Experts say improved lending capacity could support business expansion, investment and job creation while contributing to broader economic activity.
With the recapitalisation deadline approaching, attention remains focused on the ability of banks to meet the required capital thresholds and complete the necessary verification procedures. The CBN has maintained that the programme remains on track as the regulator works toward building a stronger and more resilient banking system.
The outcome of the exercise could have significant implications for Nigeria’s financial sector. By requiring banks to operate with stronger capital foundations, the CBN aims to ensure that financial institutions are better positioned to withstand economic shocks while providing the financing needed to support businesses, infrastructure and long-term economic development.
