CBN-Led Bank Recapitalisation Accelerates Nigeria’s Push For $1tn Economy

By March 31, the ongoing recapitalisation of banks driven by the Central Bank of Nigeria (CBN) will be over. Seen as one of the most ambitious exercises embarked on by the apex bank under the leadership of its Governor Olayemi Cardoso, the feat will create bigger and highly sophisticated banks to drive the Federal Government’s $1tn target.

The apex bank has continued to champion vision that upholds regulatory excellence and strengthens Nigeria’s financial system integrity and resilience. With N4.05tn already in the coffers of 20 banks, the exercise promises to be highly successful with greater impact on businesses and economy.

By this month-end, the ongoing recapitalisation of banks through capital raising will be concluded.

Not less than N5tn is expected to be raised by all the banks, when the exercise ends, but its gains will linger for decades.

One of its biggest gains remains the emergence of stronger and bigger banks ready to carry out big ticket transactions to support businesses and economy.

The CBN under the leadership of its Governor, Olayemi Cardoso believes that achieving sustainable economic growth requires strong support from the financial system. The financial sector regulator is, therefore, keen on aligning monetary and fiscal policies to achieve government’s vision of growth for businesses and $1tn economy size for the country.

For the apex bank chief, fostering a strong culture of compliance and strengthening risk management frameworks, the CBN’s leadership goal remains to protect Nigeria’s financial sector while ensuring its resilience and credibility locally and internationally.

To achieve these goals, the apex bank has reaffirmed its commitment to maintaining a transparent and resilient financial system by reinforcing regulatory compliance and risk management across Nigerian financial institutions.

Milestones Assessment For Recapitalisation

Ahead of the March 31 deadline, Cardoso, in his last public update on the recapitalisation programme, confirmed that 20 banks have met their new capital requirements. He also indicated that other banks were raising funds.

Under the recapitalisation guidelines, beyond raising funds, banks are required to subject their new equity funds to capital verification before the clearance of the allotment proposal and release of the funds to the bank for onward completion of the offer process and addition of the new capital to its capital base.

The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC).

The committee is saddled with scrutinising new funds being raised by banks under the ongoing banking sector recapitalisation programme.

Continuing, Cardoso said Nigeria’s banking system remains fundamentally sound and resilient, a cornerstone of Nigeria’s financial stability.

“At the same time, we remain vigilant to emerging risks, including cyber threats, credit-concentration pressures, and operational vulnerabilities. These are being addressed through strengthened risk-based supervision and our ongoing transition to Basel III, which will further bolster resilience, improve capital quality, and strengthen liquidity monitoring,” he said.

The CBN boss disclosed that with just four months to the conclusion of the recapitalisation exercise, the recapitalisation process remains firmly on track.

“As we strengthen the capacity of our banks, stress-testing this year confirms that Nigeria’s banking sector remains fundamentally robust. Key financial soundness indicators overwhelmingly satisfied prudential benchmarks during the year,” Cardoso added.

He said the apex bank is reinforcing operational discipline to ensure the financial system serves all Nigerians reliably.

“Our starting point was a comprehensive, end‑to‑end review of the entire cash lifecycle: from production, to transportation, to distribution, and eventual access by consumers. This holistic assessment enabled us to address root causes rather than symptoms.

“As a result, we recalibrated our cash‑printing models, issued guidelines on the optimal ATM‑to‑card ratio, strengthened requirements for CBN approval before ATM or branch closures, enforced sanctions on banks whose ATMs fail to dispense cash, and intensified supervision of payment agents and POS operators nationwide,” he said.

Speaking recently to bankers, Cardoso said the ethics and professionalism of bankers and treasurers are under constant scrutiny.

According to him, the apex bank introduced the FX Global Code for all authorized dealers and market participants to ensure full compliance with regulations.

He urged the Chartered Institute of Bankers of Nigeria (CIBN) to take the lead in upholding and demonstrating the highest standards in the industry.

“At the Central Bank, we have intensified surveillance of market activities to ensure compliance and eliminate bad actors who attempt to undermine the system. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.

Country Director, World Bank in Nigeria, Matthew Verghis, underscored the importance of positioning recapitalisation as a tool for economic transformation as well as the strategic opportunities that lies ahead.

“A stronger banking system creates the foundation to finance Nigeria’s long-term ambitions — from empowering MSMEs and expanding productive capacity to unlocking large-scale infrastructure development. The opportunity before us is clear: to convert stronger balance sheets into deeper intermediation, greater resilience, and inclusive growth that accelerates Nigeria’s journey toward a more competitive and sustainable economy,” he said.

Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, said many of the banks classified as being at an advanced stage of compliance have already secured the required funds.

“You’ll be shocked that a lot of those that the CBN said are at an advanced stage, some of them already have the funds with the CBN. What CBN is doing is verifying those funds. So, it’s not that they are still going in the markets looking for the funds. The bulk of them have actually raised the funds.”

The Group Managing Director of United Bank for Africa (UBA), Oliver Alawuba had described the ongoing CBN bank recapitalisation policy as both timely and essential in positioning the financial system to meet the demands of a growing and globally competitive economy.

According to Alawuba, the initiative is expected to boost the resilience of the banking sector by strengthening its capacity to withstand economic shocks such as inflation, currency volatility and global geopolitical disruptions.

He noted that the policy will also place Nigerian banks on a stronger footing to finance the country’s long-term economic transformation, including funding of large-scale infrastructure and industrial projects.

Alawuba further stressed that the recapitalisation policy goes beyond regulatory compliance. It is a forward-looking strategy aimed at equipping Nigerian banks to operate at the scale and sophistication required by a trillion-dollar economy.

He said the move would enhance the sector’s ability to support traditional economic drivers such as oil and gas, agriculture and manufacturing, as well as emerging sectors such as fintech, green energy and infrastructure development.

“Nigerian banks need adequate capital buffers to meet the evolving demands of these sectors. Without this, the industry cannot effectively rise to the challenge,” he said.

Building Resilient Banking System

Cardoso earlier explained that within the banking sector, the sector remains robust with key indicators reflecting a resilient system.

“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.

To ensure that the banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.

“I am pleased to note that a significant number of banks have raised the required capital through right issues and public offerings well ahead of the 2026 deadline! I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.

Cardoso explained that the banking sector remains robust, with key indicators reflecting a resilient system.

“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.

“I am pleased to note that a significant number of banks have raised the required capital through rights issues and public offerings well ahead of the 2026 deadline. I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMES and supporting investment in critical sectors of our economy,” he said.

Major Policy Shifts Lifting Economy

Founder and Chief Consultant of B. Adedipe Associates Limited (BAA Consult), Prof. ‘Abiodun Adedipe, listed major policy shifts yielding positive results for the economy. He said that the CBN has eliminated strange arbitraging and roundtripping opportunity through the forex market reforms; through petrol subsidy removal, the Federal Government Remove crippling annual waste of $10.7bn and created environment for competition; bank recapitalisation is creating stronger and more capable banks to fund $1tn economy while fiscal consolidation is plugging leakages, deploying technology and making government agencies more accountable and expanding fiscal space at sub-national.

Continuing, Adedipe said the real game changer remains the tax reforms, capable of igniting regional competition (the secret behind Chinese economic renaissance) while the Nigerian Education Loan Fund, Consumer Credit Corporation, Recapitalized Bank of Agriculture, National Credit Guarantee Company Ltd, Single digit interest rate mortgage loans are major steps that should be taken to support sustainable economic growth.

Adedipe said that Nigeria’s economy is supported by large, youthful and rapidly growing population (estimated at 237.53 million in July 2025 and sixth largest in the world, median age at 18.1 years).

The country, he said, also benefits from rapid urbanization with 54.28 per cent in December 2023, up from 46.12 per cent in 2013 and 51.96 per cent in 2020, deepening internet penetration which is at 48.15 per cent in April 2025, up from 45.57 per cent in August 2023 and 31.48 per cent in December 2018.

Fiscal‑Monetary Coordination

The CBN explained that monetary reform cannot be effective in a vacuum. Alignment with fiscal policy has strengthened Nigeria’s macro stability and yielded tangible results including reduced domestic borrowing costs, improved liquidity conditions, and more predictable fiscal operations.

For instance, the discontinuation of direct deficit financing signals one prong in our commitment to discipline.

“This stance is unequivocal as there will be no return to the practice of financing fiscal deficits by the Central Bank. In parallel, the fiscal authorities have embarked on key institutional reforms – including the implementation of a Revenue Optimisation (RevOp) framework, the establishment of a new National Revenue Agency, and upgrades to the Treasury Single Account (TSA) – to strengthen revenue mobilisation and public financial management,” Cardoso said.

“As we transition towards a full‑fledged inflation‑targeting framework, this partnership will deepen, ensuring fiscal and monetary policies reinforce each other in delivering durable price stability,” he added.