CBN Recapitalisation Drive Targets Stronger Banks, $1tn Economy

Amid a weakened naira and Nigeria’s slip in the African banking hierarchy, the Central Bank of Nigeria (CBN) is banking on recapitalisation to fortify the financial system and drive inclusive economic growth. Governor Olayemi Cardoso has emphasized that this policy will not only strengthen banks but also empower them to support underserved sectors, including MSMEs and rural communities.

Following the naira’s depreciation, Nigerian banks saw their Tier 1 capital fall by 23.5%, prompting the CBN to introduce new capital thresholds in March 2024. These include N500 billion for international commercial banks, N200 billion for national banks, and N50 billion for regional ones. Merchant and non-interest banks also face increased minimum capital requirements.

Bureaux De Change (BDCs) were also directed to recapitalise, with Tier-1 operators required to raise N2 billion and Tier-2, N500 million. Although initially given a November 2024 deadline, the CBN extended it to December 31, 2025. The apex bank maintained that robust capital buffers and high regulatory standards are essential to achieve Nigeria’s $1 trillion economic target.

The policy has already started yielding results. Several banks have raised required capital through public offerings and rights issues ahead of the 2026 deadline. According to Cardoso, this positions them to lend more, invest in digital innovation, and improve access to credit for small businesses and individuals.

CBN also highlighted improved banking sector indicators—non-performing loans remain below the 5% benchmark, and liquidity ratios exceed the 30% regulatory minimum. A recent stress test also confirmed sector resilience.

Cardoso underscored the importance of ethical banking and compliance, revealing intensified surveillance to ensure regulatory adherence. To bolster global standards, the CBN has introduced the FX Global Code for market participants. A high-level workshop with Citi focused on anti-money laundering, compliance, and correspondent banking to reinforce trust in the sector.

United Bank for Africa’s GMD, Oliver Alawuba, described the recapitalisation as timely, saying it prepares Nigerian banks to handle macroeconomic volatility and finance key national priorities like infrastructure, green energy, and digital transformation. He noted that in more developed economies, bank assets often represent 70–150% of GDP, whereas Nigeria’s currently stand at just under 12%, highlighting the urgent need for expansion.

The CBN’s strategy also includes strengthening Other Financial Institutions (OFIs) such as mortgage and microfinance banks. Plans are underway to integrate these institutions into the Global Standing Instruction platform and enact foreclosure laws to reduce loan defaults and boost credit availability.

Cardoso also noted Nigeria’s leadership in digital payments, pointing out that some innovations other countries are just adopting have long been in use locally.

Ultimately, recapitalisation is more than a regulatory exercise—it is a foundational reform aimed at stabilising the financial system, enhancing resilience, deepening inclusion, and preparing Nigerian banks for a $1tn economy. The challenge now lies in institutions’ willingness to innovate and lead within this evolving financial landscape.