How Banks Can Accelerate Nigeria’s $1trn GDP Target
As the race for bank recapitalisation intensifies, the Central Bank of Nigeria (CBN) says that the sector is essential to actualising Nigeria’s $1 trillion gross domestic product (GDP) target.
Olubukola Akinniyi Akinwunmi, director, Banking Supervision Department, CBN, said this on Monday at the ongoing seminar for finance correspondents and business editors, in Abuja.
He noted that the CBN’s objective is to strengthen the financial systems stability to absorb any form of unexpected systemic shock.
Nigeria aims to attain a $1 trillion economy by 2030. In a strong move aimed at achieving this goal, the CBN in March 2024 announced a significant increase in paid-in capital requirements (share capital plus share premium) for commercial, merchant and non-interest banks.
Banks have three ways to comply – through equity injections, mergers and acquisition, and downgrading of their licence authorisation.
A foremost rating agency, Agusto, projected an inflow of circa N4 trillion into the banking system at the end of the banks recapitalisation exercise.
“Nigerian banks are making significant progress in raising core capital to meet new paid-in capital requirements and are generally on track to meet the end-1Q26 deadline,” Fitch Ratings said.
“This is supporting a recovery in capitalisation from the impact of naira devaluation, providing fuel for business growth. It also reduces the likelihood of significant banking sector consolidation,” it noted.
Investors’ response
The CBN noted on Monday that investors are responding positively to the stability around Nigeria’s foreign exchange (FX) rate, noting that it is attracting investments into the country.
“It is very essential that we understand the implications of global developments, as grave as they may be and appreciate the efforts at stabilising the economy,” Akinwunmi said at the seminar themed, ‘Playing the Global Game: Banking Recapitalisation Towards a $1trillion Economy.’
As President Donald Trump’s sweeping tariffs hike rattles global markets, Akinwunmi noted that CBN’s policies, including the banking sector recapitalisation, is ahead of the curve in ensuring the system absorbs external shocks.
“Nigeria needs foreign direct investment (FDI). We want to promote consolidation and innovation. Recapitalisation will enable banks to take bigger risks and still stay afloat in times of trouble, support different sectors of the economy and improve confidence in the banking system,” he added.
Akinwunmi further noted that a stable macroeconomic environment would enable banks to respond adequately to the funding needs of critical sectors of the economy.
The environment is appropriately primed to encourage banks to continue to lend to the real sector, he noted.
Welcoming the participants, Emem Usoro, deputy governor, corporate services, CBN, said, “We must consider the recapitalisation of our banks to be able to fund, finance and power the economy and favourably compete globally with its peers in other climes.”
She said, “We should particularly pay significant attention to bank recapitalisation to ensure that our banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes.”
