By Bassey Udo
President Bola Ahmed Tinubu unveiled an ambitious target at the inception of his administration in May 2023 to transition the country’s economy from producing less than $400billion in value of aggregate goods and services to = a $1trillion gross domestic product (GDP) economy by 2030.
Realizing this tall agenda required the government to initiate a series of multi-sectoral reforms in key sectors of the economy to tackle long-standing systemic and structural weaknesses, to set the building blocks for the foundation.
Key sector reforms
These key reforms featured prominently in realigning the operational processes in the petroleum, capital market, foreign exchange, insurance agricultural, and financial sectors of the economy.
The removal of subsidy from the pricing template of the petroleum products to block a major pipe drain of the country’s fiscal resources and the deregulation of the entire operations of the downstream sector of the petroleum industry had set the tone or the petroleum sector.
With three executive orders signed in February 2024, the government was determined to cut down on contracting costs/timelines, promote local content compliance, and provide tax incentives to attract fresh investments in the petroleum industry.
Next was the decision by the Central Bank of Nigeria (CBN) to embark of Foreign Exchange Market unification and liberalization exercise to unify the multiple FX windows into a single, market-reflective rate.
Lifting of the FX restriction on 43-commodity items and the introduction of the Electronic Foreign Exchange Matching System (EFEMS) were reform initiatives to enhance transparency and curb speculation in the FX system.
Also, the adoption of a “tight” monetary policy stance targeted at curbing spiralling inflation and ensuring financial system stability was part of the overall banking sector reforms.
Included in the reform agenda was a 24-months long bank recapitalization programme introduced in March 2024 to raise the minimum capital requirements for commercial banks to support the drive of economic activities towards building a $1 trillion economy.
Besides, the implementation of Public Finance and Fiscal Transparency, which saw the CBN phasing out its direct financing of the budget deficits through Ways and Means, and the declaration of a state of emergency in agriculture and food security sectors were all part of the reforms, which also extended to infrastructure development and power sector efficiency.
The reforms in the capital market brought about the revision of the provisions of the Investments and Securities Act 2025 (ISA) as well as a similar exercise in the insurance sector through the Nigerian Insurance Industry Reform Act 2025 were aimed at bolstering stability, increasing capital requirements, enhancing consumer protection, and fostering digitisation of their operations.
Under the capital market, the Securities and Exchange Commission (SEC) revised the minimum capital requirements for various categories of capital market operators to include Brokers to ₦600 million, Dealers to ₦1 billion, and Broker-Dealers to ₦2 billion, while compliance deadline has been set for June 30, 2027.
Under the insurance sector, the National Insurance Commission (NAICOM) has imposed stringent capital requirements at ₦15 billion for non-life, ₦10 billion for life, and ₦35 billion for reinsurance operators, with 12 months compliance deadline from July 31, 2025.
Bank recapitalization as bedrock
Of all these reforms, the most significant is the bank recapitalization policy reforms launched by the CBN) in March 2024, to meet the country’s broader goals of building economic resilience, ensuring financial stability as the bedrock for long-term sustainable growth.
Between April 2024 and March 2026, recapitalization required banks with international commercial banking licenses to raise their minimum capital base to ₦500 billion; national commercial banks to ₦200 billion; regional commercial and national merchant banks to ₦50 billion; national non-interest banks to ₦20 billion, and regional non-interest banks to ₦10 billion.
As the apex bank drew the curtains on March 31, 2026 signalling the closure of the baking sector recapitalisation exercise, the Director, Banking Supervision, Olubukola A. Akinwunmi, and the Ag. Director, Corporate Communications of the CBN, Hakama Sidi-Ali announced that 33 banks were successful in meeting the new capital threshold, mobilising a total of ₦4.65 trillion in new capital to strengthen the resilience of the nation’s financial system and enhance its capacity to support the sustainable growth of the economy.
Benefits of recapitalisation
Largely, the outcome of the programme gave clear indications that the objectives to enhance the resilience, competitiveness, and lending capacity of nation’s financial system, and position the sector to build stronger financial buffers to absorb unforeseen shocks as a result of spiralling inflation, exchange rate volatility, and uncertainties from global crises as well as support larger-scale economic activities in support of the government’s aspiration to build a $1 trillion economy, were achieved.
A review of the entire exercise revealed that not only was strong participation attracted from domestic investors, as 72.55% of the total capital raised were sourced locally, there was a significant interest from abroad, as 27.45% of the total capital raising came from international markets, reflecting sustained confidence in the Nigerian banking sector and its economy.
With an enlarged capital bases, Nigerian banks would not only be able to absorb shocks in line with the requirement under Basel III standards and maintain financial stability, they would be confident to operate within the framework of improved risk management and governance structures embedded in the sector.
Besides, the new enhanced capital would empower the banks to undertake the finance of strategic infrastructure developments in the nation’s energy, oil and gas, manufacturing, and information technology sectors requiring long-term, high-value funding outlays.
Under the recently unveiled National Industrialisation policy regime, the recapitalised banks would be well positioned to readily support the government’s renewed industrialisation and export diversification agenda towards sustained economic growth.
In addition, stronger balance sheets by the recapitalised banks would not only enhance their credit ratings and reduce systemic risks, it would help them develop the confidence to go into strategic partnerships with their regional and international collaborators to finance key projects, thereby enhancing the international confidence of foreign investors in Nigeria’s economy.
The recapitalisation, which is the most significant banking sector reform since 2005, not only encompassed efforts to modernise the sectors regulatory and risk management frameworks, it also reflected a commitment to establish a strong collaboration, partnership and coordination between the monetary and fiscal authorities as well as the capital markets.
By building banks that are “fit for purpose” in a trillion-dollar economy, experts say, is the best strategy to boost the capacity of the financial sector to sustainably finance the activities of the micro, small and medium enterprises (MSMEs), which account for the bulk of the GDP of the economy, along with those export-oriented firms, and major infrastructure projects.
With stronger capital base, better risk management framework, and tighter oversight, the indications are that Nigerian banks are not only ready to support individuals and businesses, they are committed to take their place on the table to contribute to the sustainable growth of the country’s economy.
For the CBN governor, Olayemi Cardoso: “Sustainable economic growth would be unattainable without a resilient financial system.”
He said the recapitalisation of the banking sector was deliberately undertaken to build the capacity of the Nigerian banks to fund the scale of transactions needed to drive a $1 trillion economy.
The recapitalisation programme, he pointed out, has not only strengthened the capital base of Nigerian banks, but it has also reinforced the resilience of the entire financial system to withstand domestic and external shocks, while ensuring it is well-positioned to support the country’s economic growth.
Apart from strengthening the capital adequacy ratios (CAR) of banks, with the sector maintaining levels above international Basel benchmarks, the CBN governor said, the recapitalisation of banks implemented alongside an orderly exit from regulatory forbearance, has significantly improved banks’ asset quality, reinforcing balance sheet transparency and overall financial system stability, minimum CAR thresholds remaining at 10% for regional and national banks and 15% for banks with international licenses.
To enhance prudential oversight and ensure risk-based supervision to preserve the gains of the recapitalisation exercise, Cardoso said the CBN has strengthened its risk-based capital adequacy framework, which requires banks to conduct regular stress testing across defined scenarios and maintain appropriate capital buffers.
The immediate past Minister of State for Finance, Dr Doris Uzoka-Anite said the recent Annual General Meeting of the Abuja Chapter of the Finance Correspondents Association (FICAN) that recapitalisation of the banks would help unlock productive capacity of the Nigerian economy by ensuring the banks supported the effective implementation of the Disinflation and Growth Acceleration Strategy (DGAS) by the CBN, in collaboration with the Ministry of Finance, to deliver non-inflationary growth of the economy at above 7 percent by 2027.
Uzoka-Anite said the nine pillars of the DGAS are focused on capital mobilization through development finance instruments; sectoral acceleration in agriculture, energy, technology, manufacturing, and creative industries; a nationwide energy expansion programme covering oil, gas, solar, hydro, and emerging fuels; digital infrastructure, including broadband, AI-ready data centres, and automation; a human capital pipeline targeting over 10 million young Nigerians annually in technical and vocational programmes, and an expansion of Consumer Credit Platform that puts structured financing within reach of ordinary citizens for housing, education, healthcare, and goods.
Overall, for the CBN, the recapitalisation of the banks would not only anchor financial inclusion and broaden access to credits to key sectors nationwide, it would help the apex bank to play its regulatory roles more effectively towards building a stable, transparent, and resilient financial system that works for everyone as well as support long-term growth.
