Financial analysts have underscored the vital role of Nigeria’s ongoing banking recapitalisation in the country’s ambitious plan to reach a $1 trillion economy, a target set by President Bola Tinubu.
Hassan Bello, Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), emphasised the strategic importance of a well-capitalised banking sector during the Finance Correspondents Association of Nigeria (FICAN) Annual Conference in Lagos.
Bello explained that stronger capital bases would enable Nigerian banks to fund critical sectors, stabilise the financial system, and attract significant foreign direct investments.
“A more robust banking sector is essential to building a stable economy that can achieve the $1 trillion target,” Bello said. He further highlighted efforts by regulators, including the Central Bank of Nigeria (CBN), to strengthen financial stability.
Speaking on the theme of the conference ‘Nigeria’s Journey Towards a $1 Trillion Economy: Impact of Banks’ Recapitalization, Opportunities for Fintechs, Real Sector,” the Managing Director of United Bank for Africa, Oliver Alawuba, said $1 trillion economy aspiration requires not just incremental growth, but structural shifts in how the industry approaches banking, financial innovation, and sectoral development.
According to him, the recapitalisation initiative is not just about compliance with regulatory requirements, but about equipping the banking sector with the financial strength to be a reliable engine for economic transformation.
He also noted that with a stronger capital base, banks will have the push to withstand both external and internal shocks.
A robust capital base, he said, also attracts foreign investors as global investors seek stability and growth opportunities.
Alawuba, who was represented by the Executive Director, Finance & Risk Management at UBA, Ugochukwu Nwaghodoh, said the recapitalization policy must lead to a significant expansion of the provision of credit to the real sector, particularly in agriculture, manufacturing, and infrastructure.
He noted that currently, Nigeria’s economy faces a productivity gap.
Citing Nigerian growth statistics, he said the manufacturing sector, for example, contributed about 20.68 per cent to the nominal GDP as of the second quarter of 2024, down from 14.5 per cent in the second quarter of 2023, and lower than 14.79 per cent recorded in the first quarter of 2024, and 16.04 per cent recorded in the second quarter of 2023.
“With a larger capital base, Nigerian banks should be well-positioned to finance long-term infrastructure projects and provide low-cost credit facilities to businesses that would drive long-term growth,” he said.
Alawuba stressed that a strengthened financial sector would enable Nigerian banks to finance infrastructure projects and offer affordable credit facilities that are essential for sustainable growth.
“The goal is not just incremental growth, but structural shifts that will empower the real sectors like agriculture and manufacturing,” Alawuba noted.
Chima Nwokoji, National Chairman of FICAN, emphasized that banking sector recapitalization could also increase lending to micro, small and medium-sized enterprises (MSMEs), fostering entrepreneurship and job creation.
Nwokoji also drew comparisons with global best practices, noting that a robust banking system is vital for economic growth. He cited Singapore’s banking sector as an example of how a well-capitalized banking system can facilitate economic development.
He further explained that banking sector recapitalisation would increase lending to MSMEs, driving entrepreneurship and job creation.