CBN Urges Banks to Leverage Recapitalisation for ₦1tn Economy

The Central Bank of Nigeria has charged banks to translate the gains of the banking sector recapitalisation programme into increased lending to productive sectors, stronger financial resilience and wider economic opportunities, particularly as Nigeria targets a $1 trillion economy by 2030.

The CBN Deputy Governor, Corporate Services, Dr Muhammad Sani Abdullahi, gave the charge while declaring open the 38th Seminar for Finance Correspondents and Business Editors organised by the Central Bank of Nigeria, CBN held in Abuja on tuesday.

Speaking on the theme, “Towards a Robust and Resilient Financial System in the Post-Banking Sector Recapitalisation Era,” Abdullahi said the completion of the recapitalisation programme had provided the banking industry with stronger capital buffers needed to finance infrastructure, industrial expansion, international trade and other long-term investments.

He disclosed that 33 banks had met the revised minimum capital requirements and raised a combined ₦4.65 trillion by the end of the two-year recapitalisation programme announced in March 2024.

According to him, the stronger capital base should not be measured merely by the amount of money raised, but by its impact on the real economy.

Abdullahi said stronger banks must provide financing suited to the cash flows and investment horizons of agriculture, manufacturing, services and infrastructure, while also expanding access to finance for smaller businesses, women, young entrepreneurs and underserved communities.

He traced the recapitalisation as part of a broader reform programme initiated by the CBN three years ago to restore stability, rebuild confidence and strengthen the financial system.

The deputy governor recalled that in 2023, Nigeria’s foreign exchange market was highly fragmented, with the gap between official and parallel market rates averaging more than 60 per cent in 2022 and exceeding 100 per cent at some points.

He said net usable external reserves had fallen to about $859 million in the second quarter of 2023, while outstanding foreign exchange forward claims exceeded $7 billion.

He added that Ways and Means financing had reached about ₦26.6 trillion, while legacy development finance exposures exceeded ₦10 trillion, creating significant liquidity pressures and complicating monetary policy management.

Abdullahi said the CBN responded with a series of reforms, including the consolidation of the foreign exchange windows, movement towards a willing-buyer, willing-seller framework, settlement of valid outstanding forward claims, improved FX trading and reporting rules, and the introduction of the Electronic Foreign Exchange Matching System and Nigerian FX Code.

He noted that the measures had contributed to a significant narrowing of the gap between official and parallel exchange rates.

According to him, the average gap between the two rates fell from 68.2 per cent between January and May 2023 to less than two per cent in 2026.

The deputy governor informed that Nigeria’s foreign exchange inflows had become increasingly diversified, with autonomous sources accounting for $7.33 billion, or nearly 68 per cent, of the $10.82 billion total inflows recorded in July 2026.

He said remittances through International Money Transfer Operators reached $950 million in July, while net foreign portfolio inflows stood at $6.31 billion between January and August 2026.

On external reserves, Abdullahi said gross reserves stood at $55.60 billion as of September 11, 2026, while the end-August position provided 11.3 months of import cover.

He also noted that headline inflation, which rose to 34.8 per cent in December 2024 during the initial adjustment period, had moderated to 15.43 per cent in July 2026, while real GDP expanded by 4.43 per cent in the second quarter of 2026.

However, he cautioned that the improvement did not mean pressure on households and businesses had disappeared stating that the CBN’s focus was now on making the gains more durable, deepening investment and strengthening the sources of foreign exchange supply.

Abdullahi stressed that stronger capital alone would not guarantee a resilient banking system, warning that banks must combine adequate capital with sound corporate governance, effective risk management and strong internal controls.

He urges bank boards and management teams to demonstrate integrity, accountability and transparency, while ensuring that lending decisions were based on viable projects and proper risk assessment.

He advised that risk management must go beyond conventional credit risks to cover market and liquidity risks, cybersecurity, operational disruptions, third-party dependencies and climate-related financial risks.

“The CBN will continue to pay close attention to governance, asset quality, liquidity and large exposures,” he said.

He added that banks would also be expected to protect customer data, maintain reliable payment services and recover quickly from operational disruptions.

Abdullahi highlighted that the increasing digitisation of financial services had made cybersecurity, data protection, disaster recovery and business continuity essential components of banking resilience.

He said that the CBN would continue to deploy risk-based supervision, macroprudential surveillance and enhanced stress testing to identify vulnerabilities in the financial system.

The CBN deputy governor also commended financial journalists for their role in explaining economic and financial reforms to Nigerians.

He noted that finance correspondents and business editors remained important intermediaries between policymakers, financial institutions, investors and the public.

According to him, accurate and objective financial reporting helps strengthen market transparency, investor education and informed public debate.

He urged the financial press to continue scrutinising the banking sector and reporting not only the progress recorded but also areas where challenges persist and thanked the financial press for their engagement with the bank over the past three years.

He said the CBN valued the scrutiny of journalists and would continue to provide information and explanations on its policies.

He urged regulators, banks, businesses, investors, the media and the public to form a synergy towards building a financial system capable of absorbing shocks, supporting innovation and broadening economic opportunities.