Bank recapitalisation: Strengthening Nigeria’s financial system for a trillion-dollar economy

The Central Bank of Nigeria (CBN) is pushing ahead with sweeping reforms to reinforce the nation’s financial system through a historic recapitalisation drive for banks and Bureaux De Change (BDCs), writes JOSEPH INOKOTONG. The Central Bank of Nigeria’s recapitalisation exercise is gaining momentum as banks and Bureaux De Change (BDCs) take steps to meet the new capital thresholds designed to fortify Nigeria’s financial architecture. Governor Olayemi Cardoso has emphasized the reforms as part of a broader strategy to align Nigeria’s financial institutions with global best practices and better position them to support inclusive economic growth.

New capital thresholds

Under the recapitalisation plan unveiled in March 2024, commercial banks with international, national, and regional licenses are required to raise their minimum capital to N500 billion, N200 billion, and N50 billion, respectively, by March 31, 2026. Other financial institutions, including merchant and non-interest banks, have also received revised benchmarks.

In May, the CBN raised the capital requirement for BDCs to N2 billion for Tier 1 and N500 million for Tier 2 operators—up from the previous N35 million. Despite calls for a reduction by the Association of Bureaux De Change Operators of Nigeria (ABCON), the June 3 deadline stood firm, signaling the CBN’s commitment to enforcing reform.

  Stronger banks, wider access

Governor Cardoso has highlighted that well-capitalised banks are better positioned to lend to underserved sectors, such as Micro, Small and Medium Enterprises (MSMEs), rural communities, and emerging industries. He described the policy as a catalyst for inclusive growth, stating that increased capital enables banks to invest in digital platforms and reach remote regions through mobile banking and agent networks. With higher capital requirements and enhanced regulatory scrutiny, the apex bank is charting a course toward financial resilience, stability, and inclusion—all in pursuit of Nigeria’s ambitious goal to build a $1 trillion economy.

“With stronger capital bases, Nigerian banks can scale up operations, manage risks effectively, and support economic transformation,” Cardoso said, noting that “This is essential for achieving our national vision of a $1 trillion economy.”

 Banking sector: A pillar of stability

Recent indicators from the CBN suggest that Nigeria’s banking sector remains sound. The non-performing loan (NPL) ratio is within the regulatory limit of five percent, and banks maintain a liquidity ratio above the 30 percent threshold. Stress tests have also affirmed the sector’s resilience.

Many banks have already begun raising funds through rights issues and public offerings, ahead of the 2026 deadline. “The response so far is encouraging,” Cardoso noted, adding that this places the industry in a strong position to drive growth and support vital sectors such as infrastructure, agriculture, and manufacturing.

Industry response

United Bank for Africa (UBA) Group Managing Director, Oliver Alawuba, welcomed the recapitalisation initiative as timely and strategic. He said the policy enhances banks’ ability to withstand economic shocks and meet the financing demands of a modern economy.

Alawuba also highlighted a critical gap: while banks in developed economies have assets equivalent to 70–150 percent of GDP, Nigeria’s banking assets represent just 11.97 percent. Bridging this gap, he said, is crucial to aligning Nigeria’s financial system with global standards and fulfilling its economic aspirations. “The recapitalisation policy is more than a regulatory requirement—it’s a forward-looking strategy,” Alawuba said.

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 Compliance and integrity

Shola Phillips, Special Adviser to the CBN Governor on Compliance, called on financial institutions to maintain dynamic, risk-based compliance programs. Experts from Citi stressed the need for robust governance, KYC protocols, and technology-driven risk assessments to combat illicit financial flows estimated at over $3 trillion globally each year.

To reinforce confidence in Nigeria’s financial system, the CBN has intensified its oversight and compliance efforts. A recent Anti-Money Laundering (AML) workshop in Lagos, hosted in collaboration with Citi, underscored the importance of risk management, transparency, and global standards.

The CBN has also introduced the FX Global Code to ensure transparency and ethics among market participants. “We will continue to monitor and enforce compliance to protect our financial system from abuse,” Cardoso stated.

Expanding financial inclusion

Beyond commercial banks, the CBN is also working to strengthen Other Financial Institutions (OFIs), including Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs), to deepen credit access. Initiatives include integrating these institutions into the Global Standing Instruction (GSI) platform and leveraging Development Finance Institutions (DFIs) to expand on-lending capacity. These efforts are aimed at unlocking the potential of OFIs to support underserved populations and drive productivity.

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 Celebrating innovation

Cardoso also praised Nigeria’s payment ecosystem, noting that the country has pioneered many financial innovations long before they became mainstream globally. He called for recognition of these achievements, as they help build Nigeria’s credibility in international financial circles.

The ongoing recapitalisation of banks and BDCs represents a critical inflection point for Nigeria’s economy. With a clear focus on financial stability, inclusion, and innovation, the CBN is laying the groundwork for a stronger, more resilient financial system—one capable of powering the nation’s economic ambitions well into the future.

As the 2026 deadline draws closer, the message from the apex bank remains clear: Nigeria’s financial institutions must rise to meet the demands of a rapidly evolving economy and global landscape.