The Federal Government set an ambitious target of getting the economy to $1 trillion size by 2030. Achieving this goal requires significant input from the financial services sector under the leadership of Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso. Already, the apex bank has instituted key policy measures from the recapitalization of banks, FX reforms, fight against inflation to regulatory oversight to realise the goal, which many stakeholders described as ambitious, audacious but possible.
When nearly two years ago, the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso asked banks to brace up for new round of banking sector recapitalization to secure enough capital to serve $1 trillion Gross Domestic Product (GDP) target set by the Federal Government, many took the directive with skepticism.
Cardoso reaffirmed that President Bola Ahmed Tinubu’s economic plan, is to achieve $1 trillion GDP size by 2030, adding that the current capitalisation of banks cannot handle such economic size.
Cardoso asked: “Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital”.
Continuing, he said: “The administration, as outlined in the widely circulated Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a Gross Domestic Product (GDP) of $1.0 trillion, with clearly defined priority areas and strategies.
According to him, attaining this substantial target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels.
“The administration has already commenced this journey through fiscal reforms, including the removal of petrol subsidy and the unification of the foreign exchange market rate,” he said.
Today, many banks have recapitalized while others are seeking mergers and acquisitions to shore up their capital bases.
The CBN boss said it was in line with its efforts to deepen financial inclusion and support economic growth, the apex bank introduced new minimum capital requirements for banks.
He said: “This strategic move ensures that banks are well-capitalized, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services”.
Bank recapitalisation timelines
On March, 28, last year, CBN unveiled a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026.
The recapitalization plan requires minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.
Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth.
“By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” he stated.
The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and Nigeria Deposit Insurance Corporation (NDIC).
Under the guidelines for the recapitalisation, capital verification is a major requirement before the clearance of the allotment proposal and release of the funds to the bank for onward completion of the offer process and addition of the new capital to its capital base.
Experts had estimated that banks could raise about N5 trillion within the two-year recapitalisation period.
About one year to recapitalisation deadline, banks have stepped up preliminary consultations on the prospect of business combinations.
Analysts said there have been “more talks around mergers and acquisitions” as banks consider alternative options to fresh capital raising.
The CBN had approved the first mergers and acquisition deal between Providus Bank and Unity Bank in 2024. Access Holdings Plc, Ecobank Nigeria and Jaiz Bank Plc have met the new minimum capital requirements.
Afrinvest banking sector report on bank’s recapitalization, explained that the CBN had in its March 2024 capital requirement guideline, announced a new capital structure for banks under different licenses to strengthen the financial system and aid the government’s target of a $1 trillion economy by 2032.
The recapitalization exercise was also triggered by the clear erosion of banks’ capital buffer post-2010 from a real and FX perspective compared to 2010 levels.
“Using the 2023 average, the existing minimum capital size has lost 77.1 per cent and 76.5 per cent in FX and real terms, respectively. To shore up the capital gap, the CBN considered the impact of macroeconomic headwinds on banks’ risk profiles and financial position in defining the new threshold,” the report said.
Views from stakeholders
The Chairman of Parthian Group, Adedotun Sulaiman emphasised the essential role of investments in economic development, stating, “capital is the oxygen of the economy, and without capital, we can’t go very far.”
Speaking during the launch of the company’s two investment funds in Lagos, he said the products are its own modest contribution, in mobilizing the capital needed to achieve the President’s audacious goal of creating a $1 trillion economy.
He said: “I will say, we have huge capital deficit in Nigeria, and other developing countries. We need enough capital to build infrastructure, and support economic growth. So, what we are doing is set up these products, mobilize the capital from small savers, individuals, and corporate and then deploy the capital to people that need it can use the funds to build roads, schools, healthcare among others,” he said.
Sulaiman added: “So, that is what we are doing, it is our modest contribution to grow the Nigerian economy. The $1 trillion economy target is ambitious, audacious. The thing about life is that one should challenge himself. Is it possible? Yes, it is possible but requires a lot of hard work and resources. And can we rise to the occasion as a country? Yes, I think so”.
Other analysts said the government’s goal of achieving a $1 economy would require the institutionalisation of corporate governance in Nigeria’s public sector to foster transformation within the sector.
They urged Nigeria to adopt good governance practices to align better with international business standards. She also called for a legal framework to support this institutionalization and structures to drive national transformation.
More FX inflows via remittances
Already, remittances through International Money Transfer Operators (IMTOs) rose 79.4 per cent to US$4.18 billion in the first three quarters of 2024, demonstrating the positive impact of FX reforms.
Additionally, the CBN lifted the 2015 restriction barring 41 items from accessing FX at the official market to enhance trade and investment.
These reforms and developments reflect the bank’s commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance.
“As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso reaffirmed.
To tackle the pressing challenge of inflation, the CBN acted decisively by raising the Monetary Policy Rate by 875 basis points to 27.5 per cent in 2024—an essential move to contain inflation and restore stability.
Analysts insist that these measures under Cardoso have not only lifted the forex market and entrenched long-lasting stability but laid foundation for sustainable economic growth.
Very significantly, the resilience of the domestic economy, bolstered by a strong financial system with robust soundness indicators, instils confidence in the economic structure.
Major prudential ratios, such as capital adequacy, liquidity, and Non-Performing Loans ratios, were within prudential limits, reflecting proactive regulatory oversight and strong industry risk management practices. Significant credit was extended to growth-enhancing sectors such as agriculture, manufacturing and general commerce, as well as individuals and households.
The credit played a crucial role in stimulating economic activities and supporting output performance, emphasizing the role of financial institutions and sound regulation led by the Central Bank of Nigeria.
Besides, the CBN has also taken strategic steps to tackle inflation. The apex bank recently hosted the Monetary Policy Forum 2025, featuring fiscal authorities, legislative, private sector, development partners, subject-matter experts, and scholars with the theme: “Managing the Disinflation Process”.
Cardoso explained that the apex bank’s focus is to sustain price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship.
The CBN is continuing its disciplined approach to monetary policy, aimed at curbing inflation and stabilizing the economy.
“These actions have yielded measurable progress: relative stability in the FX market, narrowing exchange rate disparities, and a rise in external reserves to over $40 billion as of December 2024.
The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy,” he said.
To further enhance the functionality of the foreign exchange market, the apex bank introduced an Electronic Foreign Exchange Matching System which has proven effective in other markets.
The programme was meant to check forex market distortions, eliminate speculative activities and instill transparency. The EFEMS, which is commonplace in developed and developing markets offers real-time information on currency rates, trading volumes, and market activity.
For many stakeholders, these measures under Cardoso have not only lifted the forex market and entrenched long-lasting stability but laid solid foundation for economy and businesses to thrive.
Banking sector remains sound, resilient
Cardoso explained that within the banking sector, the sector remains robust with key indicators reflecting a resilient system.
“The non-performing loan ratio remains within the prudential benchmark of five per cent, showcasing strong credit risk management. The banking sector liquidity ratio comfortably exceeds the regulatory floor of 30 per cent, a level which ensures banks are maintaining adequate cash flow to meet the needs of customers and their operations. The recent stress test conducted also reaffirmed the continued strength of our banking system,” he said.
To ensure that our banking system can effectively support the growth of our economy, efforts to strengthen banks’ capital buffers were announced in 2023 with a two-year implementation window.
“I am pleased to note that a significant number of banks have raised the required capital through right issues and public offerings well ahead of the 2026 deadline! I believe that the banking sector is in a strong position to support Nigeria’s economic recovery by enabling access to credit for MSMEs and supporting investment in critical sectors of our economy,” he said.
In the same vein, Other Financial Institutions (OFIs) hold significant potential to drive productivity and economic growth by expanding access to credit and financial services for underserved individuals and businesses.
To unlock this untapped potential, the CBN aim to strengthen key institutions—particularly Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs)—to enhance their efficiency and impact.
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