Bank recapitalization inflows to target SMEs – Experts say

The completion of the Central Bank of Nigeria’s (CBN) capital requirement exercise has raised expectations for the banking sector, with experts now predicting the next phase of developments in the industry.

The CBN on Wednesday confirmed that 33 banks met the revised minimum capital requirements under its recently concluded recapitalisation programme, marking a major milestone in efforts to strengthen the country’s financial system.

The apex bank disclosed that a total of N4.65 trillion was raised over the 24-month exercise, with capital adequacy ratios across the sector now above Basel benchmarks, reinforcing banks’ capacity to support economic growth and absorb shocks.

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The programme also recorded strong domestic investor participation, with 72.55% of the capital raised sourced locally, highlighting growing confidence among Nigerian investors in the banking sector.

**What experts are saying **

Dr. Jerry Igwilo, former banker and CEO of Wynk Limited, told Nairametrics that the next phase of banking reform must shift from capital to customers, with a stronger emphasis on protection and accountability.

• _“More importantly, banks need to be mindful of the customer protection side of their business,” he said. _

According to Igwilo, Nigeria’s current complaint management framework remains significantly underdeveloped, limiting the ability of regulators to detect systemic issues early.

• _“I think the complaint management system we have in banking today is very poor. There needs to be a consolidated, digital system that allows the central bank to monitor, in real time, what customers are complaining about,” he explained.  _
• _“That is how we begin to move banking into a more democratized environment, one where customers are not just participants, but are genuinely satisfied with the system.” _

He added that the industry must also rethink how it measures success, moving beyond capital thresholds as the dominant benchmark.

• _“I look forward to a system where banks are not evaluated solely on their capital base, but also on how well they comply with regulations, how they treat their customers, how their products are supervised, and ultimately, how they impact their customers,” he said. _

Igwilo noted that the next phase of reforms should prioritise robust customer monitoring services, integrated complaint management systems, and a more technologically driven supervisory framework—one that enables regulators to identify early warning signs of unsustainable practices through real-time customer feedback.

Olubunmi Ayokunle, Head of Financial Institutions Ratings at Augusto & Co., also spoke with Nairametrics, anticipating that the increased capital will lead to more investments in the risk sector and an expansion of the loan book.

• _“We anticipate more deployment of the funds into supporting the risk sector and expansion in the loan book,” Ayokunle said.  _
• _“Some of them want to scale across the continent, particularly those with international banking licenses. We anticipate some announcements in the next few weeks or months.” _

Ayokunle also highlighted the expected growth in product offerings for deposit customers.

• _“We’re going to see more deposit products, and some banks will strengthen their technology platform. SMEs will also be a target segment for deploying funds. Over 70% of registered businesses in Nigeria are SMEs, so it makes sense for banks to focus on them,” he added. _

**Get up to speed **

Nigeria’s banking sector raised over N4.6 trillion under the CBN’s recapitalisation program, reflecting strong investor interest and increased foreign participation.

The CBN had launched the Banking Sector Recapitalisation Programme in 2024 as part of efforts to strengthen the financial system amid macroeconomic reforms.

CBN Governor Olayemi Cardoso last week confirmed that 32 banks have met the revised minimum capital requirements, signaling significant progress in the sector.

Speaking at the Monetary Policy Forum in Abuja, Cardoso called the achievement “commendable” and emphasized the role of the banking sector in supporting long-term investment and economic growth.

He added that the recapitalisation program is essential to Nigeria’s ambition of becoming a $1 trillion economy.

**More insights **

Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that while the recapitalisation strengthens the sector’s resilience, Nigeria’s financial intermediation remains weak.

• _“Private sector credit is just 17% of GDP, which is well below the sub-Saharan African average of 25%,” he explained.  _
• _“Small and medium enterprises (SMEs) receive just 1% of total bank credit, despite contributing roughly 50% of GDP and over 80% of employment.” _

Dr. Yusuf emphasized the need for a shift in focus.

• _“Now that the banks are recapitalized, policy must move towards improving financial intermediation and ensuring that credit flows effectively into productive sectors,” he said.  _

He also pointed out that most bank lending is short-term, with only 25% of loans being long-term, which is a critical issue to address.

**What you should know **

The recapitalisation initiative has already shown tangible results in terms of improved investor confidence and the expansion of Nigerian banks into regional markets.

The CBN’s goal is to create a more resilient financial system that can withstand economic shocks and support long-term growth.

Notably, the N4.61 trillion in new capital raised represents an increase of N560 billion compared to the N4.05 trillion disclosed earlier in February 2026.