Market News

By : Collins Olayinka

• Challenges persist amid banks’ recapitalisation, says Cardoso With banks now adequately funded following the recapitalisation exercise that ended last month, both the government and the private sector rose slightly in the month of February, the highest since November 2024.

Though the recapitalisation will strengthen Nigeria’s banking foundations, the challenge ahead is how to ensure that a stronger foundation supports a more dynamic, inclusive and resilient economy.

According to the latest credit figures released by the Central Bank of Nigeria (CBN), the Nigerian banking industry’s lending to the domestic economy rose from N109.42 trillion in January to N111.39 trillion in February, a 1.8 per cent increase.

This was the highest level of credit to the domestic economy since November 2024, when the total credit to the economy was N115.57 trillion. Year on year, net domestic credit had risen by 7.8 per cent from N103.36 trillion, which it was in February 2025.

Year on year, credit to the private sector had declined slightly by 0.8 per cent from N76.25 trillion, which it was in February last year.

Having commended the CBN for an orderly, non-disruptive and confidence-enhancing recapitalisation exercise, Chief Executive of the CPPE, Dr Muda Yusuf, noted that Small and Medium-sized Enterprises (SME) credit in Nigeria accounts for only about one per cent of total credit, lower than the average of about five per cent in sub-Saharan Africa.

Pointing out that this “represents one of the most significant weaknesses in Nigeria’s financial architecture”, he stressed that “priority must shift from capital adequacy to economic impact. Nigeria needs not just stronger banks, but banks that work for the economy.”

Meanwhile, currency outside the banking sector continued to decline after it reached an all-time high in December last year. According to the CBN data, the amount of cash outside the banking industry rose to an all-time high of N5.4 trillion in December 2025.

IN a policy brief in Abuja, the CBN governor, Yemi Cardoso, noted that sustainable growth depends on a resilient financial system.

While stating that Nigeria might now have financial resilience on paper, as demonstrated by the over four trillion naira raised, the real test is whether it can deliver in practice.

Financial analysts said while Nigeria’s latest banking recapitalisation exercise marks more than a regulatory milestone, it signals a structural shift in how the financial system is designed to support growth, absorb shocks and compete globally.

The latest recapitalisation exercise compelled banks to raise fresh capital ahead of a firm March 31, 2026, deadline. About N4.65 trillion was mobilised, with 33 banks meeting new thresholds, offering a quantitative measure of success.

Experts cautioned that as euphoria trails what lies ahead, the deeper story lies in what this capital means for the economy.

In foisting the recapitalisation on the banking sector, Cardoso sought to confront the under-capitalisation of Nigerian banks not only to play within Africa, but also to participate in the global financial space.

A retired central banker, Dr Yunana Bature, explained that one of the more telling outcomes of the exercise is the composition of funding, as over a quarter of the capital raised came from international investors.

He added that in a period marked by currency volatility and tightening global financial conditions, the level of foreign participation sends a strong signal.