Central Bank of Nigeria Announces Upcoming Recapitalisation to Strengthen Banking Sector
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has announced that Nigerian banks will be required to increase their capital in order to effectively support the country’s N1 trillion economy target. Speaking at the Chartered Institute of Bankers of Nigeria (CIBN) 58th Annual Bankers’ Dinner and Grand Finale, Cardoso assured that the apex bank would provide the necessary direction for financial institutions to meet the new capital requirements.
Despite concerns about the current state of Nigeria’s economy, Cardoso believes that the challenges are not insurmountable and with the right policy measures, the country can overcome the obstacles hindering economic growth and pave the way for progress and prosperity. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, also expressed confidence in the government’s economic policies, stating that they are aimed at encouraging private investment.
This announcement comes at a time when Nigeria’s Gross Domestic Product (GDP) growth rate has increased to 2.54 per cent year-on-year in real terms in the third quarter of 2023. The performance of the economy was driven mainly by the services sector, which contributed 52.70 per cent to the aggregate GDP in Q3. The non-oil sector contributed significantly to the economy, recording a growth of 3.99 per cent and contributing 94.52 per cent to the GDP.
The CBN governor expressed optimism that by taking appropriate corrective actions and strategic steps, macroeconomic stability would be restored in Nigeria, and the fundamental flaws in the economy addressed. He also emphasised the importance of prioritising price stability to safeguard the livelihoods of Nigerians and addressing the well-being of the average citizen, including access to food, shelter, healthcare, education, and skills training opportunities.
In addition to the banking sector recapitalisation, Cardoso highlighted the need for banks to reassess the responsible banking framework and for the CBN to enhance its in-house capacity to assist banks in implementing their sustainability principles. He also revealed that the CBN has introduced measures to cage inflation and ensure a more stable exchange rate through targeted policies, transparent market operations, and coordination between monetary and fiscal authorities.
In order to achieve the goals set by President Bola Ahmed Tinubu’s administration, which aims to achieve a Gross Domestic Product (GDP) of $1 trillion over the next seven years, Cardoso stressed the need to evaluate the adequacy of Nigeria’s banking industry to serve the envisioned larger economy. The CBN is committed to achieving monetary and price stability, enhancing investor confidence, attracting capital inflows, stimulating domestic investment, and ultimately improving the level of external reserves.
