Nigeria’s banks have been urged to make better use of the additional capital raised through the recent recapitalisation exercise by increasing lending to businesses, particularly micro, small and medium enterprises (MSMEs).
The Chartered Institute of Bankers of Nigeria (CIBN) said the stronger capital position of banks should go beyond improving their balance sheets. It should also help lenders provide more funding to businesses that have historically struggled to access affordable credit.
The President and Chairman of Council of CIBN, Dr Dele Alabi, said the recapitalisation exercise had given Nigerian banks a stronger financial cushion to withstand economic shocks. However, he stressed that the real value of the exercise would depend on how effectively the new capital is deployed.
According to Alabi, banks now have an opportunity to support sectors that can create jobs, increase production and contribute directly to economic development.
He noted that Nigerian banks have traditionally directed a significant portion of their lending and investment towards government securities and large corporations. While these areas remain important, he said the changing economic environment requires lenders to adopt a different approach.
Alabi argued that banks need to become more innovative in deciding where and how they invest their capital. He explained that shareholders’ capital is an expensive source of funding and therefore needs to generate meaningful economic returns.
He encouraged bank executives to look beyond traditional lending models and develop products that can make financing more accessible to smaller businesses.
MSMEs are particularly important to Nigeria’s economy because they account for a large share of businesses and provide employment for millions of people. However, many small businesses continue to face challenges such as high interest rates, limited collateral and strict lending requirements.
Greater access to bank financing could help these businesses expand their operations, purchase equipment, employ more workers and improve productivity.
Alabi spoke ahead of the 19th Annual Banking and Finance Conference of the CIBN, which is scheduled to focus on how the financial services industry can remain resilient amid major economic and technological changes.
The conference, themed “Building a Resilient Economy in an Era of Disruptions: Strategic Imperatives for the Banking and Financial Services Industry,” is expected to bring together key players from Nigeria’s financial sector and wider economy.
President Bola Ahmed Tinubu, Vice President Kashim Shettima, Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, and Central Bank of Nigeria Governor Olayemi Cardoso are expected to headline the event.
World Bank Country Director for Nigeria, Matthew Verghis, is also expected to deliver the keynote address.
The conference will examine issues affecting the financial sector, including technological disruption, cybersecurity threats, geopolitical uncertainty, climate-related risks and changing customer expectations.
For Nigerian banks, the message is increasingly clear: raising more capital is only the first step. The bigger challenge is ensuring that the funds are deployed efficiently into productive areas capable of strengthening businesses and supporting sustainable economic growth.
