CBN tells banks to channel N4.65tn recapitalisation into lending

The Central Bank of Nigeria has urged banks to turn the N4.65tn raised through recapitalisation into productive lending for businesses, infrastructure and economic growth. Deputy Governor Muhammad Abdullahi made the call in Abuja on Tuesday at the 38th Seminar for Finance Correspondents and Business Editors. He said recapitalisation should be assessed not only by the amount raised but also by the quality of services and lending supported by stronger balance sheets.

Abdullahi said 33 banks had met revised minimum capital requirements by the end of the two-year programme announced in March 2024. Together, the banks raised N4.65tn. He said agriculture, manufacturing, services and infrastructure required financing suited to their cash flows and investment periods.

Smaller businesses and households, he added, needed reliable payment systems, suitable products and fair treatment. The deputy governor linked stronger bank capital to Nigeria’s ambition to build a $1tn economy by 2030. He said lenders would need to mobilise and allocate capital at a much larger scale to support infrastructure, industrial expansion and international trade.

He warned that capital was only a starting point and said boards and management must maintain effective controls, identify risks early and lend to viable projects. The CBN would continue monitoring governance, asset quality, liquidity and large exposures, while expecting banks to strengthen cybersecurity and business continuity. Abdullahi said the benefits of recapitalisation should reach rural communities, women, young entrepreneurs and smaller firms.

CBN communications director Michael Akuka similarly said attention had shifted from whether banks could raise capital to what they would do with it. The CBN also reported that the average gap between official and parallel foreign-exchange rates had fallen from 68.2 per cent between January and May 2023 to below two per cent. Gross external reserves stood at $55.60bn on September 11, according to the supplied material.