Financial and economic specialists have voiced their support for the Central Bank of Nigeria's (CBN) ongoing push to recapitalise the nation's banks. However, they have issued a strong warning that this necessary step could be derailed by weak regulation and persistent macroeconomic instability.
Addressing Eroded Capital and Global Competitiveness
The experts, who spoke with the News Agency of Nigeria (NAN) in Ibadan on Wednesday, January 14, 2026, agreed that the recapitalisation is largely a response to the severe erosion of banks' capital bases. This erosion has been driven by sustained naira depreciation, high inflation, and the expanding size of the Nigerian economy.
Dr Alarudeen Aminu, the Oyo State Chairman of the Nigerian Economic Society (NES), clarified that the current exercise is more about restoring the real value of bank capital than expanding capacity. "The recent recapitalisation has more to do with addressing the shortfall in the real value of the capital of our banks as a result of naira devaluation," Aminu stated.
He emphasised that while the CBN's decision to raise minimum capital requirements is positive, it is not a silver bullet. "Have we been able to address inflation, exchange rate instability and other headwinds? Recapitalisation just for the sake of increasing capital may not be enough," he cautioned.
Learning from the 2004-2005 Exercise
Aminu pointed to the pitfalls of the 2004–2005 recapitalisation, which exposed critical governance weaknesses. He recalled that banks were awash with funds, but this did not translate into productive investment. "Some directors diverted funds and banks were even pumping money into the stock market by buying their own shares," he noted, highlighting that these actions contributed to eventual bank failures.
He also stressed that a key goal of the current review is to enhance the competitiveness of Nigerian banks, making them comparable to their regional and global peers.
Dr Ifeayin Onwuka, Acting Head of the Department of Banking and Finance at the University of Ibadan, underscored the importance of strong capital buffers. "Equity capital is a buffer. When a bank has robust capital, it can weather shocks much better than when it doesn't," Onwuka explained.
He highlighted that weak capitalisation has historically limited Nigerian banks' ability to finance large-scale transactions. "Before the 2004 recapitalisation, the total capitalisation of all Nigerian banks was less than one major bank in South Africa. Nigeria cannot afford to play second fiddle on the continent," he asserted.
A Timely Move for a Growing Economy
Financial consultant Mr Tunde Adepeju described the recapitalisation as timely, given the growing volume of financial transactions and the central role banks play in driving industrial and commercial activities. "The economy has grown beyond what it was five or ten years ago. If banks don't have enough to lend out to businesses, especially production and industrial businesses, it will be a tough one," Adepeju said.
He described the CBN's differentiated capital thresholds for international, national, and regional banks as fair, noting that many institutions have already met the new requirements through rights issues and private placements.
The consensus among the experts is clear: while bank recapitalisation is a critical step for economic stability and global competitiveness, its success is not guaranteed. It must be underpinned by sound macroeconomic management, effective regulation, and strict oversight to avoid a repeat of the failures witnessed in the past.
