By Seun Ibiyemi
The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns that Nigeria’s bank recapitalisation exercise, despite being largely successful, is failing to translate into meaningful support for the real economy.
In a policy brief released on Sunday by CPPE, Chief Executive Officer, Dr. Muda Yusuf acknowledged the efforts of the Central Bank of Nigeria (CBN) in executing a smooth and non-disruptive recapitalisation programme.
The group noted that 32 banks had met the new minimum capital requirements as of March 27, 2026, with no reported depositor losses, forced mergers, or job cuts.
However, he stressed that the strengthening of banks’ capital positions has not addressed the deeper issue of weak financial intermediation, warning that the real sector continues to suffer from limited access to credit.
According to the CPPE, private sector credit in Nigeria remains critically low at about 17 per cent of Gross Domestic Product (GDP), far below the sub-Saharan African average of 25 per cent and significantly behind peer economies with stronger lending frameworks.
The think tank described the situation as more troubling when broken down across key sectors, noting that consumer credit accounts for only about 7 per cent of total credit, while lending to small and medium enterprises (SMEs) stands at a mere 1 per cent.
Yusuf warned that this severe credit constraint is particularly damaging given that SMEs contribute roughly half of Nigeria’s GDP and employ the majority of the workforce, yet face a financing gap estimated at ₦48 trillion.
He also criticised the structure of credit allocation within the banking system, pointing out that most loans are short-term and heavily skewed towards the services sector, with manufacturing and agriculture receiving inadequate funding.
He identified several factors responsible for the disconnect, including high government borrowing that crowds out private sector access to funds, tight monetary policy, high interest rates, and stringent collateral requirements imposed by banks.
Yusuf urged policymakers to urgently shift focus from strengthening bank balance sheets to ensuring that financial resources flow into productive sectors of the economy.
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He called for deliberate reforms to boost private sector lending, support SMEs through credit guarantees, incentivise long-term financing, and improve access to consumer credit.
The CPPE cautioned that without these measures, the recapitalisation exercise risks falling short of its broader economic objectives, stressing that stronger banks alone will not deliver growth unless they actively support investment, enterprise, and job creation.
