• Nigerian banks raised ₦4.65 trillion in fresh capital, with over 72% sourced locally
• Foreign investors accounted for just 27.45% of total participation
• The programme strengthens bank capital, but raises questions about external investor appetite and credit expansion

The Central Bank of Nigeria has concluded its banking sector recapitalization programme with ₦4.65 trillion (about $3.37 billion) raised, but the exercise was driven largely by domestic investors, who accounted for 72.55% of total capital mobilized, compared to 27.45% from international markets.

The recapitalization, launched in March 2024, aimed to strengthen banks’ capital buffers and improve their capacity to support economic activity. However, the dominance of local funding highlights the central role of domestic liquidity in sustaining Nigeria’s financial system at a time when foreign investor participation remains relatively limited.

CBN Governor Olayemi Cardoso said the programme has reinforced the resilience of the banking sector, noting that stronger capital positions will enable banks to better withstand macroeconomic shocks and support growth.

According to the central bank, 33 banks have met the revised minimum capital requirements, with capital adequacy ratios remaining above Basel thresholds of 10% for regional and national banks and 15% for international banks.

Beyond capital levels, the programme also coincided with a gradual exit from regulatory forbearance, signaling a shift toward stricter balance sheet discipline and improved asset quality across the sector.

The relatively modest share of foreign participation comes amid broader macroeconomic challenges, including exchange rate volatility and capital flow constraints, which have shaped investor appetite for Nigerian financial assets in recent years.

Nigeria’s banking recapitalization comes at a time when credit to the private sector remains relatively constrained compared to the size of the economy, with bank lending typically accounting for a modest share of GDP relative to peer emerging markets. Despite capital positions, Nigerian banks have historically allocated a significant portion of assets to government securities, attracted by high yields and lower risk, particularly in a high-interest rate environment.

By Cynthia Ebot Takang