CBN Launches Recapitalization Drive to Strengthen Banking Sector

The Central Bank of Nigeria (CBN) has launched a recapitalization framework that mandates national banks to raise their paid capital to N500 billion, with a target threshold of N200 billion. This initiative is part of a broader effort to enhance the capital strength of Nigeria's banking sector over a 24-month period.

The recapitalization exercise is projected to enable lenders to raise approximately N2.3 trillion, significantly boosting liquidity and strengthening the capital position of the industry. Data indicates that several top-tier Nigerian banks maintain a capital adequacy ratio (CAR) above 20 percent, exceeding the minimum regulatory requirement.

Analyst Tunde Afolabi noted that this development provides room for expansion across Africa, particularly within the African Continental Free Trade Area (AfCFTA), and supports financing for intra-regional trade. However, the effective deployment of this capital without eroding returns remains a challenge, especially following the end of COVID-era regulatory forbearance in June last year.