Urgent Need for DFI Recapitalization in Nigeria's Economy

In an interview, Adewale Smatt Oyerinde, a director at the Nigerian Employers' Consultative Association (NECA), discussed the urgent need for recapitalization of Development Finance Institutions (DFIs) to tackle challenges facing the Nigerian economy, particularly the manufacturing sector. He pointed out the paradox where financial institutions are flush with cash, yet the real economy suffers from a lack of credit.

Recent Treasury bill auctions revealed a significant disconnect, with investors bidding N4.4 trillion for securities worth N800 billion, indicating a 400% oversubscription. Oyerinde advocated for a mandatory lending quota requiring commercial banks to allocate at least 20% of their loan portfolio to manufacturing and agriculture SMEs.

He noted that current bank earnings from government securities are approximately 40%, which detracts from lending to productive sectors. The manufacturing sector is struggling, with the Purchasing Managers' Index dropping to 105.8 in January 2026, and SMEs facing high borrowing costs.

Oyerinde called for tax reforms to alleviate the burden on businesses and improve their survival and growth prospects.