CPPE Warns of Weak Credit Allocation Despite Bank Recapitalization

The Centre for the Promotion of Private Enterprise (CPPE) has expressed concerns regarding the weak credit allocation in Nigeria, despite the successful bank recapitalization exercise. Muda Yusuf, the Chief Executive Officer of CPPE, highlighted that private sector credit is only 17% of GDP, which is below the Sub-Saharan African average of 25-34%.

The report indicates that consumer credit accounts for just 7% of total lending, significantly lower than the regional range of 15-25%. The CPPE identified structural barriers that continue to limit the impact of the banking sector on the real economy, undermining goals for economic diversification and industrialization.

The organization emphasized the need for policy focus to shift from mere recapitalization to improving financial intermediation to ensure effective credit flow to the productive sector. Olayemi Cardoso, the Governor of the Central Bank of Nigeria, noted that the ongoing recapitalization program has already yielded positive outcomes, particularly in terms of improving investor confidence in the banking sector.