The World Bank has challenged Nigerian banks to unlock the full economic value of the ₦4.65 trillion raised in the recently concluded recapitalisation exercise, warning that the fresh capital must reach businesses that can create jobs and expand production.
World Bank Country Director for Nigeria, Matthew Verghis, said the banking sector was now stronger and safer after the recapitalisation but must redirect more funds towards productive businesses instead of relying heavily on government securities.
He spoke at the Chartered Institute of Bankers of Nigeria (CIBN) 19th Annual Banking and Finance Conference in Abuja.
The challenge comes against the backdrop of a Pinnacle Daily analysis which found that stronger bank capital had not yet translated uniformly into stronger lending in the first half of 2026.
Of the banks that had released their second-quarter financial results at the time, First HoldCo, FCMB Group and Sterling Financial recorded faster growth in equity than gross loans, while Wema Bank took a more aggressive approach to lending.
At First HoldCo, government securities increased by ₦2.80 trillion, compared with only ₦565.23 billion in additional gross loans, raising questions over whether the fresh capital is reaching businesses and sectors that can drive production and employment.
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Pinnacle Daily recalls that Nigeria’s banks raised ₦4.65 trillion in fresh equity during the recapitalisation exercise, with ₦3.37 trillion, or 72.55 per cent, sourced locally. By the March 31, 2026 deadline, the Central Bank of Nigeria (CBN) said 33 of the country’s 37 banks had met the new minimum capital requirements.
Verghis said the major issue was no longer the availability of capital but how it was being allocated, particularly given Nigeria’s need to create millions of jobs for its rapidly expanding workforce.
“If you are going to take away one piece of my intervention, it will be the word jobs. Sustained jobs come from firms that invest, spend and hire, and from a financial sector that finances them,” Verghis said.
He maintained that domestic credit to the private sector was only about 13 per cent of GDP, while micro, small and medium-sized enterprises received only about one per cent of available credit and agriculture about six per cent.
“This is where the jobs are. The core observation to me and to the World Bank is credit is bypassing the job creators,” Verghis said.
He urged banks to increase lending to productive businesses and make greater use of blended finance, guarantees, credit enhancement and risk-sharing facilities to mobilise more commercial and institutional capital.
In the same vein, President Bola Ahmed Tinubu, represented by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, challenged the banks to ensure the recapitalisation produces more than larger balance sheets.
“The recently concluded bank recapitalisation must produce more than bigger balance sheets. It must translate into capital formation in the real economy, financing Nigerian businesses as they expand across Africa and pursue our ambition of a trillion-dollar economy.”
“A bigger bank that does not finance a more productive economy is a suboptimal outcome,” he said.
The President hinted that the next phase of his administration’s reforms is to convert stability into investment, investment into production, production into jobs and growth into improved living standards.
He cited real GDP growth of 4.43 per cent in the second quarter of 2026, external reserves exceeding $54 billion and a decline in headline inflation to 15.43 per cent as evidence that the reforms were beginning to produce measurable results.
“Stability has returned, predictability is rising, and prosperity is coming,” the President said but warned that macroeconomic stability should not be mistaken for economic prosperity.
“Stability is the foundation; prosperity is the destination,” he added.
CIBN President Dele Alabi noted that about 72 per cent of the incremental capital was subscribed by domestic investors, demonstrating Nigeria’s capacity to mobilise local capital for economic development.
“That lesson is very clear in the Nigerian capital market, that we have the capacity to build local capital formation in Nigeria,” he said.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X