With Nigeria’s banking recapitalisation exercise now concluded, attention is shifting to whether stronger banks will finally channel more credit to agriculture, manufacturing, and small businesses, sectors widely seen as underserved despite their crucial role in driving economic growth.
This position was outlined by Ummie Kabir, a PR consultant with Apex Media Services, who argued that the success of the recapitalisation exercise should be measured not only by stronger bank balance sheets but by the extent to which banks support the productive sectors of the economy.
The recapitalisation programme, launched by the Central Bank of Nigeria (CBN) in March 2024 under Governor Olayemi Cardoso, introduced new minimum capital requirements for banks.
Commercial banks with international licences were required to raise their capital base to ₦500 billion, national banks to ₦200 billion and regional banks to ₦50 billion.
According to Cardoso, the exercise was designed to strengthen the financial system, improve resilience against economic shocks and position banks to support Nigeria’s ambition of becoming a $1 trillion economy by 2030.
By April 2026, the CBN declared the exercise successfully concluded, with 33 banks raising ₦4.65 trillion in fresh capital, surpassing expectations.
More than 72 per cent of the funds were sourced locally, while about 27 per cent came from international investors.
Kabir noted that while recapitalisation has strengthened the banking system, questions remain over banks’ contribution to the real economy.
“The dominant view among the SMEs, manufacturers and genuine farmers is that banks prefer low-risk lending to the government and oil and gas sector,” she said.
According to her, Nigerian banks’ conservative lending pattern is driven largely by the attractive yields on government securities such as treasury bills and bonds, as well as macroeconomic instability that raises default risks.
“Rather than lending to small businesses and manufacturing, banks have favoured sovereign debt for reliable, inflation-hedging returns,” she stated.
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The trend, she argued, has left agriculture and small businesses as the biggest victims of banks’ low appetite for risk, despite several intervention policies aimed at increasing credit to those sectors.
Citing National Bureau of Statistics data, Kabir said agriculture remains Nigeria’s largest employer, providing jobs for more than 25 million Nigerians and contributing 28.66 per cent to GDP in 2024, yet it continues to receive only a small share of bank lending.
She added that the suspension of the Anchor Borrowers Programme in 2024 further reduced credit access to agriculture, although recovery began in 2025 through NIRSAL’s risk-sharing framework.
Small and medium-sized enterprises face an even wider financing challenge, she said, with the sector’s credit gap estimated at ₦48 trillion as of 2024.
“Commercial lending rate which is as high as 30 percent and short tenors limit uptake,” she noted.
Kabir said recapitalisation alone would not guarantee economic growth if credit did not flow to productive sectors.
“Strong and stable financial system which on its own does not deliver or guarantee economic growth. Rather, real growth depends on what funds are channelled into,” she said.
She argued that as Nigeria pushes toward a $1 trillion economy, banks must significantly increase support for agriculture, manufacturing and SMEs instead of concentrating lending in services and oil and gas, which together accounted for 95 per cent of credit in 2024.
The consultant acknowledged that the recapitalisation exercise has positioned banks to finance larger projects and withstand economic shocks, with institutions such as the IMF describing the policy as “timely and appropriate” and Fitch projecting loan growth above 20 per cent in 2026.
However, she warned that access to finance alone would not solve the challenges facing the real sector, which continues to grapple with poor infrastructure, unreliable electricity, insecurity, regulatory bottlenecks and high operating costs.
“Credit alone doesn’t solve the problem because if you pump money into an economy with bad infrastructure, inconsistent power, insecurity and policy uncertainty such money may go down the drain,” she said.
Kabir urged the CBN to move beyond financial stability and use regulation and moral suasion to ensure affordable, long-term credit reaches productive sectors.
“The apex bank should ensure that whatever influence it can muster, either in the form of regulation or moral suasion, make sure that affordable and adequate credit is extended to the real sector,” she said.
She added that businesses and investors now expect lower interest rates and longer-term financing, including targeted funding for agriculture, SMEs, manufacturing and infrastructure to support food security, industrial production and job creation.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X