Abah hails CBN recapitalization policy as catalyst for building resilient market
By Sofiyyah Layole
A development and governance expert, Dr Joe Abah has hailed the Central Bank of Nigeria (CBN) recapitalisation policy as a great move toward building a more resilient and competitive financial market.
Recall that financial institutions in Nigeria have significantly raised the base capital requirements for market operators. This pivotal policy shift aims to strengthen the economy and align the domestic financial system with crucial global standards, the CBN noted.
Commenting, Abah argued that the persistent devaluation of the naira has made this policy necessary to bolster stability and restore investor confidence.
“This measure will help improve market stability and investor confidence.” he said but however cautioned that while the policy is necessary, operators should have been granted more time to comply with the new capital thresholds given the prevailing economic realities.
He noted that the simultaneous need for funds is creating a short-term strain. “Many operators are sourcing funds from the same economy, which could create short-term strain.”
He also noted that the exercise poses a direct threat to smaller firms, which may be forced out of the market due to their inability to meet the new mandates.
Abah further emphasized that the policy presents a vital opportunity for strategic mergers, partnerships, and consolidations that will ultimately result in stronger, more sustainable institutions.
The expert also issued a practical warning to investors, advising them to exercise caution and conduct thorough research, as the recapitalization drive is likely to affect market dynamics in the short term.
He urged a shift toward diversification, “Don’t put all your eggs in one basket. Consider diversifying into real estate, commodities, and other sectors.”
Despite these potential short-term disruptions, Dr. Abah concluded that the recapitalization policy is an essential step toward forging a more stable, competitive, and globally recognized Nigerian financial market.