Bank recapitalization: CPPE hails CBN, calls for increased lending to SMEs, Manufacturers

The Centre for the Promotion of Private Enterprise (CPPE) has commended the Central Bank of Nigeria (CBN) for the orderly and non-disruptive execution of the bank recapitalization programme as the exercise nears its conclusion.

Recall that as of March 27, 2026, 32 banks have successfully met the new minimum capital requirements per the announcement made by the CBN Governor, Olayemi Cardoso at an event recently.

"This milestone was achieved without reports of depositor losses, forced mergers, or the erosion of shareholder value, reflecting a significant improvement over past consolidation episodes and underscoring enhanced regulatory capacity within the national financial system," the CPPE is quoted as saying.

Despite the successful strengthening of bank balance sheets and their improved capacity to absorb shocks, the CPPE highlights a persistent and concerning disconnect between the banking sector and the productive segments of the economy.

Data reveals that private sector credit as a percentage of GDP in Nigeria stood at only 17% in 2025. This figure trails the sub-Saharan African average of 25% and peer economies such as South Africa and Mauritius, which maintain levels of 57.5% and 69.8% respectively.

This gap underscores a deep-seated structural weakness in Nigeria’s financial architecture that limits growth prospects across multiple sectors.
The credit environment is particularly constrained for small and medium enterprises (SMEs), which receive only 1% of total credit despite contributing approximately 50% of the national GDP and 80% of employment.

With an estimated financing gap of ₦48 trillion, the current credit allocation remains heavily skewed toward the services sector, which accounts for 55% of total credit. In contrast, manufacturing and agriculture receive only 14% and 5% respectively.

55% of total bank lending also remains short-term in nature, a structure that is fundamentally unaligned with the long-term financing needs of infrastructure and industrial development.

Moving forward, the CPPE urged the CBN and fiscal authorities to prioritize the next phase of reform by reconnecting the banking system to the real economy.

The organization advocated for deliberate policy measures to increase private sector credit to 30% of GDP, de-risk SME lending through improved credit infrastructure, and address the crowding-out effects of high public sector borrowing.

The policy think-thank noted that the success of the recapitalization effort will be determined not just by stronger balance sheets, but by the extent to which the banking system supports investment, job creation, and economic transformation.