Nigeria’s ₦4.65tn Bank Recapitalisation Faces Its Biggest Test: Lending to the Real Economy

Nigeria’s banking sector has raised ₦4.65 trillion through recapitalisation, with 33 banks meeting revised capital requirements. The exercise has improved banks’ shock-absorption capacity, but its real value will depend on whether the funds translate into affordable credit for manufacturers, farmers, exporters, technology firms and small businesses. Finance and insurance grew by 9.29% in real terms in Q2 2026, down from 16.13% a year earlier. The sector remains important to non-oil growth, but high borrowing costs, a 26.5% monetary policy rate and a 45% cash reserve ratio continue to make lending difficult for many productive businesses. The key question is where banks deploy their stronger capital bases. Policymakers may need incentives that make responsible lending to agriculture, manufacturing, exports and SMEs more attractive without weakening lending standards. Nigeria’s $1 trillion economy ambition will require recapitalised banks to support productive investment, not merely hold stronger balance sheets.

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