The Central Bank of Nigeria (CBN) has issued a strong warning to deposit money banks against sourcing capital from illicit or unverified funds as the country enters a new phase of banking sector recapitalisation. According to Dr. Olubukola Akinwunmi, Director of Banking Supervision at the CBN, this caution is part of efforts to safeguard financial system stability and ensure that the sector remains resilient enough to support Nigeria’s ambitious $1 trillion economy target. Speaking at the 36th Finance Correspondents Association of Nigeria seminar, Akinwunmi emphasized the importance of transparent funding sources, adding that proper verification processes are in place to prevent systemic risks from dirty money.
The recapitalisation initiative, which kicked off on April 1, 2024, will run for two years and is expected to reposition Nigerian banks for greater responsibilities. New minimum capital requirements have been set: N500bn for international banks, N200bn for national banks, and N50bn for regional and merchant banks. Non-interest banks at both national and regional levels must meet N20bn and N10bn thresholds, respectively. Akinwunmi reiterated that while the sector remains sound on core indicators like liquidity and non-performing loans, increased capital will help banks better absorb global and domestic shocks, while supporting key growth sectors such as infrastructure, agriculture, and manufacturing.
Deputy Governor Emem Usoro echoed the importance of the recapitalisation exercise, calling it a necessary response to evolving global financial trends. She reminded stakeholders that the last major recapitalisation in 2004 brought critical stability to the sector and argued that a stronger, better-capitalised banking system is essential for achieving the government’s economic goals. With rising risks, expanding financial flows, and Nigeria’s development agenda, she urged for policy clarity, strategic communication, and broad-based stakeholder support to ensure successful execution of this initiative.
United Bank for Africa’s Group Managing Director, Oliver Alawuba, added a private sector perspective, stressing that Nigeria must grow its economy at a minimum of 10% annually to realistically hit the $1tn GDP mark by 2030. He praised the CBN’s proactive move, stating that the recapitalisation is more about future readiness than any current sector weakness. Alawuba called for improved policy incentives, financial inclusion, and public trust, while flagging persistent challenges like inflation, poor infrastructure, and cybersecurity threats. He concluded that well-capitalised banks are central to Nigeria’s economic transformation and must be equipped to support inclusive growth across all regions.
Source: Punch