Avoid Illicit Recapitalisation Funds, CBN Warns
The Central Bank of Nigeria (CBN) has warned deposit money banks to avoid raising capital from illicit sources as part of the ongoing recapitalisation exercise.
The apex bank said the measure was necessary to preserve financial system stability and ensure that the banking sector remains strong enough to support the country’s $1tn economic target.
Speaking at the 36th Finance Correspondents Association of Nigeria and Business Editors seminar in Abuja on Monday, the Director of Banking Supervision at the CBN, Dr Olubukola Akinwunmi, said while the recapitalisation exercise is designed to reposition the sector for bigger responsibilities, the bank will not compromise its regulatory oversight.
Akinwunmi said, “We ensure there is proper verification. And the verification is to ensure that we do not encourage illicit funds into our banking system. Illicit funds can only destabilise the banking system.”
He explained that the new minimum capital thresholds announced by the bank on March 28, 2024, were introduced to address the structural imbalances in the economy and prepare banks to absorb shocks from both domestic and global headwinds.
Under the new requirements, international commercial banks are expected to meet a minimum capital of N500bn, while national commercial banks are to raise theirs to N200bn.
Regional commercial and merchant banks are expected to raise a minimum of N50bn each, while non-interest banks at the national and regional levels are to meet capital bases of N20bn and N10bn, respectively.
According to Akinwunmi, the recapitalisation exercise, which took effect on April 1, 2024, will run for a period of 24 months, ending on March 31, 2026.
He added that the capital requirement is already in effect for new banking licence applications.
The banking sector, he noted, has shown resilience over the years and remains sound across key prudential indicators.
“We have just completed certain examinations and research to give us the reassurance that our banks are on a strong footing. Our banks are standing on sound footing when it comes to liquidity, capital adequacy and non-performing loans,” he said.
He added that the exercise would place banks in a stronger position to withstand rising global tensions and macroeconomic uncertainties.
“The recapitalisation is also about strengthening the financial system for the future. Larger capital bases translate to greater capacity to fund high-impact sectors such as infrastructure, manufacturing, and agriculture. Banks must be ready for the emerging global order,” he said.
The CBN, he noted, has adopted a phased implementation to ensure that banks continue to operate effectively while raising capital.
He also stated that flexible funding options such as public offers, rights issues, mergers, acquisitions and strategic foreign investments were available to banks.
He added that banks could choose to scale down their licence types where necessary without losing regulatory standing.
On corporate governance, he said stronger capital would naturally invite more investors who would in turn demand improved transparency and compliance with anti-money laundering and terrorism financing laws.
Akinwunmi clarified that the bank had returned to its original definition of share capital—comprising paid-up capital and share premium—stressing that this was in line with the legal provisions under the Banks and Other Financial Institutions Act.
He maintained that the recapitalisation programme would enhance banks’ ability to power the growth of SMEs, support job creation, and improve access to credit for critical sectors that contribute directly to GDP growth.
He said the exercise would deepen financial inclusion, promote innovation and consolidate the banking system in a manner that makes it more globally competitive.
“Our banks are ready for the emerging challenges that the global economy faces. With stronger capital buffers, they will be better positioned to navigate external shocks and support the trillion-dollar vision of this administration,” Akinwunmi said.
Also speaking, the Deputy Governor of the CBN, Ms Emem Usoro, has said that Nigeria must ensure a strong, stable, and well-capitalised banking sector if it hopes to attain its goal of becoming a one-trillion-dollar economy.
Delivering the keynote address at the seminar in Abuja, Usoro described the recapitalisation exercise as a critical policy response to global financial changes and one that would enhance the banking system’s capacity to fund and power the economy effectively.
She noted that the last major recapitalisation exercise in 2004, which raised the minimum capital base for banks to N25bn, had reduced the number of banks from 89 to 25 and helped stabilise the sector.
However, with increasing global financial flows, evolving risks, and Nigeria’s renewed development ambition, a more robust financial intermediation framework was now required.
“As we aspire to build a $1tn economy, all hands must be on deck,” she said.
According to the deputy governor, the recapitalisation drive is not just about raising capital but also about improving financial system resilience, fostering competition, and positioning Nigerian banks to support development financing.
“We must consider the recapitalisation of our banks to be able to fund, finance and power the economy and favourably compete globally with its peers in other climes,” she said, urging stakeholders to provide sustained support through policy clarity, implementation discipline, and strategic communication.
Usoro also commended the role of the media in shaping public understanding of monetary policy reforms, calling for more collaboration between regulators, financial operators, and journalists.
The Group Managing Director of United Bank for Africa Plc, Mr Oliver Alawuba, has said that Nigeria must grow its economy at a minimum rate of 10 per cent annually if it hopes to achieve the $1tn gross domestic product target set by the Federal Government.
Speaking at the seminar, Alawuba warned that the country’s current growth rate of 3.84 per cent was not sufficient to achieve the ambitious target by 2030.
He said, “If we continue to grow at the current rate, we will not be able to meet the $1tn GDP target. To achieve it, the economy must grow in double digits, and a minimum of 10 per cent is required. This is achievable, considering that the economy still grew by 3.84 per cent in 2024 despite inflation, exchange rate volatility and insecurity.”
Alawuba noted that many African countries with smaller economies were already achieving stronger growth rates. He cited examples such as Kenya, Rwanda and Tanzania in East Africa, as well as Côte d’Ivoire and the Benin Republic in West Africa, all of whom are experiencing growth of 6–7 per cent.
He commended the Central Bank of Nigeria’s decision to commence another recapitalisation exercise, describing it as a proactive move aligned with the government’s long-term economic vision.
He said the exercise, announced in March 2024 and effective from April 1, 2024, was not due to weakness in the banking sector but to strengthen its capacity to support the country’s transformation.
According to him, the banking industry has evolved significantly since the last recapitalisation in 2005, both in terms of asset size and the complexity of financial transactions.
As such, he said banks needed to be well-capitalised to absorb shocks from inflation, exchange rate depreciation, political risks, and global economic headwinds.
Alawuba stressed the need for stronger collaboration between banks, regulators, the media, and the government to successfully drive growth.
He called for clear policy incentives, effective regulation, and a national reorientation agenda that fosters confidence in the Nigerian economy and its institutions.
He said, “Strong economies are built on the foundation of strong banks. This transformation will depend on how well the financial sector mobilises capital, supports infrastructure, strengthens the real sector, and accelerates digital innovation.”
Highlighting key challenges, Alawuba pointed to regulatory inconsistencies, low ease of doing business, weak contract enforcement, insecurity, limited access to finance, and inadequate infrastructure—especially power—as major constraints.
He added that high inflation, volatile exchange rates, and interest rate pressure continued to weigh heavily on growth projections.
He said, “Nigeria cannot develop if a majority of its population remains outside the financial system. We must drive financial inclusion aggressively, especially in rural areas. Every adult Nigerian should be part of the financial system.”
Alawuba also urged banks and government institutions to work together to address infrastructure financing gaps, especially in sectors like power, roads and housing.
He maintained that Nigerian banks were capable of funding national development and managing reserves, noting that UBA and other Nigerian banks already manage parts of central bank reserves for several African countries.
Commenting on cybersecurity risks, the UBA GMD disclosed that Nigerian banks lost over ₦42bn to cyber fraud in 2023.
He stressed the importance of collaboration between banks, security agencies and the CBN to combat digital fraud and strengthen public trust in the financial system.
He added, “Banks must be safe places for Nigerians. We need to invest in platforms that protect depositor funds, ensure cyber resilience, and maintain confidence in the banking sector.”
On the recapitalisation itself, Alawuba said Nigerian banks had begun submitting their capital plans and some had made significant progress.
He stated that while the recapitalisation drive was not about forcing consolidation, all banks—large and small—must be supported to grow because of their different roles in the economy.
In her welcome address, the Acting Director of Corporate Communications at the Central Bank of Nigeria, Mrs Sidi Ali Hakama, said the annual Finance Correspondents and Business Editors seminar has become a critical platform for deepening media understanding of monetary policy and banking regulation.
According to her, the CBN remains committed to engaging journalists in capacity-building forums that will improve the quality of financial reportage and foster mutual understanding.
She said the ongoing recapitalisation programme was not only central to financial system stability but also to realising Nigeria’s ambition of achieving a $1tn GDP by 2030.
