By Citizen Clement

The Central Bank of Nigeria (CBN) has mandated banks to meet new minimum
capital requirements by March 31, 2026. CBN has undertaken several banking policies called consolidation or recapitalisation exercises. Recently, Major requirements include ₦500 billion for international banking and ₦200 billion for national banks. As of March 2026, 32 banks, the vast majority of Nigeria’s lenders, have successfully met these targets, while others face potential mergers, acquisitions, or license downgrades.

Governor Olayemi Cardoso of the CBN, along with several other pro-establishment technocrats, as contended that the recapitalisation policy is a crucial component of the government’s ‘economic reforms’, and will empower our banks to fund developmental initiatives, draw in foreign investors, and ultimately advance the Nigerian economy. The rationale provided by the Tinubu regime for Recapitalisation suggests that the minimum capital base of banks is a key determinant of the economy’s robustness.

Nevertheless, history offers a cautionary reminder that capital alone does not guarantee resilience, as it would be recalled that Nigeria has travelled this road before. In the consolidation process overseen by former CBN Governor Charles Soludo between 2004 and 2005, the number of banks in the nation significantly decreased from 89 to 25. This reform resulted in the formation of larger banks that were hailed as national champions, despite all said and done, barely five years after; banking system plunged into crisis, forcing regulatory intervention, bailouts, and the creation of the Asset Management Corporation of Nigeria to absorb toxic assets.

As banks hurriedly work to meet the new capital requirements, the crucial question is
not how much capitals has been acquired, but whether these reforms will qualitatively impact on the core services of Nigerian banking system. However, like every other sector, the strength of the banking industry is fundamentally dependent on the overall health of the economy, A strong economy generally improves bank profitability, increases  credit demand, and reduces non-performing loans (NPLs), whereas economic downturns typically increase bank risk and limit lending capacity.

Based on reports, Nigeria’s banking sector has acquired more than N4.5 trillion in

additional capital commitments from various bank categories. These stats may appear impressive on paper. Numbers alone might be misleading when analysing the trends in Nigeria’s economy. Previous recapitalisation cycles revealed worrisome practices in which funds were generated through related-party transactions, borrowed money disguised as equity, or complicated financial arrangements that recycled risks back into the banking system. If such methods reemerge, recapitalisation will become little more than an accounting exercise, which we still rendered the real sector of the economy comatose.

To prevent another instance of failure, the Tinubu government must therefore ensure that every naira raised represents genuine, loss-absorbing capital. Under capitalism, recapitalisation is less about strengthening the real economy and more about restoring confidence for profit-making by financial elites. Without fundamentally transforming the system, what is presented as “balance sheet strength” remains largely fictitious paper wealth sustained by speculation and state backing, rather than real productive value. In this context, every round of recapitalisation merely postpones crisis, socialises losses, and preserves a system where banks are rescued while the working people bear the cost.

Sadly enough, Nigerian banks face challenges in financing viable production due to inadequate infrastructure, which limits their competitiveness in a globalised economy. They primarily generate profit through business loans aimed at earning interest. However, with official interest rates around 25% and unofficial rates reaching about 35%, it becomes challenging for borrowers to achieve profitability after obtaining loans. This situation is compounded by the low level of infrastructure and the limited purchasing power of the workforce.

The major question is that while recapitalisation often focuses on financial metrics,
the banking sector ultimately runs on human capital. Another impact of this
exercise is that consolidation and mergers triggered by the reform leads directly to
workforce disruptions and job losses. For a sector already rigged against its workers with  casualisation and outsourcing  already the dominant model for the banking sector, capitalization, mergers will means workers will further have to be sacrificed, and there is no escaping a declining staff morale, which will in turn weaken institutional culture and productivity. The majority of banks’ profits come from government investments via foreign exchange transactions, high interest yields from government actions through treasury bills and bonds, as well as activities like money laundering and racketeering. The remaining profits primarily stem from financing the importation of goods and services, along with some medium-scale production. A significant portion of bank deposits consists of public sector funds, including deposits from federal, state, and local governments and their agencies. The abysmal level of infrastructure explains why Tinubu, despite his legendary globe-trotting, has not been able to attract serious investors to Nigeria.

Nigeria does not simply need bigger banks. It needs better banks, institutions capable
of financing innovation, supporting entrepreneurs, and building economic opportunity
for millions of citizens. The true capital of any banking system is not just money. It is trust.
The Nigerian ruling elite cannot move this country forward economically because they
are so weak and backward like their counterparts in other neo-colonial third world
countries, the working masses must struggle to bring an end to the rule of the
capitalist ruling elite with their IMF/World Bank-inspired neo-liberal and anti-people
policies and nationalise the commanding heights of the economy, including big banks and place them under the democratic control and management of the workers.