April 20, (THEWILL) – Speakers, participants and other guests at the recently concluded 36th edition of the Central Bank of Nigeria (CBN) Seminar for Finance Correspondents and Business Editors held in Abuja, agreed that implementing the banking recapitalisation scheme poses a daunting task for the Nigeria Inter-Bank Settlement System (NIBSS).
The forum also concluded that various environmental and regulatory challenges which are parallel to the smooth-running of the exercise constitute a major concern to both the regulators and the operators.
PLACE OF NIBSS
NIBBS provides the infrastructure support that drives the financial services industry, especially the payment systems.
Specifically, NIBSS is a shared service payment infrastructure company that facilitates electronic payments within the Nigerian financial system and acts as a central switch, ensuring interoperability between various financial institutions and enabling seamless electronic fund transfers and payments.
The kernel of NIBSS functions centres on interoperability, that is enabling all banks, mobile payment operators, and other financial institutions to send, receive, and process funds and other instruments electronically through a common channel.
BANKING RECAPITALISATION
THEWILL recalls that on March 28, 2024, the CBN issued a directive to financially reshape the domestic money banks (DMBs), which spiked a theatre of competition among the operators.
In a direct memo, the CBN revised the capitalisation requirements, setting new benchmarks for banks with international operations at N500 billion, national licences, N200 billion, and regional licences, N50 billion. This directive, a crucial step towards a stronger banking sector, initiates a time-sensitive two-year journey that will start on April 1, 2024, and end on March 31, 2026.
Going by the data available, commercial banks in the country would require a combined N3.894 trillion to meet the new baseline capital requirements.
This would trigger capital raising efforts to the combined tune of N3.894 trillion to meet the new baseline capital requirements. The capital raising would be from both domestic and international markets which the banks have already keyed into.
According to available data, under commercial banks with international authorisation of N500 billion, in meeting with the new capital base, Access Bank, Fidelity Bank, FCMB, First Bank, Guaranty Trust Bank, Union Bank, United Bank for Africa and Zenith will be raising a capital of N248.19 billion, N370.30 billion, N374.71 billion, N248.66 billion, N361.81 billion, N351.91 billion, N384.19 billion, and N229.25 billion respectively.
Also, CitiBank Nigeria Limited, Polaris Bank, Stanbic IBTC Bank, Standard Chartered Bank Limited, Sterling Bank, Titan Trust Bank, Unity Bank, and Wema Bank will be adding a new capital of N185.56 billion, N149.57 billion, N90.74 billion, N154.58 billion, N142.85 billion, N90.74 billion, N154.58 billion, N142.85 billion, N170.80 billion, N183.67 billion, and N184.87 billion respectively.
INDUSTRY PERSPECTIVES
“The banking recapitalisation is a huge challenge to the financial services sector because it has opened an expressway for stiff competition and it is going to separate the ‘boys’ from the ‘men’ of the banking industry. A lot of innovations, investments, transformation and human capital deployment both directly and indirectly will reshape the industry,” said Prof. Ken Ife, Chief Economic Strategists, ECOWAS Commission, who chaired the seminar session on the first day.
According to Prof Ike, to grow a $1 trillion economy by 2023 requires strong banks with adequate capital base to finance the real sector, not just focusing on forex trading. He emphasised that the banks must invest hugely in infrastructure that would drive a new era of digital banking and the infrastructure must be of global standard in performance such that investor and customer confidence are not eroded.
Prof Ike, who is the Lead Consultant on Private Sector Development to the ECOWAS Commission, emphasised that those responsible for the digital infrastructure must prepare for the huge challenge the banking capitalisation would throw up.
In his presentation entitled ‘Banking Recapitalisation Towards a One-Trillion Dollar Economy: Industry Perspective’, Group Managing Director/CEO, United Bank for Africa (UBA), Dr Oliver Alawuba, noted that “The banking recapitalisation initiative represents a landmark policy shift aimed at aligning Nigeria’s financial system with its ambitious economic goals.”
Dr Alawuba, whose presentation dwelt on key success factors for attaining the goal of the recapitalisation exercise, emphasised that critical issues such as capital adequacy, FX instability, governance, cyber risks, and market readiness must be in place.
“This strategic initiative is central to achieving the country’s vision of a $1 trillion economy by 2030, positioning banks not just for compliance but as true economic enablers.
“Success will require improved supervision, policy incentives, capacity building, and collaborative execution among financial institutions, government, private sector, and media partners.
“Nigeria’s transformation depends on how effectively the financial sector mobilises capital, supports infrastructure, strengthens the real sector, and accelerates digital innovation.
“As the saying goes, strong economies are built on the foundations of strong banks.”
CHALLENGES TOWARDS $1TRN ECONOMY
Enumerating the challenges against the $1 trillion economy vision, Dr Alawuba, who is also Doyen of Bank MDs, emphasised on Ease of Doing Business environment, noting that Nigeria ranked 131 out of 190 countries in 2019 (Brazil: 124; China: 32; India: 62; Indonesia: 73), which is a negative attribute. This falls under Regulatory and Policy Challenges.
Others are Macro-economic Headwinds (such as high inflation, largely influenced by currency depreciation); Financial Accessibility and Inclusion (including limited access to credit by SMEs, which account for over 80% of businesses in Nigeria); Security Concerns (security challenges, particularly in agriculture and oil-producing areas, limit investment and economic activity), and Infrastructure Deficit (deficits in energy, transportation, and digital infrastructure which increase business costs and reduce productivity).
DIGITAL INFRASTRUCTURE
The three-man colloquium moderated by a Television anchor-person, Nancy Nnaji, included Prof. Uche Uwaleke, Professor of Capital Markets, Nasarawa State University, Keffi; Mr Musa Jimoh, Director, Payments System Policy Department, CBN; Mr Akin Morakinyo, and Mr Sunday Michael Ogwu, Group Business Editor at Daily Trust, Abuja.
The team emphasised on building a strong infrastructure to support the expansion in banking services and the competition that would evolve as the players push for higher performance standards. The team highlighted the importance of NIBSS in supporting what they referred to as the emerging sophisticated digital banking environment.
“NIBSS has been supportive in the emerging complex digital banking regime that is now driving the fast-growing fintech sector. We don’t know if NIBSS can cope with the rapid expansion in a sophisticated digital financial economy because the demands will be huge and challenging,” said a participant whose voice echoed the concern of the others that “we are going into a new world of banking with digital banking infrastructure of global standard”.
RACE FOR UPGRADE
Nigerian banks have engaged in systems upgrade in recent times in readiness for the post-recapitalisation economy. Similarly, NIBSS says it now has top-notch technology infrastructure and security measures to provide payment and settlement services that are among the best in the world.
According to Mr Musa Jimoh, Director, Payments System Policy Department, CBN, Nigeria can boast of digital payment infrastructure that effectively reduces operational and credit risks in funds transfer between financial institutions.
“NIBSS provides the infrastructure for automated processing, settlement of payments, and fund transfers between banks, discount houses, and card companies,” the company said on its website.
THE IMPERATIVES
Highlighting the imperatives of the recapitalisation policy, the Deputy Governor, Corporate Services, CBN, Ms Emem Usoro, emphasised that the global financial system and architecture have assumed a new dimension, necessitating proactive actions by countries.
In the keynote address delivered at the 36th edition of the CBN Seminar for Finance Correspondents Association of Nigeria (FICAN) and Business Editors, held at Ibeto Hotels, Abuja, 14th – 15th April, 2025, and attended by over 200 participants, Ms Usoro emphasized that the banking recapitalization was important in achieving Nigeria’s dream of a $1 trillion economy by 2030.
“Building a one trillion-dollar economy is not an easy task. It would require careful planning, robust and clear policy direction, dutiful implementation, and averred commitment from stakeholders that would galvanise the various sectors of the economy.
“Today, our economy is valued at approximately $250 billion. As we aspire to build a 1 trillion dollar economy, all hands must be on deck to push with strong ideas to sustain this vision that has very noble capabilities of making our economy develop faster and improve the quality of lives of our citizens,” she said.
The theme of the seminar was ‘Playing the Global Game: Banking Recapitalisation Towards a 1 trillion dollar economy’.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
