Banking sector

By Salmanu Isa Darazo


Nigeria’s banking sector has entered a new phase of strength and global relevance following the successful completion of a sweeping recapitalisation exercise spearheaded by the Central Bank of Nigeria (CBN).

The exercise, which mandated banks to meet new capital thresholds by March 31, 2026, is widely regarded as the most significant reform since the 2005 consolidation era—signalling a bold regulatory shift aimed at repositioning the financial system for long-term economic transformation.


A Strategic Reform Anchored by the CBN

At the heart of the exercise is the CBN’s vision to build a resilient, well-capitalised banking system capable of supporting Nigeria’s ambition of a $1 trillion economy. By enforcing higher capital requirements, ranging from ₦10 billion for regional non-interest banks to ₦500 billion for international commercial banks—the apex bank has effectively reset the industry’s financial architecture.

The results are striking: Nigerian banks collectively raised ₦4.65 trillion, with 33 institutions meeting the new thresholds. Notably, the recapitalisation attracted both local (72.55%) and international (27.45%) investments, underscoring renewed investor confidence in Nigeria’s financial system and regulatory credibility.


Strengthening Stability and Global Competitiveness

Analysts note that the recapitalisation significantly enhances banks’ ability to absorb economic shocks while aligning Nigeria’s financial system with global standards such as Basel III.

Beyond compliance, the reform signals a transition to stronger corporate governance, improved risk management, and enhanced regulatory oversight—all driven by the CBN’s supervisory framework.

This positions Nigerian banks not just as domestic financial intermediaries, but as competitive players in the global financial ecosystem.


Unlocking Financing for National Development

A key outcome of the CBN-led reform is the expansion of banks’ lending capacity. With stronger balance sheets, financial institutions are now better equipped to fund large-scale projects across critical sectors, including infrastructure, energy, manufacturing, and technology.

This increased capacity is expected to accelerate Nigeria’s industrialisation drive and support export diversification—key pillars of the Federal Government’s economic agenda.


CBN’s Role in Policy Coordination and Economic Stability

The recapitalisation also reflects growing synergy between monetary and fiscal authorities. By aligning its policies with government growth objectives, the Central Bank of Nigeria is strengthening policy transmission mechanisms, improving liquidity management, and reinforcing inflation control measures.

This coordinated approach enhances macroeconomic stability while ensuring that financial sector reforms translate into real economic outcomes.


A Foundation for Inclusive Growth

Beyond macroeconomic gains, the reform carries significant implications for financial inclusion. A stronger banking system is better positioned to expand credit access to small and medium enterprises (SMEs), support grassroots economic activities, and deepen financial penetration across underserved communities.

The CBN’s broader objective, analysts say, is to build a financial system that is not only robust but inclusive—capable of delivering growth that is both sustainable and widely shared.










The Road Ahead

While most banks have met the new requirements, those yet to fully recapitalise remain operational and are progressing toward compliance under CBN supervision.

Industry observers agree that the recapitalisation marks a turning point—laying the groundwork for a stronger, more transparent, and globally competitive banking sector.

Conclusion

The recapitalisation exercise is more than a regulatory adjustment—it is a strategic economic intervention led by the Central Bank of Nigeria. By strengthening financial institutions, boosting investor confidence, and aligning with national development goals, the CBN has set the stage for sustained economic growth and stability.

For Nigeria, the message is clear: a resilient banking system is not just desirable—it is essential for the future.

Salmanu Isah Darazo is an analyst and publisher, he can be reached via Salmanudrz@gmail.com

By Muhammad Habibat Sani

Residents of Abaji, a prominent town in Abuja, lament the prolonged closure of the only bank in the area. The closure, prompted by a series of recent robbery incidents, has left the community reeling.  

This development has brought significant hardship to the residents, particularly business owners and individuals who depend on the bank for daily transactions and upkeep.  

For several months now, the bank has remained shut following a robbery incident that resulted in the tragic loss of lives.  

The wave of robberies in the town has not only claimed lives but also disrupted economic and commercial activities, leaving the community in a dire situation.  

Many residents of Abaji, particularly business owners, have resorted to travelling to neighbouring towns such as Gwagwalada and Lokoja to carry out banking transactions.  

It would be recalled that earlier this year, daredevil robbers stormed the bank in Abaji, killing some members of the community and injuring others, including security personnel.  

Since the tragic incident, the bank has remained desolate, and management has made no visible effort to improve the situation. The affected bank has refused to resume commercial operations, citing the damage to its structure that still needs to be repaired.  

The town’s youth are also not spared from hardship. Many endure the rigorous process of traveling to Gwagwalada, about 63 minutes away, just to carry out banking transactions. Those who rely on ATMs are equally affected, as they must travel to withdraw cash or perform any form of banking activity. 

Several residents shared their frustrations with our correspondent. Ummilkhair Muhammad Sani, born and raised in Abaji, complained about her expired ATM card. She said, “Transport from Abaji to nearby towns is expensive, so I’ve left the card without renewing it.”  

Another resident, Umar Ashafa, expressed his dissatisfaction with the situation. He said, “We are at the mercy of POS (point of sale) operators. To withdraw ₦1,000, you now have to pay 100 naira and calculate the charges, and it’s a hardship. Sometimes, you have to check several shops just to find cash.”  

Ekene Arachie, the manager of Nipco Petroleum, Abaji, has raised concerns about the unavailability of banks in Abaji, describing it as a serious security threat. He stated, “The effect of the absence is very devastating. Major businesses find it difficult to handle cash. The absence of such commercial banks has done more harm than good. It has created a lacuna between businesses and banks and has given room for security challenges.”  

Similarly, Mallam Adamu, a point-of-sale (POS) operator, has lamented the difficulty of accessing cash. He said, “We have to beg big shop owners to give us cash. Normally, we get that cash from banks, but now it affects our business. Sometimes, I cannot get cash and have to close down my shop.”  

A police officer who pleaded anonymity while reacting to the bank closure explained that the police had received numerous complaints from families residing in Abaji, business owners, travellers, and petty traders.  

He said, “They are seriously affected by the bank closure as they do not have any means to transact their business with ease, especially the movement of cash and settling of debts.”  

Addressing measures being taken to prevent future occurrences, the police officer noted, “The police are putting all necessary mechanisms in place to curtail such incidents from repeating. We have embarked on building synergy within the communities in Abaji to enable them to trust and report issues on time to the police. During the last robbery operations, it was visibly noticed that no timely information was provided to the police. But be rest assured, we are seriously checking the traces of such ugly incidents.”  

He further appealed to the public for cooperation, adding, “I will also request that you, as a good citizen of Nigeria, which I believe you are, help us with information that can lead to any secret meetings or plans by the men of the underworld (robbers) before they can execute their plans, so we can arrest them on time.”  

Commenting on the police response during the robbery, he described the incident as unfortunate. Still, he commended the gallant efforts of his officers, stating, “Even without proper information to the police, we tried our best and should be clapped for. The role of the police during the robbery incident or any other robbery is to counter the robbers, and we do that by engaging the robbers in a shootout (gun battle). That is what happened during the First Bank robbery in Abaji. Regrettably, we lost one of our officers and a civilian.”  

He emphasised that despite these losses, the robbers were unable to cart away any money from the bank due to the professionalism displayed by the police. “It is important to note that because of our professional display of gallantry, the robbers were unable to remove any money from the bank.” 

By Wonderful Adegoke 

“I’ve also had to absorb the cost of failed transactions,” lamented Adeyemi Ademola, a food seller on campus at Usmanu Danfodiyo University, Sokoto (UDUS), her voice tinged with frustration and despair. 

Struggling to keep her business afloat, Ademola’s story highlights the pervasive challenges stemming from disrupted banking services. Her small shop, which supplies students with staples like rice, beans, garri, and other essentials, has been eerily quiet. The culprit? Persistent banking service disruptions, especially from Guaranty Trust Bank (GTB) and Access Bank, which her customers rely on for online payments.

Ademola’s predicament mirrors the experiences of countless others who cannot access essential banking services. GTB’s ongoing downtime—part of its transition to a new core banking application system—has left many in limbo. Even a visit to customer care brought little solace, as the explanation of “technical disruptions” linked to recent system upgrades felt more like a dismissal than a solution. Such upgrades, ostensibly aimed at fortifying defences against cyberattacks, have instead sown doubt about the security and efficiency of these systems.

The upgrades, though necessary, come with inevitable growing pains. Migrating vast amounts of customer data and integrating it across multiple platforms—from ATMs to mobile apps—is complex and time-intensive. Customers, however, bear the brunt of these transitions, enduring weeks or even months of service disruptions that hinder daily transactions.

In the past quarter alone, several commercial banks in Nigeria have initiated IT upgrades to bolster their operations and prepare for an increasingly competitive future. While these efforts are laudable, they have had far-reaching effects, straining banking operations and customer satisfaction. 

The National Bureau of Statistics (NBS) reports that the banking sector’s contribution to Nigeria’s GDP rose to 16.36% in Q2 2024, a testament to significant technological investments. Yet, for many, these figures are cold comfort amidst recurring downtimes and transaction failures.

Ademola’s weariness is palpable. She confides that her trust in traditional banking institutions, once the cornerstone of financial stability, is eroding. The persistent disruptions have cost her business revenue and undermined the basic operations on which her enterprise depends.

Lost Sales, Revenue, and Opportunities

The ripple effects of these banking failures are felt across various sectors. Rabi’u Bawa, a POS attendant, recounts her struggles: lost sales, revenue, and opportunities due to failed transactions. She still haunts the memory of a recent incident—a Sterling Bank system failure that left her unable to process payments. The frustrated customer walked away, leaving Bawa to shoulder the financial loss.

“This isn’t an isolated incident,” Bawa shares, her tone heavy with frustration. She’s frequently faced delayed payments and disputes stemming from unprocessed transactions. When her account is debited, but the recipient remains untouched, she finds herself mired in time-consuming and costly resolution processes, often at the expense of her reputation.

The disruptions have had devastating consequences for Adepoju Victor, an entrepreneur dealing with laptop repairs and phone accessories. “The stress and anxiety have taken a toll on my mental health,” he admits, his voice betraying sleepless nights spent worrying about his business. “The banks need to take responsibility for their actions and find a solution to this recurring problem.” His sentiment is echoed by many who have poured their resources and efforts into enterprises now threatened by systemic banking inefficiencies.

Service Disruptions Violate Customers’ Rights

The Federal Competition and Consumer Protection Commission (FCCPC) has warned financial institutions sternly about the crisis. According to a statement by Tunji Bello, the Commission’s Chief Executive Officer, these disruptions inconvenience customers and infringe upon their rights.

“Interruptions that impede customers from engaging in transactions or accessing essential funds are not merely an inconvenience,” Bello asserts. “They may constitute a violation of fundamental consumer rights.” The Commission’s stance underscores the urgency for banks to address these disruptions swiftly and decisively.

As customers continue to grapple with the fallout of these disruptions, Nigeria’s banking sector must balance technological advancements with reliable service delivery. Until then, entrepreneurs like Ademola, Bawa, and Victor have remained at the mercy of a system struggling to adapt to its progress.

By Anwar Usman

The Central Bank of Nigeria (CBN) has announced that it will slam a fine of N150m per branch on Deposit Money Banks found guilty of facilitating the illegal flow of mint naira notes to currency hawkers and unscrupulous agents.

The apex bank disclosed this in a circular issued on Friday, December 13, 2024, signed by the Acting Director of the Currency Operations Department, Mohammed Olayemi.

The circular revealed the CBN’s concern about the increasing prevalence of mint naira notes being traded by hawkers, a practice the bank described as impeding efficient and effective cash distribution to customers and the general public.

The circular, which referred to an earlier directive dated November 13, 2024, highlighted the apex bank’s determination to address the commodification of the naira.

Under the directive, any financial institution found guilty of this act will face a penalty of N150m for the first violation.

Subsequent infractions, the CBN warned, would attract stricter sanctions under the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020.

To ensure compliance, the apex bank stated that it would increase periodic spot checks in banking halls and ATMs while deploying mystery shoppers to uncover illicit cash hawking spots across the country.

The CBN further called on the DMBs to strengthen controls, processes, and procedures around their Cash Management Centres, branches, and teller operations to prevent their systems from being exploited for illegal transactions.

Reports has it that the CBN issued a serious warning to Deposit Money Banks over cash hoarding and diversion, stating that such actions will attract stiff penalties.

The CBN also warned against cash hoarding, diversion, and other practices that hinder cash flow, stressing that such actions violate the Clean Note Policy.