Bamidele Famoofo
Leading financial journalists under the umbrella of Finance Correspondents Association of Nigeria, Business Editors, the academia and key players in the Nigerian banking industry as well as financial sector regulators, in April 2025, converged on the capital city of Nigeria, Abuja, for a singular purpose-it was how Nigeria can achieve a $1trillion economy proposed by the Federal Government of Nigeria, through banking recapitalization.
The bi-annual event, first of its kind under the leadership of Mr. Olayemi Cardoso, Governor of the Central Bank of Nigeria, was timely, according to participants, given the seriousness attached to achieving robust economic growth through the contribution of the financial sector, especially the banks.
The seminar themed, “Playing the Global Game: Banking Recapitalization Towards a One-Trillion Dollar Economy”, according to Ms. Enem Usoro, Deputy Governor, Corporate Services, Central Bank of Nigeria, who delivered the keynote address, was apt at the time, because it would elicit frank discussions with far-reaching recommendations that will enhance understanding of the workings of the global financial system and how to position the Nigerian Banks to take full advantage of the opportunities presented by the dynamics of these initiatives.
Sharing some insights relating to the theme of the seminar, Usoro hinted that the global financial system and architecture have assumed a new dimension even before the new administration of Donald Trump in the United States of America. “Globalisation has broken the limits of financial flows, and investors have inadvertently taken full advantage of the opportunities. However, countries and their financial systems must be prepared and ready to utilise opportunities created by financial globalisation through appropriate policy support and actions.
“There is no gain saying that the financial system’s size and quality play critical roles in powering and financing an economy. Literature has established that financial resources, complimented by quality human capital and technology, remain the major driving forces of industrialisation since the emergence of the 4th industrial revolution. To play this critical role, the banking system must grow, expand and deepen through deliberate policy efforts.”
Going down the history lane, she highlighted efforts by the CBN in the past to reform the banking sector in Africa’s largest economy through recapitalization. She however disclosed that the 2004 banking sector consolidation and recapitalisation exercise, which sets a limit of N25 billion minimum capital base for banks and brought the Nigerian banks from 89 to 25, can no longer matchup with the present global realities.
The Deputy Governor argued that a sure way to build a one trillion dollar economy is to work towards the recapitalisation of our banks to be able to fund, finance and power the economy and favourably compete globally with their peers in other climes. “I think that if the current protectionist development approach by the US and other big economies continues to pervade the global system, we should particularly pay significant attention to bank recapitalisation to ensure that our banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes.”
She however, warned that 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 $250billion. 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.”
According to Usoro, the push for a new paradigm towards the recapitalisation of banks to power a one trillion-dollar economy would no doubt improve the strength and health of the financial system, deepen financial intermediation and promote healthier competition as well as usher in a robust payment architecture that would strengthen our payment system.
Speaking from the perspective of an operator, Mr. Oliver Alawuba, Group Managing Director and Chief Executive Officer, United Bank for Africa Plc, warned that to achieve the target of $1trillion economy as declared by President Bola Tinubu, commercial banks must focus on lending to the economy, which is the main reason why they are in existence.
Alawuba who is doyen of bank CEOs in Nigeria, said infrastructure, manufacturing and agriculture are three critical sectors which Nigerian banks must give priority, if the nation must achieve the lofty goal of growing its economy to $1trillion.
Alawuba applauded the move by the CBN for banks to recapitalise to be able to withstand the current shocks in the global financial industry. His words: “It was a very good move which aligns the monetary and fiscal policies. It’s about a vision for the economy. It’s not because banks are having issues.”
He however warned that the current rate of economic growth in Nigeria won’t get it close to the $1trillion economy, if nothing drastic is done to change the narratives.
“At the current growth rate, Nigeria’s GDP will be about $260bn by 2029. This current rate won’t allow the target to come into fruition as the gap will be around $740bn.
“A double digit growth of 10 percent and above will make it possible and it’s achievable. The economy must be critically transformed to achieve a $1trn economy. East African and some West African countries are achieving 7 percent growth at the moment, “he said.
Alawuba listed some hurdles which must be surmounted to achieve a $1trillion GDP to include infrastructure deficit, regulatory and policy inconsistencies, low financial inclusion rate and insecurity amongst others.
Alawuba noted that a successful recapitalization will boost the asset base of banks which will enhance their ability increase lending to the economy and contribute more to GDP growth.
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