From Uche Usim, Washington DC
The International Monetary Fund (IMF) has joined the list of international organisations that strongly endorsed Nigeria’s banking sector recapitalisation programme.
It described it as a key reform that is already strengthening financial stability, improving macroeconomic resilience and enhancing the country’s capacity to absorb external shocks in an increasingly volatile global environment.
The Fund said the Central Bank of Nigeria (CBN)-led exercise, spearheaded under Governor Olayemi Cardoso, represents a decisive step toward building a more robust financial system capable of supporting sustained economic growth and Nigeria’s ambition of becoming a $1 trillion economy.
The endorsement was made at the 2026 IMF/World Bank Spring Meetings in Washington, DC, where officials highlighted Nigeria’s reform trajectory as one of the more notable stabilization efforts among emerging markets facing rising global uncertainty.
The timing, experts say, is critical because global oil markets remain volatile following geopolitical tensions in the Middle East, shipping costs are rising, inflationary pressures are persisting across many economies and global financial conditions are tightening. Against this backdrop, Nigeria’s financial reforms are being closely watched as a test case for resilience in a major oil-dependent economy.
Banking buffers are most valuable in times of stress
A central highlight of the IMF’s assessment came from Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department, who said the real value of bank recapitalisation is only fully visible during periods of stress, precisely the environment Nigeria is currently navigating.
Speaking during the presentation of the Global Financial Stability Report, Adrian said global financial stability depends on strong capital buffers that can absorb shocks without destabilising the broader economy.
“Concerning bank recapitalisation, it is in times of stress where the value of bank capital really comes to the fore. So, what we are aiming for for global financial stability is a banking sector that is capitalised against adverse shocks.”
He explained that recapitalised banks are better positioned to maintain lending flows during downturns, reducing the risk of credit crunches that often deepen economic recessions in emerging markets.
Adrian further noted that Nigeria’s banking reforms are aligned with global best practice, particularly at a time when economies are being tested by commodity price volatility, geopolitical shocks, and sudden shifts in global capital flows.
He added:
“Of course, it’s in times of stress where the value of bank capital really comes to the fore, right? So, what we are aiming at for global financial stability is a banking sector that is capitalized against adverse shocks. So yes, bank recapitalisations are very welcome and are paying off, particularly under times of stress.”
The IMF’s position represents one of the strongest international validations yet of Nigeria’s banking reform agenda, which required banks to significantly increase their minimum capital thresholds over a 24-month compliance period ending March 31, 2026.
IMF projects steady but cautious growth path for Nigeria
In a separate presentation of the World Economic Outlook, IMF Economic Counsellor and Director of Research Department Pierre-Olivier Gourinchas projected that Nigeria’s economy will maintain moderate growth over the next two years, despite global headwinds.
He forecast that Nigeria’s GDP will expand by 4.1 per cent in 2026 and 4.3 per cent in 2027, supported by structural reforms, improved financial sector strength, and gradual macroeconomic stabilisation.
However, he cautioned that the global outlook remains fragile due to ongoing geopolitical tensions and supply-side shocks.
“Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027,” Gourinchas said.
He noted that Nigeria, like many emerging markets, faces a dual challenge: benefiting from higher oil prices while also managing inflationary pressures and rising costs of imports.
He added that policy responses must remain flexible, with governments required to balance fiscal discipline, targeted support for vulnerable populations, and long-term structural reforms.
Nigeria’s banking reform: Largest overhaul in 2 decades
Nigeria’s banking recapitalisation programme is widely regarded as the most significant financial sector reform since the 2005 banking consolidation exercise.
Initiated by the Central Bank of Nigeria in March 2024, the reform required banks to meet new minimum capital requirements designed to strengthen financial resilience and align the banking system with Nigeria’s long-term ambition of building a $1 trillion economy.
The new capital thresholds included: N500 billion for international commercial banks
N200 billion for national banks
N50 billion for regional banks
N20 billion for national non-interest banks, N10 billion for regional non-interest banks
The 24-month compliance window ended on March 31, 2026.
At the conclusion of the exercise, the CBN confirmed that 33 banks successfully raised a combined N4.65 trillion in new capital, marking one of the largest private-sector capital mobilisations in Nigeria’s financial history.
A joint statement by the CBN Director of Banking Supervision, Olubukola A. Akinwunmi, and Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, confirmed the outcome.
They said: “Over the 24-month period, Nigerian banks raised a total of N4.65 trillion in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy.”
They added that investor participation was strong both locally and internationally, with 72.55 per cent of capital raised domestically and 27.45 per cent sourced from foreign investors, signalling sustained confidence in Nigeria’s financial sector despite macroeconomic volatility.
Cardoso: Reform anchors Nigeria’s $1 trillion economy ambition
CBN Governor Olayemi Cardoso said the recapitalisation exercise is a cornerstone of Nigeria’s long-term economic transformation agenda.
He said: “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
Cardoso added that the strengthened banking system is now better positioned to finance large-scale economic activity, including infrastructure development, energy transition projects, manufacturing expansion, SME growth, and technology innovation.
He stressed that strong capital alone is not sufficient without discipline in governance, risk management, and credit allocation.
“Sustainable economic growth is unattainable without a resilient financial system. This recapitalisation ensures Nigerian banks can fund the scale of transactions needed to drive a $1 trillion economy,” he said.
He further noted that banks must now play a more active role in driving productive lending rather than speculative financial activity.
From Capital raise to credit quality: The next phase
With recapitalisation completed, attention has now shifted to the quality of credit deployment across the financial system.
The CBN says the next phase of reforms will focus on strengthening credit-risk frameworks, improving governance standards, and ensuring that newly raised capital is channelled into productive sectors of the economy.
Priority sectors include infrastructure, agriculture, energy, manufacturing, export industries, and digital technology.
Officials say this shift is necessary to ensure that recapitalisation translates into real economic outcomes such as job creation, industrial expansion, and improved productivity.
Cardoso warned that without strong oversight, recapitalisation could lead to risk concentration or inefficient capital allocation, citing lessons from previous banking reforms.
He said regulatory vigilance is essential to avoid repeating cycles of credit expansion followed by financial distress.
Strengthening Financial Infrastructure and Cash Systems
Beyond recapitalisation, the CBN has also embarked on broader financial system reforms aimed at improving efficiency, transparency, and access.
Cardoso said the apex bank has undertaken a full review of Nigeria’s cash lifecycle, from production and transportation to distribution and end-user access.
He said inefficiencies across the cash distribution chain are being addressed through policy reforms, improved monitoring systems, and stricter compliance rules for financial institutions.
Measures introduced include enhanced ATM service requirements, sanctions for non-dispensing machines, tighter oversight of agent banking networks, and stricter approval processes for branch or ATM closures.
The CBN says these reforms are aimed at improving financial inclusion and ensuring reliable access to cash across urban and rural areas.
Stakeholders call for cheaper credit, better banking services
While the IMF has praised Nigeria’s recapitalisation programme, domestic stakeholders say the real impact must now be felt in the real economy.
Bank Customers Association of Nigeria (BCAN) President, Dr. Uju Ogubunka, said customers expect better service delivery and lower banking costs following the capital injection.
“The banks have raised significant funds to shore up their capital bases. Now, we expect them to improve on service quality and shun excess charges,” he said.
Similarly, Association of Bureau De Change Operators of Nigeria (ABCON) President, Dr. Aminu Gwadabe, said stronger capital buffers should translate into cheaper and longer-term credit for businesses and households.
“We need cheaper loans. Big capital should reflect on cheaper and more affordable loans,” he said.
He added that stronger banks should be able to compete more effectively at global standards, particularly in trade finance, infrastructure lending, and agricultural financing.
Outlook: stronger banks, higher expectations
With IMF endorsement, rising reserves, improved investor confidence, and a fully recapitalised banking sector, Nigeria enters 2026 with stronger financial fundamentals than in recent years.
However, both international and domestic observers agree that the true measure of success will not be capital raised, but how effectively it is deployed.
The next phase of Nigeria’s financial reform agenda will determine whether stronger banks translate into stronger businesses, higher productivity, more jobs, and sustained economic growth.
As the IMF noted, bank capital is most valuable not when conditions are stable, but when stress arrives. For Nigeria’s economy, that stress is already here.
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