Group commends CBN reforms but warns weak lending to businesses, households could limit economic impact…..
The Centre for the Promotion of Private Enterprise has commended the Central Bank of Nigeria for the successful implementation of the bank recapitalisation programme, describing it as a major milestone in strengthening the country’s financial system.
In a statement signed by its Chief Executive Officer, Muda Yusuf, the group said the exercise, which is nearing completion, has been orderly, non-disruptive and confidence-boosting.
According to CPPE, as of March 27, 2026, at least 32 banks had met the new minimum capital requirements, with no reported cases of depositor losses, forced mergers, job cuts or erosion of shareholder value, an outcome it described as a marked improvement from previous consolidation exercises.
While acknowledging the strengthened capacity of banks to absorb shocks and finance large transactions, CPPE raised concerns over the weak link between the banking sector and the real economy.
The group noted that private sector credit in Nigeria remains low at about 17 percent of Gross Domestic Product, significantly below the sub-Saharan African average of 25 percent and about 34 percent for lower-middle-income countries. It added that countries such as South Africa, Mauritius and Cape Verde demonstrate much stronger levels of financial intermediation.
According to the report, credit access remains particularly constrained in key segments of the economy. Consumer credit accounts for only about seven percent of total lending, limiting domestic demand and broader economic growth.
More critically, lending to small and medium enterprises stands at roughly one percent of total credit, far below the regional average of about five percent. This is despite SMEs contributing around 50 percent of GDP and over 80 percent of employment, with an estimated financing gap of about ₦48 trillion.
CPPE also highlighted structural imbalances in credit allocation, noting that a large share of bank lending is short-term. About 55 percent of total credit has a maturity period of less than one year, while only about 25 percent is long-term, falling short of the financing needs of sectors such as manufacturing, agriculture, infrastructure and real estate.
In addition, the distribution of credit remains skewed, with the services sector receiving about 55 percent of total lending, compared to 14 percent for manufacturing and just five percent for agriculture.
The group attributed these challenges to several factors, including high government borrowing, tight monetary policy, elevated interest rates, stringent collateral requirements for SMEs and incentive structures that favour low-risk, short-term investments over real sector financing.
CPPE urged both monetary and fiscal authorities to prioritise the next phase of reform by strengthening financial intermediation and improving access to credit for productive sectors.
It recommended increasing private sector credit to at least 30 percent of GDP in the medium term, introducing credit guarantees to de-risk SME lending, incentivising long-term financing and addressing the crowding-out effect of public sector borrowing.
The group also called for measures to expand consumer credit and improve monetary policy transmission to ensure that lower interest rates translate into increased lending to businesses and households.
CPPE concluded that while the recapitalisation exercise has strengthened the resilience of the banking sector, its true success will be measured by its impact on economic growth, job creation and enterprise development.
It stressed that Nigeria’s priority must now shift from capital adequacy to ensuring that banks play a more active role in supporting the real economy.
