Why CBN Recapitalisation of Nigerian Banks May Not Drive Real Sector Growth – Oyedotun
Financial analyst Oyedotun has argued that the ongoing recapitalisation of Nigerian banks by the Central Bank of Nigeria may not necessarily translate into meaningful growth in the real sector of the economy.
According to him, while recapitalisation is aimed at strengthening banks’ balance sheets and enhancing their capacity to absorb shocks, it does not automatically guarantee increased lending to key productive sectors such as agriculture, manufacturing, and small and medium-scale enterprises.
He explained that banks often prioritise low-risk, high-return ventures, including government securities and foreign exchange transactions, rather than channeling funds into sectors that drive real economic growth but carry higher risks.
Oyedotun further noted that structural challenges—such as poor infrastructure, policy inconsistency, and an unfavourable business environment—continue to discourage banks from extending credit to the real sector.
He added that without targeted policies and incentives to de-risk lending, recapitalisation could end up benefiting the financial system more than the broader economy.
The analyst called on the CBN and the federal government to complement recapitalisation efforts with reforms that will improve ease of doing business, strengthen institutions, and create an enabling environment for sustainable economic growth.