The Central Bank of Nigeria (CBN) has issued a clear directive regarding its new capital base requirements: all new banking license applications submitted after April 1, 2024, must comply immediately. Existing banks, however, have been granted a two-year window to meet the updated standards, concluding on March 31, 2026. This announcement, made by Dr. Olubokola Akinwumi, Director of Banking Supervision at the CBN, during the 36th edition of the Finance Correspondents and Business Editors Association of Nigeria (FICAN), underscores the apex bank’s commitment to strengthening the nation’s financial sector.
“While existing banks are required to meet the minimum capital requirement within 24 months commencing from 1st April 2024 and terminating on 31st March 2026, the requirement is immediately applicable to all new applications for banking licences submitted after 1st April 2024 for proposed banks,” Akinwumi stated.
The CBN’s move aims to fortify the banking system against emerging economic challenges, including potential global shifts. Akinwumi clarified that strict guidelines are in place to prevent illicit or borrowed funds from entering the recapitalization process, preserving the stability of the financial ecosystem. The theme of the workshop, ‘Playing the Game: Banking Recapitalisation towards a One-Trillion Dollar Economy’, indicates the CBN’s forward thinking approach.
According to Akinwumi, “The recapitalisation exercise is targeted at achieving strengthened financial system stability, enhancing lending capacity, improving competitiveness and promoting consolidation and innovation.” I believe that, as banks navigate this transition, we’ll see significant advancements in digital banking and financial inclusion.
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Oliver Alawuba, Managing Director of United Bank for Africa (UBA), offered a compelling perspective from the industry’s front lines. He suggested that Nigerian banks are well-equipped to manage a portion of Nigeria’s foreign reserves, drawing on UBA’s experience in managing reserves for 19 other nations. “In 19 countries where UBA operates, we are managing some countries’ foreign reserves. If foreigners can trust us to do so, the CBN could allow us to manage part of Nigeria’s foreign reserves,” Alawuba asserted.
Alawuba also emphasized the sacrifices Nigerian banks make through the cash reserve ratio (CRR), proposing that unfreezing and reinvesting a portion of these funds could further stimulate economic growth. “At the rate of 3.84 per cent, we will not make a $1 trillion economy. For us to get there, clearly, we need to grow in double digits. And the minimum double digit you can get is 10 per cent. So, this economy needs a transformation that will propel the growth to a minimum of 10 per cent for us to get to $1 trillion in 2030.”
The push for bank recapitalization is intrinsically linked to Nigeria’s ambition to achieve a $1 trillion economy by 2030, a goal the current administration is actively pursuing. As these regulations take effect, the banking sector is poised for a transformative period, potentially leading to stronger, more innovative institutions that can drive the nation’s economic growth.
