The Nigerian Economic Summit Group (NESG) has warned that the Central Bank of Nigeria’s (CBN) bank recapitalisation programme, though timely and largely successful, may not automatically lead to increased lending to the real sector unless structural bottlenecks are urgently resolved.

In its Nigeria Private Sector Outlook 2026 report, the NESG noted that despite stronger bank capital bases, lending remains concentrated in relatively low-risk sectors such as manufacturing and oil and gas, leaving out critical segments like Micro, Small and Medium-sized Enterprises (MSMEs), which account for about 96 percent of businesses in Nigeria.

The recapitalisation exercise, launched in April 2024 with a March 31, 2026 deadline, raised minimum capital requirements for banks by between 100 and 900 percent. The policy was designed to strengthen financial system resilience, align Nigeria with global standards, improve banks’ capacity to fund large projects, and expand credit to productive sectors.

Banks responded strongly through rights issues, public offers, and capital injections from parent firms. By early April 2026, 33 deposit money banks had met or exceeded the new thresholds, raising about ?4.65 trillion in fresh capital. Several Tier-1 lenders surpassed requirements ahead of schedule.

However, the NESG said stronger balance sheets alone would not guarantee a shift in lending behaviour. “While the recapitalisation drive is timely and necessary, it does not automatically guarantee that banks will channel additional resources to productive sectors,” the report stated.

The group identified key barriers as inadequate market information, weak loan recovery systems, poor enforcement mechanisms, and fragmented databases on borrowers’ creditworthiness. These challenges, it said, have encouraged banks to prefer safer government securities over business lending.

According to the NESG, addressing these issues would encourage lenders to redirect funds to the real sector, especially MSMEs, boosting productivity, job creation, and long-term growth.

The report also highlighted new risks for businesses in 2026. Its Enterprise Risk Survey showed that traditional macroeconomic concerns have been replaced by market pressures and digital threats. Loss of customers emerged as the biggest risk, driven by weak purchasing power and unstable demand, while market competition intensified from startups and cheap imports.

Cyber and information breaches were also rated a growing concern as firms expand digital operations. Talent shortages, supply chain disruptions, and infrastructure gaps remained moderate risks.

The NESG said policymakers must fix information gaps, strengthen credit enforcement, and improve credit databases if recapitalisation is to deliver meaningful economic impact. (Nigerian Tribune)