Following the successful implementation of the Central Bank of Nigeria (CBN) recapitalisation policy, which began in 2024 and ended in March 2026, it is expected that there will be greater access to credit for the real sector of the economy.
Thirty-three banks in different categories were recapitalised as stipulated by the Central Bank of Nigeria (CBN). The international category recapitalised with a minimum share capital of N500 billion, the national category – N200 billion, and the regional – N50 billion, raising a total of N4.65 trillion.
CBN Governor, Olayemi Cardoso, at a briefing of the Senate Committee on Banking, Insurance and Other Financial Institutions, on the activities of the CBN since the beginning of the year, noted that “with recapitalisation now completed, our focus has shifted towards ensuring that stronger capital translates into improved governance, enhanced risk management and support for productive activities.”
The Chairman of the Committee, Mukhail Adetokunbo Abiru, commended the CBN reforms, including restoring stability in the foreign exchange market and successfully implementing the banks’ recapitalisation.
Mukhail noted that the recapitalisation would only achieve the objectives with banks’ increased lending to productive and critical sectors.
He listed agriculture, manufacturing, infrastructure, technology, and small and medium enterprises as the critical sectors expected to benefit from banks’ recapitalisation.
Nigeria operates a predominantly bank-based financing system, in which banks are the dominant intermediaries, providing a greater share of financial services.
Banks are in the money market segment of the financial system, which provides short-term funds generally for a period of one year or less, and commercial banks are at the centre of most money markets as both suppliers and users of funds.
Products in the money market include bank accounts, term certificates of deposit, interbank loans, commercial paper (CPs), Bank Acceptances (BAs), Treasury Bills, Bills of Exchange, and others.
Banks seem to be averse to lending to the real sector of the economy, which had once prompted the CBN (2019) to mandate them to increase their loan-to-deposit ratios or risk a fine, triggering greater credit flow to the manufacturing sector.
The real sector is the primary driver of national output, which contributes about 60 per cent of GDP.
It is the engine and driving force of the economy, encompassing manufacturing, agriculture, construction, infrastructure, and services.
CBN noted that the real sector creates more linkages in the economy than any other sector and has the capacity to generate high employment and income-generating potential.
The real sector satisfies aggregate demand, is closely linked to people’s standard of living, and is used to measure the effectiveness of macroeconomic policies.
CBN has continued to implement policies that enhance macroeconomic stability, promote private sector growth, and create jobs.
The Bank prioritises financial system stability and effectively monitors all banks and financial institutions under its regulatory purview, ensuring the health of banks to maintain the integrity of the financial system and towards supporting the real sector.
In an article titled “Supporting Manufacturing For National Empowerment, which was published in the Vanguard newspaper on July 29. In 2021, I noted that manufacturing is the essence of the secondary sector of the economy, which has the highest multiplier effects.
Manufacturing leads to job creation, urbanisation, poverty eradication, feeds aggregate demand, enhances the standard of living, and is considered the most important cause of economic growth.
Manufacturing problems in Nigeria include poor power supply, inflation, high interest rates, and limited access to credit.
Lack of access to credit will lead to reduced manufacturing and capacity utilisation, stagnation of the sector’s contribution to GDP, job losses, supply-side inflation, forex pressures, etc.
Bank credit to the manufacturing sector fell by N1.92 trillion from N8.53 trillion in December 2024 to N6.61 trillion in December 2025. representing a 22.5 per cent year-on-year contraction.
In a press report, the Manufacturers Association of Nigeria (MAN) noted that the credit contraction constituted a threat to job creation, industrial growth, and economic diversification.
There is a need to channel greater credit flow to the real sector of the economy. Banks are expected to show interest in financing real-sector projects and to encourage local manufacturing.
In January 2025, bank credits to the private sector were N77.38 trillion, rising to N78.08 trillion in April, then dropping to N75.83 trillion in August and further to N75.24 trillion in January 2026.
After the CBN reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.50 per cent in February 2026, credit to the private sector rose by N380.85 billion, and net domestic credit rose from N109.43 trillion in January to N111.40 trillion, representing an increase of 1.80 per cent.
CBN has retained the MPR at 26.50 per cent in a cautious move to maintain macroeconomic stability and not to spur inflation, which has thus far been de-escalated to a reasonable extent.
The MPR is the benchmark interest rate, which also determines the quantum of credit flow to businesses in the economy.
CBN may further reduce the MPR depending on how the pendulum swings and the local and global outlook, but for now, the Bank maintains a cautious stand between inflation targeting and promoting growth.
The cost of borrowing is still relatively high, but businesses are optimistic about improved financing conditions that would make it easier for them to obtain credit for expansion plans.
Confidence in the economy is strengthening because of the reforms.
The CBN survey report shows strong business confidence, with respondents expressing optimism about the outlook in the months ahead.
Nwobu, a Chartered Stockbroker and Business Journalist, wrote via arizenwobu@yahoo.com
