Recapitalisation To Lift Nigeria’s Private Sector Credit Above 13%

Nigeria’s private sector faces a significant credit shortfall. Domestic lending to the sector is currently just 13% of Gross Domestic Product (GDP), far below the global average. This gap presents a major challenge to the country’s economic growth, especially compared to countries with trillion-dollar economies, where private sector lending typically hovers around 80% of GDP.
Yemisi Edun, Managing Director of First City Monument Bank (FCMB), has affirmed that the ongoing recapitalisation of Nigeria’s banks will help address this shortfall. Speaking at the 17th Annual Banking and Finance Conference in Abuja, Edun stressed the need for increased private sector credit to fuel economic development, particularly for Small and Medium-sized Enterprises (SMEs).
“In the country, SMEs, which play a major role in employment and economic growth, are struggling with limited access to credit,” Edun said. With the recapitalisation of banks, there will be more capacity to offer affordable loans to SMEs, enabling them to grow and contribute more effectively to GDP.”
Edun further explained that if Nigeria aims to reach a $1 trillion economy, the financial services sector must grow faster than the economy. Financial services account for around 4.7% of GDP. For the sector to hit a target of 5.5% by 2030, it would need to grow by more than 18% annually. The ongoing recapitalisation, expected to increase the banking sector’s shareholders’ funds by over 50%, will be critical to this growth.
“With a larger capital base, banks will be better positioned to meet the financing needs of critical sectors like infrastructure and manufacturing, both of which are essential for Nigeria’s long-term economic growth,” she disclosed.
Beyond traditional lending, Edun advocated for alternative financing mechanisms such as joint ventures, venture capital, and loan guarantee schemes to support high-potential SMEs. “Diverse funding options, including equity and debt partnerships, are essential for overcoming the capital constraints many businesses face,” she recommended.
Infrastructure financing, she noted, is another pressing issue, with Nigeria needing about $100 billion annually to address its infrastructure deficit. Edun recommended that banks collaborate on issuing long-term infrastructure bonds and forming public-private partnerships (PPPs) to make this happen.
Edun also flagged Nigeria’s low deposit-to-GDP ratio, currently at 15%, compared to a global average of 50%. She urged banks to expand financial inclusion by increasing agency banking in underserved areas and introducing tailored savings products to mobilise more deposits.
Looking ahead, Edun stressed the importance of investing in technology and human capital. “Digital transformation and automation are critical for the future of financial services. Innovations like artificial intelligence will play a key role in enhancing efficiency and expanding access to underserved populations,” she said.
Edun’s remarks reflect a broader belief that the ongoing recapitalisation exercise will enable Nigerian banks to better support the private sector, which is crucial for economic growth. By expanding access to affordable credit and addressing infrastructure and inclusion gaps, Nigeria’s financial system will be well-positioned to fuel sustainable development.