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President Bola Tinubu has once again called on deposit money banks (DMBs) to channel the fresh capital raised through the recently concluded recapitalisation exercise into micro, small and medium enterprises (MSMEs) and other productive sectors, warning that the funds should not remain parked in risk-free government securities or concentrated among top-tier corporates.
Speaking at the 19th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja, Tinubu who was represented by the Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, said the banking and financial services industry must move “from intermediation to transformation” by financing real economic activity rather than primarily intermediating government debt.
The CBN’s recapitalisation programme, which ended on March 31, 2026, saw 33 lenders raise a combined N4.65 trillion to meet the new minimum capital requirements. While the exercise has strengthened bank balance sheets, there remain concerns policymakers that a large share of banking credit continues to flow to the public sector.
Industry data show that credit to government rose to about N40.38 trillion as of May 2026, up from N22.99 trillion a year earlier, raising questions about how much of the new capital is actually supporting jobs, production and exports.
Tinubu argued that a resilient banking system cannot coexist indefinitely with a situation where businesses cannot access affordable credit, manufacturing struggles to expand, and millions of productive MSMEs remain outside the formal financial system.
He said the recently concluded bank recapitalisation must produce more than bigger balance sheets, must translate into capital formation in the real economy, finance Nigerian businesses as they expand across Africa and pursue the country’s ambition of a $1 trillion economy by 2030.
To de-risk lending to the real sector, the government is expanding the architecture of guarantees, risk-sharing, blended finance and credit enhancements, with the National Credit Guarantee Company (NCGC) at its core. The NCGC, established in May 2025 with an initial capital of N100 billion, is designed to share credit risk with participating financial institutions and crowd in multiple units of private capital rather than having government finance the economy directly.
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At a stakeholders’ forum in Lagos on September 3, the NCGC unveiled “GuaranteeHer”, a gender-responsive credit guarantee scheme targeting more than N100 billion in financing for over 20,000 women-owned and women-led MSMEs over the next five years, with the potential to create or sustain more than 150,000 jobs.
Tinubu said the impact of such schemes should be measured by how much credit ultimately reaches businesses, the extent to which collateral requirements are reduced, and whether loan pricing and tenors are appropriate for productive enterprises.
Echoing the President’s position urging banks to deploy the N4.65 trillion in new capital to MSMEs and other productive sectors to stimulate growth and employment. CIBN President, Dr Dele Alabi said Nigeria’s approximately 39.6 million MSMEs, which account for about 97 per cent of businesses, 88 per cent of employment and 46 per cent of GDP, remain constrained by high operating costs, limited market access and poor access to finance.
He said that the proposed MSME hubs offering shared infrastructure, advisory services and easier access to finance would help reduce costs, improve bankability and ensure that macroeconomic gains translate into stronger businesses and better jobs.
“Banks could no longer depend heavily on trading government paper or lending mainly to large corporations, especially as interest rates and yields on government securities continue to decline”, Alabi said.
He argued that smarter bank CEOs must think more ingeniously about utilising the stronger capital base, “going down the ladder” to lend to MSMEs in a secure and profitable manner.
