Nigerian Banks Under Pressure Over Fresh Recapitalisation Calls

Nigerian banks may come under fresh liquidity pressures following the push for a $1 trillion economy as directed by President Bola Tinubu.

This would be in line with another recapitalisation regime, which the banking authorities believe would help make the banking sector more resilient.

The Central Bank of Nigeria (CBN) has already indicated a readiness by nigerian banks for the said recapitalisation.

The Director of the Banking Supervision Department of the CBN, Dr Olubukola Akinwumi, while speaking at the 36th Edition of a seminar organised by the Finance Correspondents and Business Editors Association of Nigeria underscored the credibility of a more capitalised banking sector not only for the banks themselves but the larger economy.

He said the credibility of local banks was rising due to their ability to address various challenges, including exchange rates issues, thereby boosting investor confidence.

The Central Bank of Nigeria (CBN) has said that Nigeria would need strong, resilient and stable banks in its quest to achieve the $1 trillion economy target set by President Bola Tinubu against 2030 timeline.

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Though he underscored the importance of the recapitalisation, his inability to state for certainty how much individual banks had been able to raise stirred some doubts.

He said sector operators were making progress toward meeting the banks’ recapitalisation deadline but declined to comment on how much they had been able to raise individually.

That though leaves some room for pessimism even as a staff of a tier 2 bank who spoke unanimously, told our correspondent that not all banks would be comfortable with the new resolve.

“I know banks which are already under pressure to meet their primary obligations. As much the new directive may be for the good of the sector, the issue, is how many banks would migrate without stress.

She said she was in a meeting of operators last month where a number of participants expressed concern over liquidity issues in the sector and the challenge of meeting customers’ cash calls.

“Believe me, there were issues about the amount of cash withdrawals from their major customers instead of deposits; they complained about lull from those who trade with their cash, so they are taking more money than they are bringing in.

Elsewhere, many Nigerians have complained about cash squeeze and high cost of living, making it difficult for them to afford basic convenient living, much less invest in productive sectors.

One of them, Asuelime Irabor, a graduate farmer, told our correspondent that daily survival in the economy had become difficult for him to talk about investing in his farming business.

“it is worse because obtaining loan is not that easy.

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“When I was forced to try these online apps that give small loans I ran into a heavy problems.

“They gave me N50, 000 and said I should repay N70, 000. But the worse challenge was that they said I must repay under three weeks. It was a big problem and the whole purpose was defeated.”.

He advised the federal government to make agriculture for example, vibrant, encourage, young farmers as well as other small business operators who need capital through directive to Nigerian banks