LCCI: Bank Recapitalisation’ll Improve Access To Credit, Make Lending Conditions Competitive

As the deadline for banks to raise their capital ends in four days’ time, private sector operators, Micro, Small and Medium Enterprises (MSMEs) and others, are hoping that banks’ improved financial standing will result in anticipating a surge in affordable credit and reduced lending rates than what are currently applicable in the country.

With tier-1 banks’ new minimum capital threshold set at N500 billion by the end of this month, analysts expect a surge in capital to unlock billions in loans for oil and gas ventures, manufacturing, and agribusiness—fueling economic recovery amid rising energy demand.

The Lagos Chamber of Commerce and Industry (LCCI) has said the banking sector recapitalisation is expected to improve access to credit and strengthen financial stability.

The director general of the LCCI, Dr Chinyere Almona, responding to LEADERSHIP inquiries, on Thursday, however, said the chamber expects lending rates to remain high in the short term due to prevailing macroeconomic conditions.

Almona, who described the banking recapitalisation as “a defining inflection point in Nigeria’s financial architecture,” noted that stronger capital buffers would position banks to support larger and longer-term financing across key sectors of the economy.

The Central Bank of Nigeria (CBN) had given banks until March 31, 2026, to shore up their capital base. It allows commercial banks with international authorisation to hold a minimum of N500 billion in paid-up capital, up from N50 billion previously. National banks are required to have a capital base of N200 billion, up from N25 billion, and regional banks are required to have a capital base of N50 billion, up from N10 billion.

Merchant banks are also required to shore up their capital to N50 billion from N15 billion, and non-interest banks with national licence now have a required N20 billion capital base from N10 billion, while regional non-interest banks now have a capital base of N10 billion up from N5 billion.

Governor of the CBN, Olayemi Cardoso had disclosed that despite macroeconomic headwinds, including subsidy removal and exchange rate reforms, Nigerian banks attracted about N4.61 trillion in fresh capital, with nearly 27 per cent sourced from foreign investors, while also expanding operations across African markets.

According to LCCI, “stronger capital buffers expand banks’ lending headroom and risk tolerance, enabling them to finance larger, more complex, and longer-tenor transactions,” particularly in manufacturing, infrastructure, energy and agriculture.

She added that while the outlook for access to finance is positive, “immediate relief in borrowing costs may be limited,” citing elevated inflation and tight monetary policy as key factors sustaining high lending rates.

The benchmark interest rate currently stands at 26.5 per cent, with monetary policy initially signalling a gradual easing cycle. However, persistent global uncertainties and a slower-than-expected decline in inflation have dampened expectations of a further rate cut at the next Monetary Policy Committee (MPC) meeting in May.

Bearing these in mind, LCCI said while short-term cost pressures may persist, the recapitalisation programme “fundamentally strengthens the foundation for improved access to finance, more competitive lending conditions, and a more dynamic private sector,” positioning Nigeria for sustainable growth toward its $1 trillion economy ambition.

“Over the medium to long term, however, the dynamics are expected to shift favourably,” noting that increased competition and improved pricing efficiency would eventually drive down lending rates and expand access to sustainable financing.

LCCI further emphasised that the reform would “strengthen the core of financial intermediation and enhance the capacity of the banking system to absorb shocks while financing long-term developmental programmes.”

Also speaking, chief investment officer of VNL Capital Assets Management, Ifeanyi Ubah, said the recapitalisation exercise is critical to stabilising the financial system and supporting economic growth.

“What the recapitalisation actually means is creating that solid foundation to make sure counterparty risks are avoided and the foundation of the economy is solid,” he said.

Ubah described the financial services sector as a leading indicator of economic performance, adding that “the more it does well, the more economic growth,” stressing that the exercise is “meant to propel growth for this $1 trillion economy.”

He noted that banks meeting the new capital thresholds demonstrate resilience, particularly in absorbing shocks, saying, “The banks meeting it shows they are ready for temporary shocks.”

Providing further insight into asset quality, he said, “The average NPL is around the 7 per cent threshold, which is not too bad, given that the target is 5 per cent and there’s a one-off impairment.”

On lending conditions, Ubah acknowledged the pressure from high interest rates but maintained that opportunities still exist within the system.

“The interest rate is high, but it’s dovish,” he said. “Yes, interest rates make it harder to do business, but it’s not an outright killer. “

He added that market dynamics could still support profitability, noting that “the profitability in the market would absorb the cost of the interest rate to give you some earnings.”

On monetary policy, he cautioned that exchange rate management remains critical, warning that “putting it too low will mean accelerated inflation and reduced returns,” while excessively high rates could weaken purchasing power.

In the same vein, the chief executive of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, commended the orderly implementation of the recapitalisation programme.

“One of the most commendable aspects of the current recapitalisation exercise is the orderly and non-disruptive manner in which it is being implemented,” he said.

Yusuf noted that most banks have either met or are on track to meet the new requirements, raising capital through “rights issues, public offers, and private placements,” in contrast to the 2004 consolidation exercise, which saw “forced mergers, bank failures, loss of shareholder value, and job dislocations.”

“The current process has, by comparison, been measured, well-sequenced, and market-driven. There has been no evidence of systemic panic, depositor losses, or widespread institutional distress,” he added.

He, however, stressed that recapitalisation should not be seen as an end in itself, warning that the real test lies in improved credit delivery to the productive sectors of the economy.

“Nigeria continues to face significant gaps in credit delivery, particularly to SMEs, the rural economy, agriculture, and other productive sectors,” Yusuf said, adding that these areas remain critical for employment generation and inclusive growth.

“With stronger capital bases, banks are expected to increase their risk appetite in a responsible manner, expand credit access, and support productive investments across the economy,” he stated.