Banks in Nigeria experience fresh turmoil
The Central Bank of Nigeria (CBN) has implemented a series of regulatory reforms and prudential measures aimed at stabilizing and strengthening the financial system, significantly impacting Nigerian companies' access to financing.
One key impact of these interventions has been the enhancement of **capital adequacy and banking sector stability**. In 2025, the CBN imposed temporary restrictions on dividend payments, executive bonuses, and foreign subsidiary investments for banks under regulatory forbearance. This move aimed to preserve capital within banks, ensuring they maintain adequate buffers against potential economic shocks, thereby sustaining a healthy banking system capable of supporting economic recovery and lending activities over the long term.
Another significant impact has been the **recapitalization and enhanced lending capacity**. The ongoing recapitalization plan, which seeks to raise banks' minimum capital significantly by March 2026, directly supports improved credit access for Nigerian companies. Stronger capital bases enable banks to increase lending without compromising regulatory requirements, enhancing their ability to finance businesses across sectors.
The CBN's initiatives have also focused on **improving financial inclusion and digital access**, especially targeting previously excluded segments through digital platforms and financial literacy programs. This has improved companies' outreach and access to credit, including SMEs.
The CBN has also demonstrated **regulatory flexibility supporting transitional challenges**, granting limited forbearance to Deposit Money Banks during the recapitalization phase. This pragmatic approach helps maintain steady financing flows to Nigerian businesses despite transitional regulatory changes.
Nigeria's return to the Eurobond market and reforms in the foreign exchange (FX) market, including the introduction of a transparent “willing-buyer, willing-seller” FX trading system, have stabilized the naira and increased portfolio inflows. This FX stability reduces financing costs and risk premiums, making it easier for companies to access both local and foreign financing.
The International Monetary Fund (IMF) has praised Nigeria’s financial reforms, emphasizing the positive effects on banking sector resilience and credit availability. It highlights Nigeria's progress in strengthening the Anti-Money Laundering framework and urges careful sequencing of capital flow management to sustain financial sector development and financing access.
However, it's important to note that the media note mentions a potential risk of increased risk of state bankruptcies and a banking sector crisis due to the manipulation of the currency regime. This underscores the need for continued vigilance and adherence to transparent financial practices.
Meanwhile, Nigerian oil export revenues have experienced a $1bn surge due to theft, which could further strain the financial system and necessitate CBN's continued intervention. Despite these challenges, the CBN's efforts have strengthened the banking sector's capital position and operational discipline, leading to more resilient banks that can provide improved access to credit for Nigerian companies.
The CBN's initiatives in the banking-and-insurance sector have led to enhanced lending capacity for Nigerian businesses, facilitating access to credit due to stronger capital bases in banks. Furthermore, the focus on improving financial inclusion and digital access has contributed to better business outreach and enhanced access to credit, particularly for SMEs in the industry. This progress has been endorsed by the International Monetary Fund (IMF).
