Recapitalisaton: World Bank, Access Bank CEO Predict Credit Boost to Private Sector

• Verghis: Economy needs higher growth to make desired impact

Nume Ekeghe

World Bank Country Director for Nigeria, Mr. Matthew Verghis, yesterday declared that the ongoing recapitalisation of the banking industry will strengthen banks’ position to increase lending to the private sector.

In a similar vein, Managing Director/Chief Executive, Access Bank Plc, Roosevelt Ogbonna, said recapitalised banks will have stronger capital base and liquidity to drive economic growth by funding public infrastructure, supporting private sector investment, and boosting consumer activity.

Verghis and Ogbonna spoke in Lagos, at the Agusto & Co.’s 2026 Economic Roundtable, titled, “Nigeria’s Banking Recapitalisation: What Does the Recapitalisation Mean for the Nigerian Economy?”

It also emerged that about 25 out of the 38 commercial and merchant banks in the country had already met the new capital thresholds, mobilising about N2.5 trillion from the recapitalisation exercise as of December 2025.

The World Bank country director hailed the recapitalisation exercise ordered by Central Bank of Nigeria (CBN), describing it as key to economic and financial stability.

Verghis said recapitalisation became necessary after years of macroeconomic pressures eroded banks’ capital buffers.

He said the economy needed to grow above the current 4.4 per cent to impact on the average Nigerian as well as achieve the aspiration for $1 trillion-dollar economy by 2030.

He stated, “So, the basic reason why this recapitalisation was needed, why banks had to dip into their pockets once again, is that over the decade of policy, banks had become undercapitalised.

“The capital requirements that were set in place, because of the exchange rate and because of the very high inflation, meant that capital adequacy ratios needed to be raised.

“Having an adequately financed banking sector is central. So, for the stability of the economy, raising the capitalisation of the banking sector, I think the central bank has taken the right step.”

Verghis observed that domestic credit to the private sector remained low relative to peer economies in the Sub-Saharan.

He said, “The easiest way to see this is to look at the ratio of domestic credit to the private sector. The ratio is about 21 per cent. The Sub-Saharan average is 33 per cent, and countries like the Philippines do about 50 per cent.”

He stated that credit must not only increase but also be productive.

He said a well-capitalised industry should also incentivise banks to boost credit to the real sector as interest rates drop.

According to him, “Banks can no longer rely as heavily on investing in government securities. That liquidity will need to be put to good use. The incentives are well aligned, and I’m hopeful this will increase.”

Verghis disclosed that about 25 of the 38 commercial and merchant banks had already met the new requirements as of December, with roughly N2.5 trillion mobilised under the exercise, while the remaining institutions had less than 50 days to comply.

Placing the recapitalisation within a broader reform context, he linked it to foreign exchange harmonisation, subsidy reforms, and revenue measures aimed at stabilising the economy.

He stressed that inflation must decline further to single digit to protect purchasing power, adding that growth must accelerate beyond current levels.

Verghis said, “In my view, inflation has to come down much faster. It has to bend down to single digits to reach a point where it’s not getting into people’s pockets.

“The second part of how people start feeling better from reforms is why it’s so critical that growth, four per cent is good but not good enough.

“Growth needs to be reaching towards higher levels for Nigeria to achieve its ambition of a trillion-dollar economy.

“That’s an aspirational goal, but that’s the kind of ambition Nigeria has shown a willingness to take action on.”

He highlighted Micro, Small and Medium Enterprises (MSMEs), which account for about 97 per cent of businesses, as a key channel for inclusive growth, despite structural constraints, including high informality and limited access to credit.

Verghis expressed confidence in Nigeria’s long-term prospects.

He said, “I firmly believe that Nigeria’s tomorrow will be better than today.”

Ogbonna underscored the historical link between banking sector strength and economic expansion, pointing to the 1999–2007 period when Nigeria recorded average GDP growth of about four per cent, with several years hitting seven to eight per cent.

He stated that the era was characterised by a reform-minded government focused on enabling private enterprise and a newly recapitalised banking industry equipped with the financial capacity to fund large-scale investments.

According to him, sustainable growth requires a combination of public investment in infrastructure financed at appropriate long-term rates, a private sector committed to capital formation and local manufacturing, and consumers with sufficient liquidity and disposable income to drive demand.

He stated that a profitable and well-capitalised banking system not only provided buffers against economic shocks but also strengthened the capacity of lenders to support broader macroeconomic activities.

The Access Bank CEO said, “The Nigerian banking industry is no different from banking industries anywhere in the world, and banking is always going to be about capital and liquidity.

“So, as you have banks with stronger quality capital, that means that they have the absorptive capacity to withstand shocks.

“I think recapitalisation from the banking industry will definitely create a stronger market, because the banks will have the war chest to support the economic actors, government, private sector, as well as consumers towards making the right investments for growth.”.”