Kale: Nigeria Must Leverage Banking Sector Recapitalisation to Close $120bn Trade Finance Gap, Drive $1trn Economy

• Says retaining reforms, industrialisation key to unlocking AfCFTA gains

Nume Ekeghe

The Group Chief Economist and Managing Director, Research and Trade Intelligence at Afreximbank, Dr. Yemi Kale, yesterday said Nigeria must strategically leverage the ongoing banking sector recapitalisation to help close Africa’s $80 billion to $120 billion annual trade finance gap and position the continent as a central driver of intra-African trade under the African Continental Free Trade Area (AfCFTA).

Speaking at the Ecobank Customer Forum in Lagos, Kale stressed that as Africa’s largest economy and consumer market, Nigeria’s ability to mobilise capital and support domestic producers would significantly shape the continent’s trade trajectory.

He said: “Nigeria is a very large economy. Not only do we have a big domestic market, but we also have a potentially large market that can benefit the entire continent.

“The policies being introduced to stabilise the macroeconomic environment are helpful, and I would advise that those policies be retained. We have to keep faith with the reforms.”

He argued that closing the continent’s wide trade finance shortfall, estimated at between $80 billion and $120 billion annually, would require stronger banks’ balance sheets, deeper capital buffers, and more aggressive lending to exporters and small and medium-sized enterprises.

“Recapitalisation of the banks is important. You cannot lend to businesses to grow, expand or import machinery if you do not have enough capital. How do Nigerian banks support deepening intra-African trade if they do not have enough capital?” he asked.

According to him, increasing banks’ capital base would expand their capacity to finance domestic businesses, scale export-oriented production and support SMEs seeking to integrate into regional value chains.

“By increasing recapitalisation, you increase the ability of banks to lend more to domestic businesses and exporters. There are significant benefits for the Nigerian economy, especially in improving intra-African trade,” he added.

Kale also linked Nigeria’s long-term growth ambition, including the federal government’s $1 trillion economy target to improvements in competitiveness and production efficiency.

“There are two ways to grow: You produce goods and services and sell them to consumers within Nigeria, across the continent, and preferably outside the continent. But the only way you can sell goods outside Nigeria is if they are competitive,” he noted.

Reducing structural bottlenecks in infrastructure, regulation, and logistics, he said, would lower production costs, moderate inflation and raise purchasing power.

“If you fix the Ease of Doing Business, you reduce the cost of production. Goods become cheaper, inflation comes down, and purchasing power improves.

“Higher demand leads to higher production, more jobs and more income. That is how you significantly grow the economy and move towards a $1 trillion target,” Kale explained.

On Nigeria’s trade structure, he reiterated the need to break the cycle of exporting raw materials and importing finished goods.

“The reason we export raw materials and import finished goods is that we do not have a production structure that is competitive,” he said.

“If it is cheaper to import something than to produce it locally, consumers will import.”

He called for accelerated industrialisation and value addition, arguing that Nigeria should process its raw materials locally, meet domestic demand and export surplus finished products.

Citing the Dangote Refinery as proof of concept, Kale said the combination of policy alignment, capital mobilisation, and scale could shift sectors from import dependence to export competitiveness.

He argued that the same approach be extended to pharmaceuticals, agribusiness, automotives and electric vehicle components, textiles and garments, digital and business services, as well as green minerals such as lithium and cobalt, with a focus on producing locally, meeting domestic demand and exporting finished goods.

While AfCFTA provides a harmonised legal framework and access to a unified continental market, Kale maintained that its success for Nigeria would depend on sustained reforms, credible macroeconomic management, industrial capacity building and a banking system strong enough to finance trade at scale.

Managing Director, Ecobank Nigeria, Mr. Bolaji Lawal, in his welcome address, said the forum was designed to interrogate practical pathways for accelerating trade and deepening Nigeria’s integration within the continent.

“Our second customer forum in the series focuses on strengthening Nigeria’s economic transformation. We would like to explore how we can drive exports, promote regional integration, and, most importantly, support Nigeria’s economic transformation, as we all work together towards the shared objective of building a $1 trillion economy,” he said.

Lawal noted that Ecobank’s pan-African footprint positions it uniquely to facilitate cross-border commerce.

“At Ecobank, we pride ourselves on being the bank with a footprint in 33 African countries, and trade is at the heart of everything we do.

“We are keen to share knowledge and discuss how our platform can better support trade across Africa and beyond,” he added.

Speaking on the panel, an official of the Central Bank of Nigeria (CBN) emphasised the need for stronger regional coordination and financial integration to unlock Africa’s trade potential.

Import and Trade Relations Office, Trade and Exchange Department, Central Bank of Nigeria (CBN) Tiku Allu, said Africa’s greatest opportunity lies in deepening collaboration across borders and strengthening backward integration within the continent.

“The opportunity we have as a continent lies in better collaboration and integration. There are opportunities in areas such as backward integration, where banks can play a critical role by providing access to the capital and financing structures required to support production within the region, rather than relying on imports from outside,” he said.

He added that financial institutions must be more deliberate in structuring solutions that enable regional production and value addition.

“These are opportunities that banks like Ecobank and others can begin to capitalise on more intentionally,” Allu noted.