Nigeria's banking system is awash with cash following completion of a major recapitalisation drive. Yet banks aren't lending that money out at anywhere near the same pace, creating a dangerous gap between financial strength and real economic support.
Fresh data from the Financial Markets Dealers Association shows liquidity hit N4.15 trillion in April 2026. That's a staggering 1,253 percent jump from the N306.54 billion available in April 2023, when the Central Bank first launched the recapitalisation programme.
Banks raised more than N4.65 trillion over two years to meet tougher capital rules. The recapitalisation exercise wrapped up on 31 March 2026, fundamentally reshaping how the sector operates.
But lending tells a different story. Credit to private businesses climbed just 0.9 percent month-on-month to N94.61 trillion in February 2026.
That's compared to N93.74 trillion the month before.
Year-on-year, the picture looks better — a 24.06 percent increase from February 2025's N76.26 trillion. Still, this growth lags far behind the liquidity surge banks are enjoying.
Ayodele Akinwunmi, chief economist at United Capital, noted that the completed recapitalisation pushed liquidity higher. He said growing confidence in the banking system also drove the expansion.
According to him, the jump to N4.15 trillion represents a 1,325 percent increase compared to 2025 alone. It signals a major structural shift in how much cash banks are holding.
Ayokunle Olubunmi from Agusto & Co sees the picture differently. A tough macroeconomic climate is still making lenders nervous about handing out money, he told reporters.
Banks are disbursing loans more cautiously than before. Proceeds from the capital raise exercise did significantly boost overall industry liquidity, Olubunmi added.
CBN Governor Olayemi Cardoso said the recapitalisation strengthened bank capital bases across the board. It's reinforced resilience in the financial system, he noted.
All 33 banks met the revised minimum capital requirements set by the central bank. Capital adequacy ratios now sit above international Basel benchmarks across the sector.
Regional and national banks must maintain at least 10 percent CAR. Those with international authorisation face a 15 percent threshold.
Muda Yusuf, chief executive of the Centre for the Promotion of Private Enterprise, raised a critical question. Has all this recapitalisation actually translated into support for the real economy?
Evidence suggests not. Nigeria's private sector credit represents just 17 percent of GDP as of 2025.
Sub-Saharan Africa averages 25 percent across the region.
South Africa's financial system channels 57.5 percent of GDP into private credit. Mauritius reaches 69.8 percent, showing what stronger intermediation looks like.
In Yusuf's view, this gap exposes a persistent structural problem. The financial system and productive sectors of the economy remain dangerously disconnected.
