To bring a $1 trillion Nigerian economy to life is to begin what can be considered unprecedented although it is achievable. First, there should be sufficient disbursement to key sectors which altogether inspires healthy sustainable growth.

After this should come a clearly spelt rules-based financial system being coordinated by the central banking authority. Everything looks like they are being sorted based on the precedence being set entering the New Year 2024 by the Central Bank of Nigeria (CBN). A new round of recapitalisation envisioned by the bank is setting the way and aligning with President Bola Tinubu’s 2026 target to reach the $1 trillion mark.

“Amidst the general lull in [the] global economy”, says Mr Tinubu, “our ambition to attain a $1 trillion economy appears daunting.” The president, speaking through a representative, said this while offering a goodwill message at The Guardian Newspaper’s 40th anniversary event held in Lagos on Tuesday, 28 November.

By attracting huge investments in agriculture, oil and gas, and renewables, the president believes the objective will become a successful one.

Next year’s budget proposal by President Bola Tinubu to the national assembly was somewhat remarkable for policy analysts who saw budgetary allocation increase in education and health.

• Defence and Security sector – ₦3.25 trillion or 12 percent of the budget expenditure.
• The education sector received ₦2.18 trillion or 7.9 percent of the budget.
• The health sector was allocated ₦1.33 trillion or 5 percent of the budget.
• Infrastructure was allocated ₦1.32 trillion or 5 percent.
• Social Development and Poverty got ₦534 billion or 2 percent of the budget.

All these allocations need to be running in the background of an extraordinarily strong banking system, so off to figure out how this would come about.

ALSO READ: CBN rebranding in full swing with new Acting Governor Cardoso

It was in 2005 that the CBN last completed a recapitalisation function in the banking industry – that which demanded banks to raise their capital base from two billion Naira to ₦25 billion. With a new Governor of the Central Bank of Nigeria Dr Olayemi Cardoso handling matters, the capitalisation will certainly go way up.

When such happens, not every commercial bank will be able to keep up, particularly those below the first tier.

Being highly placed to undergo a new capitalisation process without facing issues, banks like Zenith Bank, Guaranty Trust Bank or First Bank will probably be receiving requests from lower tiers asking for a merger which ensures their survival.

On Friday, 25 November, Governor Cardoso was attending the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) where he pitched for the capitalisation.

“It is not just about the stability of the financial system in the present moment, as we have already established that the current assessment shows stability.

“However, we need to ask ourselves: Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action.

“Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital.”