Nigeria’s banks have completed a major bank recapitalisation exercise, raising ₦4.65tn in fresh capital. Yet access to affordable credit remains a challenge for businesses looking to expand, invest in equipment or increase production.

The exercise, which concluded in March 2026, saw 33 banks meet the Central Bank of Nigeria’s revised minimum capital requirements. The stronger capital base is expected to improve banks’ capacity to support businesses and economic activity. But raising capital and getting that money into the hands of businesses are two different things.

For companies facing high borrowing costs and strict lending conditions, the benefits of recapitalisation may take time to reach the factory floor, the workshop or the small business trying to take on more customers.

When businesses cannot afford to grow

The challenge is particularly visible in manufacturing, where access to long-term financing is essential for acquiring machinery, expanding production lines, purchasing raw materials and meeting operating costs.

Despite the banking sector’s recapitalisation, credit to manufacturers has fallen by about 34 percent, declining from ₦8.5tn in December 2024 to ₦5.6tn. Manufacturing now accounts for just 8.7 percent of bank credit, while oil and gas, finance and insurance together take up about 46 percent.

This imbalance matters because a country’s ability to produce more of what it consumes depends partly on whether local businesses can finance production. When manufacturers struggle to obtain loans, they may postpone equipment purchases, reduce expansion plans, or operate below their capacity.

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Trade has also overtaken manufacturing in the distribution of bank credit. This raises questions about the kind of economic activity the financial system is supporting, particularly when financing the importation and distribution of goods appears more attractive than funding their production locally.

Credit to Nigeria’s private sector represents about 13 percent of gross domestic product, compared with 38.1 percent in lower-middle-income countries. For businesses that need external financing to grow, this limited availability of credit creates another barrier.

The cost of getting a loan

Even when businesses qualify for financing, the cost can make borrowing difficult to justify. Lending rates range from about 19 percent for prime borrowers to 32.6 percent for other customers. For a business operating on tight margins, repaying a loan at these rates can consume a significant portion of its earnings, particularly when the investment will take months or years to generate returns.

Banks also have to consider the risks involved in lending. Businesses with irregular cash flows, limited collateral or little credit history may find it harder to secure financing, while shorter loan tenures can make it difficult to fund investments that require time to become profitable.

These challenges can make banks cautious about lending to smaller businesses and companies in sectors where returns take longer to materialise. For manufacturers, in particular, financing needs often extend beyond short-term working capital. They need loans that can cover equipment purchases, factory expansion and other investments that may take several years to pay off.

These conditions help explain why a stronger banking system does not automatically translate into cheaper loans or easier access to finance for businesses.

Making the money work for businesses

The recapitalisation exercise has given Nigerian banks a stronger financial foundation, but the next stage will depend on how effectively they use that capacity.

At the 2026 Fellowship Investiture of the Chartered Institute of Bankers of Nigeria, industry leaders called for the new capital to support productive sectors and deliver tangible economic benefits. The CIBN president, Dele Alabi, argued that the success of recapitalisation should be measured by its contribution to new industries, expanding businesses, thriving small and medium-sized enterprises and sustainable jobs.

For manufacturers, this means access to affordable, long-term funding to acquire machinery, increase production and improve efficiency. Agricultural processors need financing for storage, processing and distribution, while smaller enterprises require capital to purchase equipment, strengthen supply chains and serve larger markets.

Banks will still need to manage lending risks and protect depositors’ funds. However, that does not rule out developing more practical ways to assess businesses, including giving greater attention to cash flow, contracts, business performance and the strength of a company’s operations rather than relying almost entirely on conventional collateral.

Credit guarantees and development finance can also help reduce the risks associated with lending to businesses that have growth potential but struggle to meet traditional lending requirements.

Ultimately, recapitalisation was never meant to end with banks meeting a new capital threshold. Its wider economic value lies in what stronger banks can make possible: businesses that can invest, manufacturers that can produce more, smaller enterprises that can expand and companies that can employ more people.

Meiza Nigeria