Central Bank of Nigeria Calls for Increased Capital Base as Economy Targets $1 Trillion

Governor Yemi Cardoso Urges Banks to Boost Capital Adequacy to Align with Ambitious Economic Growth Projections

In a significant move aimed at fortifying the financial sector, the Central Bank of Nigeria (CBN) has hinted at compelling banks in the country to elevate their capital base to support the government’s ambitious $1 trillion economy target. Governor Yemi Cardoso revealed this development at the 58th Annual Bankers Dinner and Grand Finale of the 60th anniversary of the Chartered Institute of Bankers of Nigeria (CIBN) held in Lagos.

Cardoso emphasized that Nigerian banks currently lack sufficient capital relative to the financial system’s requirements for servicing a $1.0 trillion economy in the near future. This announcement comes on the heels of President Bola Tinubu’s recent suggestion that Nigeria’s economy could grow to $1 trillion by 2026, further underscoring the need for robust financial backing.

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

Expressing concerns about previous foreign exchange restrictions imposed on the importation of 43 items by the previous government, Cardoso assured that the CBN, under his watch, would be repositioned as a catalyst for change and economic development.

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The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, commended the CBN’s commitment to building a stable and resilient economy. He acknowledged that the decisions taken by the government, though challenging, were necessary for turning the country around, attracting investment, creating jobs, and reducing poverty.

Mr Ebenezer Onyeagwu, Chairman of the Body of Banks’ Chief Executive Officers and Managing Director of Zenith Bank, called for support for the reforms introduced by the CBN. He affirmed that the apex bank was already addressing the issue of FX forward and assured that it would soon be resolved.

The President of the Chartered Institute of Bankers of Nigeria, Ken Opara, lauded Governor Cardoso’s initiatives aimed at repositioning and stabilizing the economy. Notable achievements mentioned include a focus on core monetary policy mandates, unification of the exchange rate, and steps to boost liquidity in the foreign exchange market.

The presence of Vice President Kashim Shettima and Lagos State Governor Babajide Sanwo-Olu, represented by Rukaiya El-Rufai and Abayomi Oluyomi, respectively, highlighted the significance of this gathering in shaping the economic landscape of Nigeria.

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