Nigeria Has Reformed Its Banks. But Are Banks Creating More Value? by Dr. Abiola Salami, Principal, CHAMP Global Leadership Consultancy
“ The ultimate test of an institution is not the strength of its inputs. It is the quality of the outcomes it consistently produces.”– Dr. Abiola Salami
Introduction
There is something fascinating about Nigeria’s relationship with banks.
We complain about banks when they charge us. We complain when they don’t lend to us. We complain when the app refuses to open at the exact moment we need to transfer ₦5,000. And yet, when the banking industry becomes stronger, we celebrate the numbers.
Our banks have more capital, more assets, more deposits, more technology, more branches becoming digital and more transactions moving online. But there is a question we don’t ask often enough What is all that strength actually producing?
Nigeria is now in the middle of one of the most consequential transformations of its financial system in years. The Central Bank’s banking-sector recapitalisation has pushed institutions to strengthen their capital bases, while the broader financial system is also experiencing higher capital requirements. The direction is for bank to build stronger institutions that can withstand shocks and support growth towards the trillion dollar economy.
This doesn’t only sound great; it is necessary.
But here is where Performance Leadership™ asks a different question – Does a stronger bank automatically mean a higher-performing bank?
We must ask this question because capital is an input, resilience is a capability but economic value is the outcome.
Imagine two families. Family A earns ₦1 million a month. They decide to increase their emergency savings from ₦1 million to ₦3 million. That’s excellent. Family B on the other hand although also has ₦3 million in savings, but that money is sitting untouched while the family continues borrowing to pay school fees, fund a small business and handle emergencies.
Both families have capital but are they experiencing the same financial performance? Of course not.
The question is not simply, “How much do you have?” The question is, “What are you able to produce with what you have?” That is the question Nigeria should now be asking of its banking industry.
The recapitalisation question cannot end with capital. The 2024 CBN recapitalisation exercise raised minimum capital requirements to ₦500 billion for international banks, ₦200 billion for national banks and ₦50 billion for regional banks, with banks required to meet the new requirements by March 31, 2026. The objective was not to make Nigerian banks look impressive on paper. It was to create institutions capable of supporting a larger, more resilient economy. And this is where the conversation becomes interesting.
Nigeria has experienced a substantial increase in capital inflows. In 2025, capital inflows reached $23.22 billion, up almost 90 per cent from $12.32 billion in 2024. But approximately 85 per cent of that inflow was foreign portfolio investment, while foreign direct investment was only $923 million.
That tells us something. Money is returning. But much of it is still interested in financial returns, not necessarily long-term productive investment.
So we should ask, Can Nigeria’s financial system convert capital into productive capacity? Because that is where performance begins.
A bank can report impressive profits while the economy around it still struggles to finance the next factory. A bank can have a beautiful digital app while a small manufacturer cannot obtain affordable working capital. A bank can have an enormous balance sheet while an entrepreneur spends six months trying to secure financing. A bank can be technologically sophisticated while the real economy remains starved of long-term capital. That is the paradox.
Financial-sector strength and economic-sector strength are related. But they are not the same thing.
What should we actually measure?
If we are serious about banking performance, perhaps we should stop measuring success only through the traditional scorecard of profitability, capital adequacy, liquidity, asset quality and shareholder return. Of course, these five matter but there should be another dashboard. Let us call it the Banking Value Conversion Dashboard.
We should ask the following three questions:
1.How much capital is being converted into productive lending?
This is not just how much money sits on the balance sheet. It is asking, how much reaches agriculture, manufacturing, technology, infrastructure, healthcare, housing and growing businesses?
2. How much banking activity is creating real economic activity?
A million transactions can look impressive but what happened because of those transactions? Did a business expand? Did a company employ ten more people? Did a manufacturer increase production? Did a young entrepreneur move from informal activity to a structured enterprise?
3. Are banks financing tomorrow or simply managing today?
This is critical. The safest transaction is not always the most valuable transaction. Sometimes leadership means being able to manage risk without becoming allergic to opportunity.
The SME Test
Let us make this even simpler. Imagine a woman who runs a food-processing company. She has customers. She has orders. She has a good product. She has five employees. She needs ₦30 million to buy equipment that would double her production capacity. She goes to the bank.
The bank tells her that the business is promising. Everyone agrees. The numbers look good. Then comes the collateral conversation. She doesn’t have enough. That means the deal is over. Now imagine that thousands of businesses face versions of this every year.
We can have the strongest banks in Africa and still have a weak productive economy if capital cannot travel from the financial system into viable economic opportunities. While I reckon that the banking system is not the economy; we cannot deny the fact that it is one of the economy’s most important conversion mechanisms. That is why the question of performance matters.
Technology is not the same thing as transformation. We should also be careful with our obsession with digital banking. Nigeria has become one of Africa’s most exciting financial technology markets. We can transfer money from our phones while standing in traffic. We can open accounts without entering a branch. We can pay bills at midnight. We can send money to someone whose surname we don’t even know.
Yes that is progress but technology can make an inefficient process faster. It does not automatically make the underlying system better. If it used to take three days to make a poor decision and technology reduces it to three seconds, congratulations; we now have a faster poor decision.
That is why digital transformation must ultimately be measured not just by the number of downloads of your bank app but by five critical things (a) customer value (b) productivity (c) inclusion (d) risk reduction and (e) economic outcomes.
So what should the next era of Nigerian banking look like?
I believe the next question is no longer “Are our banks adequately capitalised?” It should be “Are our banks adequately converting capital into national value?” That requires a different kind of leadership.
Banking leaders will have to think beyond balance sheets, deposits, transactions, compliance, and quarterly performance. They will have to think about productivity, development, transformation, trust, customer outcomes and institutional value.
This is not an argument for banks to become development agencies. No, banks must remain commercially disciplined. It is an argument for recognising that commercial performance and economic value do not have to be enemies. In fact, the best financial institutions should be able to create both.
The Performance Test
Every bank should be able to answer five uncomfortable questions:
1.What are we converting? Is it capital, technology, people, data and trust?
2. What are we converting them into? Is it loans, products, revenue, productivity and economic opportunity?
3.For whom? Is it shareholders, customers, employees, businesses and the economy?
4.At what cost?
5.What measurable difference exists because we did it?
That is the real performance conversation.
Nigeria has paid a significant price for financial-sector reform. The next chapter should not simply be about stronger banks. It should be about stronger economic outcomes produced through stronger banks.
Because at the end of the day, a bank does not exist merely to have money. It exists to move money, manage risk, create value and enable economic activity.
And perhaps this is the question we should carry into every boardroom. If our capital has increased, our technology has improved, our people are more qualified and our systems are stronger; what should be measurably better because of all of it?
That is Performance Leadership™. The ultimate test of an institution is not the strength of its inputs. It is the quality of the outcomes it consistently produces.
For banking leaders, boards and executive teams, this is the time to move from capital adequacy to value adequacy. The balance sheet tells us what a bank has. Performance tells us what that bank can make happen.
About Dr. Abiola Salami
Dr. Abiola Salami is the Principal Performance Strategist at CHAMP – a full scale professional services firm trusted by high performing business leaders for providing Executive Coaching, Workforce Development & Advisory Services to improve performance. He is the Convener of Dr Abiola Salami International Leadership Bootcamp ; The Peak PerformerTM Festival Made4More Accelerator Program and The New Year Kickoff Summit. You can reach his team on hello@abiolachamp.com and connect with him @abiolachamp on all social media platforms.
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About Dr. Abiola Salami
Dr. Abiola Salami is the Principal Performance Strategist at CHAMP – a full scale professional services firm trusted by high performing business leaders for providing Executive Coaching, Workforce Development & Advisory Services to improve performance. He is the Convener of Dr Abiola Salami International Leadership Bootcamp ; The Peak PerformerTM Festival Made4More Accelerator Program and The New Year Kickoff Summit. You can reach his team on hello@abiolachamp.com and connect with him @abiolachamp on all social media platforms..
For private coaching, boardroom recalibration, or executive healing strategy, connect email me directly at hello@abiolachamp.com to begin your private Executive Coaching Session.
