NIGERIA AT 66: WHAT KIND OF FINANCIAL SYSTEM DOES A NATION TRYING TO GROW ACTUALLY NEED? by Dr. Abiola Salami, Principal, CHAMP Global Leadership Consultancy
“ Banks must protect depositors. They must price risk. They must remain profitable. They must preserve capital. They must comply with prudential requirements. But Nigeria must also confront an important structural and national performance question: If one of the principal institutions designed to intermediate capital increasingly finds it safer and more attractive to deploy resources elsewhere than into productive private enterprise, what happens to economic transformation?.” – Dr. Abiola Salami
Introduction
Nigeria turns 66 today.
There will be speeches about our journey, reflections about our possibilities and familiar conversations about what the country has achieved, lost and still hopes to become.
But perhaps Independence Day should also force us to ask a vital question. What kind of economic institutions does a nation trying to grow actually need? And, more specifically, what should Nigeria expect from its financial system?
This question matters because banks are not ordinary businesses. A manufacturing company converts raw materials into products. A telecommunications company converts spectrum and infrastructure into connectivity.
A bank sits in a different place in the economic architecture. It receives society’s savings.
It allocates capital. It prices risk. It determines which businesses receive financing. It helps households transact. It finances trade. It supports investment. And increasingly, it provides the digital rails through which the economy moves.
That makes banking one of the most significant transmission systems in any economy.
At 66, therefore, Nigeria should not only be asking whether its banks are strong. We should be asking what their strength is producing.
Nigeria Has Stronger Banks
There has been significant change.
The Central Bank of Nigeria’s recapitalisation programme raised minimum paid-up capital requirements substantially: ₦500 billion for commercial banks with international authorisation, ₦200 billion for national banks and ₦50 billion for regional banks. The compliance window ran from April 2024 to March 31, 2026. The CBN said explicitly that the objective included strengthening banks’ ability to lend to critical sectors and support economic growth.
The IMF subsequently described the recapitalisation exercise as successfully completed, noting that most institutions had met the revised capital requirements and that the exercise had strengthened resilience and financial stability.
That is important. A weak banking system cannot finance a strong economy. But the reverse question is now more important. Does a stronger banking system automatically produce a stronger economy? Not necessarily. That is where the performance conversation begins.
Capital Is an Input. Development Is an Outcome.
Nigeria’s economy grew by 4.43 per cent year-on-year in the second quarter of 2026, according to the National Bureau of Statistics. The finance and insurance sector recorded real growth of 9.29 per cent and contributed 3.37 per cent to real GDP during the quarter. Financial institutions accounted for 87.22 per cent of the sector’s real output.
Those numbers tell us that financial services are an important and growing part of the economy. But Performance Leadership™ forces us to go one step further.
The important question is not simply how well the banking sector itself performs. It is how effectively banking performance enables other parts of the economy to perform. Can a manufacturer finance expansion? Can an agricultural enterprise invest in processing capacity? Can an entrepreneur with a viable business obtain appropriately structured capital? Can exporters finance working capital competitively? Can infrastructure projects attract long-duration financing? Can households transact safely, reliably and affordably? Can Nigerian businesses move from survival to scale?
Those are not peripheral questions. They are some of the ways we determine whether financial intermediation is translating into economic performance.
The Intermediation Problem
There is already reason to look closely at this conversion. The IMF’s 2026 assessment of Nigeria noted that banks’ holdings of government securities represented about 22 per cent of total assets and warned that this, together with high cash-reserve requirements and other structural constraints, could crowd out private-sector credit.
Following its September 2026 meeting, the CBN reset the Monetary Policy Rate at 23 per cent while retaining the Cash Reserve Requirement for deposit money banks at 45 per cent.
These are not arguments that banks should abandon prudence and begin indiscriminate lending.
Banks must protect depositors. They must price risk. They must remain profitable. They must preserve capital. They must comply with prudential requirements.
But Nigeria must also confront an important structural and national performance question: If one of the principal institutions designed to intermediate capital increasingly finds it safer and more attractive to deploy resources elsewhere than into productive private enterprise, what happens to economic transformation?
From Financial Strength to National Strength
Nigeria does not merely need bigger banks. It needs banks capable of financing bigger Nigerian ambitions.
The country needs financial institutions with the sophistication to understand emerging sectors, build alternative credit models, finance value chains, support exporters, structure infrastructure transactions, serve growing businesses and deploy technology without abandoning customer trust.
This is why recapitalisation should not be viewed as the finish line. It should be viewed as new capacity. And capacity raises expectations.
If an institution has more capital, stronger technology, deeper talent, larger networks and greater institutional capability, society is entitled to ask what those resources are producing.
This is the same question we should ask of government expenditure, corporate investment, leadership development and every significant organisational resource i.e. Where is the performance?
The October Question
This month, the October edition of The Performance Leadership Brief™ turns that question toward Nigerian banking.
Our central question is simple; Nigerian Banks Have Recapitalized. Can the Banks Now Recapitalize Nigeria?
We will examine banking not merely through profitability, capital adequacy or shareholder returns, but through what I call the capital-to-performance conversion. Can stronger balance sheets become productive credit? Can productive credit become stronger businesses? Can stronger businesses create jobs? Can financial innovation improve productivity? Can digital banking deepen trust? Can capital strengthen the real economy?
Because the final test of a financial system is not simply how much money moves through it. It is what that money makes possible.
Nigeria’s financial sector has achieved important progress. The next challenge is conversion. At 66, perhaps that is one of the most important questions we can ask about many of our institutions. We have accumulated people, policies, capital, technology, infrastructure, experience and reforms. But what are these assets producing?
A nation does not become prosperous because it possesses resources. It becomes prosperous when institutions consistently convert resources into outcomes.
For Nigerian banking, the post-recapitalisation era should therefore be measured by something bigger than the size of bank balance sheets. The question must increasingly become How much stronger is Nigeria because its banks are stronger?
That is the performance test. And that is the conversation we need to have..
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.
NB
If you are a Supervisor, Manager or Team Lead, Take the Manager’s Execution Scorecard Assessment to see where execution may be breaking in your team.
If you are a Senior Executive, Look into the Invisible Toll Mirror to see the toll of the weight you are carrying.
For private coaching, boardroom recalibration, or executive healing strategy, connect email me directly at hello@abiolachamp.com to begin your private Executive Coaching Session.
