Business
Experts: Stronger Financial System Hinges on Cross-Sector Collaboration
As Nigeria charts a course toward becoming a one-trillion-dollar economy, experts from across the financial, regulatory, and academic sectors have emphasized that the key to financial system stability and investor confidence lies in deep, strategic collaboration.
This was the central message at a colloquium titled “Banking Recapitalisation Towards a One-Trillion Dollar Economy—Implications, Prospects, and the Way Forward,” held Tuesday in Abuja.
Speaking at the event, Mr. Musa Jimoh, Director of the Payments System Policy Department at the Central Bank of Nigeria (CBN), stressed the importance of managing risks within the financial and payment systems. “It’s very important that we take care of the risks associated with the payment system and the broader financial system,” he said.
Jimoh acknowledged the challenge regulators face in keeping pace with rapid technological innovation, emphasizing that risk management and regulatory compliance are non-negotiable. “There are many regulations that operators must comply with. Otherwise, we risk destroying everything we’ve built,” he warned, noting the need to align local regulatory frameworks like Nigeria’s NDPR with international standards such as the EU’s Payment Services Directive.
He added that technology has evolved from being a mere enabler to becoming central to risk control, efficiency, and scalability. Tools such as artificial intelligence and automation, he said, enhance transparency and support data-driven regulation. However, Jimoh noted that technology alone is not enough. “Transparency and public disclosure from banks and fintechs are crucial. Open communication builds trust, especially as services expand,” he said, adding, “Stakeholder engagement is critical. Only through collaboration can we build resilient infrastructure and reduce systemic risk.”
Echoing this call, Professor Uche Uwaleke of Nasarawa State University, a respected capital markets expert, emphasized the importance of transparency in the upcoming banking recapitalization drive. “Banks must recapitalize with clean capital—genuine equity contributions, not retained earnings or shareholder reserves,” he stated.
Uwaleke expressed concerns about the domestic capital market’s capacity to absorb the estimated ₦3 to ₦4 trillion in new capital without distorting equity prices. He recalled how past recapitalization waves strained the market due to simultaneous capital-raising exercises. To avoid such disruptions, he recommended close coordination between the CBN, Securities and Exchange Commission (SEC), and the Nigerian Exchange (NGX).
With Nigeria’s capital market still relatively shallow—less than 10% of GDP, and daily turnover trailing significantly behind markets like South Africa—Uwaleke stressed the need for strategic sequencing. “The recapitalization drive must be well-timed and well-managed to avoid unintended consequences and attract long-term investments,” he advised.
Dr. Joseph Ogede of the Nigerian Economic Summit Group (NESG) highlighted the opportunity that recapitalization presents to improve access to finance for small and medium-sized enterprises (SMEs), a key driver of economic growth. He noted that limited access to credit remains a persistent barrier for SMEs, as reflected in the NESG’s Business Confidence Monitor. He argued that increased bank capital should facilitate more robust private sector lending.
“Improved financial intermediation will support innovation and job creation, especially in sectors like agriculture, manufacturing, and digital infrastructure,” Ogede said. But he also warned that this would only be realized through deliberate collaboration among banks, regulators, policymakers, and private sector actors. “With stronger capital bases, banks can scale operations and expand into underserved areas. But consistent policy enforcement is crucial to encourage lending into productive sectors,” he added.
Former CBN Director Mr. Dipo Fatokun emphasized that recapitalization must go hand-in-hand with the modernization of Nigeria’s payment systems. As banks become larger and their operations more complex, the need for interoperable and secure payment infrastructure becomes more urgent. He also cautioned against the risks of poor coordination, including a potential rise in non-performing loans due to lax credit standards. Such risks, he said, can be mitigated through shared risk management frameworks and transparent data exchange.
In conclusion, the experts agreed that isolated reforms will not suffice to deliver the financial system resilience and investor confidence Nigeria seeks. Instead, a unified, strategic, and cross-sectoral approach is required—one that integrates technological advancement, regulatory compliance, capital market development, and inclusive access to finance. Only through meaningful collaboration can Nigeria build a robust, inclusive, and future-ready financial system capable of supporting its ambition to become a one-trillion-dollar economy.