The Centre for the Promotion of Private Enterprise, CPPE, has raised concerns over a widening gap between Nigeria’s banking sector and the real economy, despite 32 banks meeting the Central Bank of Nigeria’s recapitalisation requirement ahead of the March 31 deadline.
In a statement issued on Sunday, CPPE Chief Executive Officer, Muda Yusuf, said that while banks have successfully strengthened their capital base, there is an urgent need to ensure that the financial system delivers meaningful support to productive sectors.
According to the think tank, the key issue is no longer capital adequacy but whether the strengthened banking system will translate into improved economic outcomes, particularly for businesses and job creation.
CPPE noted that access to credit remains a major challenge, especially for small and medium enterprises (SMEs). It revealed that SME lending accounts for only about one per cent of total bank credit in Nigeria, far below the sub-Saharan African average of five per cent. This is despite SMEs contributing roughly 50 per cent of the country’s Gross Domestic Product and over 80 per cent of employment, with an estimated financing gap of about N48 trillion.
The organisation described the situation as a significant weakness in Nigeria’s financial structure.
“The evidence suggests that this linkage remains weak,” the statement said.
It further noted that private sector credit as a percentage of GDP stands at about 17 per cent in 2025, compared to an average of 25 per cent in sub-Saharan Africa and around 34 per cent in lower-middle-income countries. In contrast, countries such as South Africa, Mauritius, and Cape Verde record significantly higher levels of financial intermediation.
CPPE stressed that the disparity highlights a persistent structural disconnect between the financial system and the productive sectors of the economy.
“The ultimate success of this reform will be determined not just by stronger balance sheets, but by the extent to which the banking system supports investment, enterprise, job creation, and economic transformation.
“At this critical juncture, the priority must shift from capital adequacy to economic impact. Nigeria needs not just stronger banks, but banks that work for the economy,” the statement added.
