After the Capital Rush: Who Really Wins Nigeria’s Bank Recapitalisation?

BY BLAISE UDUNZE

By any standard, Nigeria’s ongoing bank recapitalisation exercise is one of the most consequential financial sector reforms since the 2004-2005 consolidation that shrank the number of banks from 89 to 25. Then, as now, the stated objective was stability to have stronger balance sheets, better shock absorption, and banks capable of financing long-term economic growth. The Central Bank of Nigeria (CBN), in 2024, mandated a sweeping recapitalisation exercise compelling banks to raise substantially higher capital bases depending on their license categories. The categorisation mandated that every Tier-1 deposit money bank with international authorization is to warehouse N500 billion minimum capital base, and a national bank must have N200 billion, while a regional bank must have N50 billion by the deadline of 31st March 2026. According to the apex bank, the objectives were to strengthen resilience, create a more robust buffer against shocks, and position Nigerian banks as global competitors capable of funding a $1 trillion economy.

But in the thick of the race to comply and as the dust gradually settles, a far bigger conversation has emerged, one that cuts to the heart of how our banking system works. What will the aftermath of recapitalisation mean for Nigeria’s banking landscape, financial inclusion agenda, and real-sector development? Beyond the headlines of rights issues, private placements, and billionaire founders boosting stakes, every Nigerians deserve a sober assessment of what has changed, and what still must change, if recapitalisation is to translate into a genuinely improved banking system. The points are who benefits most from its evolution, and whether ordinary Nigerians will feel the promised transformation in their everyday financial lives, because history has taught us that recapitalisation is never a neutral policy. The fact remains that recapitalization creates winners and losers, restructures incentives, and often leads to unintended outcomes that outlive the reform itself.

Concentration Risk: When the Big Get Bigger

Recapitalisation is meant to make banks stronger, and at the same time, it risks making them fewer and bigger, concentrating power and risks in an ever-narrowing circle. Nigeria’s Tier-1 banks, those already controlling roughly 70 percent of banking assets, are poised to expand further in both balance sheet size and market influence. This deepens the divide between the “haves” and “have-nots” within the sector. A critical fallout of this exercise has been the acceleration of consolidation. Stronger banks with ready access to capital markets, like Access Holdings and Zenith Bank, have managed to meet or exceed the new thresholds early by raising funds through rights issues and public offerings. Access Bank boosted its capital to nearly N595 billion, and Zenith Bank to about N615 billion.

In contrast, banks that lack deep pockets or the ability to quickly mobilise investors are lagging. The results always show that the biggest banks raise capital faster and cheaper, while smaller banks struggle to keep pace.

As of mid-2025, fewer than 14 of Nigeria’s 24 commercial banks met the required capital base, meaning a significant number were still scrambling, turning to rights issues, private placements, mergers, and even licensing downgrades to survive.

The danger here is not merely numerical. It is systemic: as capital becomes more concentrated, the banking system could inadvertently mimic oligopolistic tendencies, reducing competition, narrowing choices for customers, and potentially heightening systemic risk should one of these “too-big-to-fail” institutions falter.

Capital Flight or Strategic Expansion? The Foreign Subsidiary Question

One of the most contentious aspects of the recapitalisation aftermath has been the deployment of newly raised capital, especially its use outside Nigeria. Several banks, flush with liquidity from rights issues and injections, have signalled or executed investments in foreign subsidiaries and expansions abroad, like what we are experiencing with Nigerian banks spreading their tentacles to the Ivory Coast, Ghana, Kenya, and beyond. Zenith Bank’s planned expansion into the Ivory Coast exemplifies this outward push.

While international diversification can be a sound strategic move for multinational banks, there is an uncomfortable optics and developmental question here: why is Nigerian money being deployed abroad when millions of Nigerians remain unbanked or underbanked at home?

According to the World Bank, a large number of Nigeria’s adult population still lack access to formal financial services, while millions of SMEs, micro-entrepreneurs, and rural households remain on the edge, underserved by traditional banks that now chase profitability and scale.

Of a truth, redirecting Nigerian capital to foreign markets may deliver shareholder returns, but it does little in the short term to advance domestic financial inclusion, poverty reduction, or grassroots economic participation. The optics of capital flight, even when legal and strategic, demand scrutiny, especially in a nation still struggling with deep regional and demographic disparities.

Impact on Credit and the Real Economy

For the ordinary Nigerian, the most important question is simple: will recapitalisation make credit cheaper and more accessible?

History suggests the answer is not automatic. The tradition in Nigeria’s bank system is mainly to protect returns, and for this reason, many banks respond to higher capital requirements by tightening lending standards, raising interest rates, or focusing on low-risk government securities rather than private-sector loans, because raising capital is expensive, and banks are profit-driven institutions. Small and medium-sized enterprises (SMEs), often described as the engine of growth, are usually the first casualties of such risk aversion.

If recapitalisation results in stronger balance sheets but weaker lending to the real economy, then its benefits remain largely cosmetic. The economy does not grow on capital adequacy ratios alone; it grows when banks take measured risks to finance production, innovation, and consumption.

Retail Banking Retreat: Handing the Mass Market to Fintechs?

In recent years, we have witnessed one of the most striking shifts, or a gradual retreat of traditional banks from mass retail banking, particularly low-income and informal customers.

The question running through the hearts of many is whether Nigerian banks are retreating from retail banking, leaving space for fintech disruptors to fill the void.

In recent years, players like OPAY, Moniepoint, Palmpay, and a host of digital financial services arms have become de facto retail banking platforms for millions of Nigerians. They provide everyday payment services, wallet functionalities, micro-loans, and QR-enabled commerce, areas traditional banks once dominated. This trend has accelerated as banks chase corporate clients where margins are higher and risk profiles perceived as more manageable. The true picture of the financial landscape today is that the fintechs own the retail space, and banks dominate corporate and institutional finance. But it is unclear or uncertain if this model can continue to work effectively in the long term.

Despite the areas in which the Fintechs excel, whether in agility, product innovation, and customer experience, they still rely heavily on underlying banking infrastructure for liquidity, settlement, and regulatory compliance. Should the retail banking ecosystem become split between digital wallets and corporate corridors, rather than being vertically integrated within banks, systemic liquidity dynamics and financial stability could be affected. Nigerians deserve a banking system where the comforts and conveniences of digital finance are backed by the stability, regulatory oversight, and capital strength of licensed banks, not a system where traditional banks withdraw from retail, leaving unregulated or lightly regulated players to carry that mantle.

Corporate Governance: When Founders Tighten Their Grip

The recapitalisation exercise has not been merely a technical capital-raising exercise; it has become a theatre of power plays at the top. In several banks, founders and major investors have used the exercise to increase their stakes, concentrating ownership even as they extol the virtues of financial resilience.

Prominent founders, from Tony Elumelu at UBA to Femi Otedola at First Holdco and Jim Ovia at Zenith Bank, have all been actively increasing their shareholdings. These moves raise legitimate questions about corporate governance when founders increase control during a regulatory exercise. Are they driven by confidence in their institutions, or are they fortifying personal and strategic influence amid industry restructuring.

Though there might be nothing inherently wrong with founders or shareholders demonstrating faith in their institutions, one fact remains that the governance challenge lies not simply in who holds the shares, but how decisions are made and whose interests are prioritised. Will banks maintain robust internal checks and balances, ensuring that capital deployment aligns with national development goals? The question is whether the CBN is equipped with adequate supervisory bandwidth and tools to check potential excesses if emerging shareholder concentrations translate into undue influence or risks to financial stability. These are questions that transcend annual reports; they strike at the heart of trust in the system.

Regional Disparity in Lending: Lagos Is Not Nigeria

One of the persistent criticisms of Nigerian banking is regional lending inequality. It has been said that most bank loans are still overwhelmingly concentrated in Lagos and the Southwest, despite decades of financial deepening in this region; large swathes of the North, Southeast, and other underserved regions receive disproportionately smaller shares of credit. This imbalance not only undermines inclusive growth but also fuels perceptions of economic exclusion.

Recapitalisation, in theory, should have enhanced banks’ capacity to support broader economic activity. Yet, the reality remains that loans and advances are overwhelmingly concentrated in economic hubs like Lagos.

The CBN must deploy clear incentives and penalties to encourage geographic diversification of lending. This could include differentiated capital requirements, credit guarantees, or tax incentives tied to regional loan portfolios. A recapitalised banking system that does not finance national development is a missed opportunity.

Cybersecurity, Staff Welfare, and the Technology Deficit

Beyond balance sheets and brand expansion, there is a human and technological dimension to the banking sector’s challenge. Fraud remains rampant, and one of the leading frustrations voiced by Nigerians involves failed transactions, delayed reversals, and poor digital experience. Banks can raise capital, but if they fail to invest heavily in cybersecurity, fraud detection, staff training, and welfare, the everyday customer will continue to view the banking system as unreliable. Nigeria’s fintech revolution has thrived precisely because it has pushed incumbents to become more customer-centric, agile, and tech-savvy. If banks now flush with capital don’t channel a portion of those funds into robust IT systems, workforce development, fraud mitigation, and seamless customer service, then the recapitalisation will have achieved little beyond stronger balance sheets. In short, Nigerians should feel the difference, not merely in stock prices and market capitalisation, but in smooth banking apps, instant reversals, responsive customer care, and secure platforms.

The Banks Left Behind: Mergers, Failures, or Forced Restructuring?

With fewer than half the banks having fully complied with the recapitalisation requirements deep into 2025, a pressing question is: what awaits those that lag? Many banks are still closing capital gaps that run into hundreds of billions of naira. According to industry estimates, the total recapitalisation gap across the sector could reach as much as N4.7 trillion if all requirements are strictly enforced.

Banks that fail to meet the March 2026 deadline face a few options:

– Forced M&A. Regulators could effectively compel weaker banks to merge with stronger ones, echoing the consolidation wave of 2005 that reduced the sector from 89 to 25 banks.

– License downgrades or conversions. Some banks may choose to operate at a lower license category that demands a smaller capital base.

– Exits or closures. In extreme cases, banks that can neither raise capital nor find a merger partner might be forced out of the market.

This regulatory pressure should not be construed merely as punitive. It is part of the CBN’s broader architecture of ensuring that only solvent, well-capitalised, and risk-prepared institutions operate. However, the transition must be managed carefully to prevent contagion, protect depositors, and preserve confidence.

Why Are Tier-1 Banks Still Chasing Capital?

Perhaps the most intriguing puzzle is why some Tier-1 banks, long regarded as strong and profitable, are aggressively raising capital. Even banks thought to be among the strongest, such as UBA, First Holdco, Fidelity, GTCO, and FCMB, have struggled to close their capital gaps. UBA, for instance, succeeded in raising around N355 billion toward its N500 billion target at one point and planned additional rights issues to bridge the remainder.

This reveals another reality that capital is not just numbers on paper; it is investor confidence, market appetite, and macroeconomic stability.

One can also say that the answer lies partly in ambition to expand into new markets, infrastructure financing, and compliance with stricter global standards.

However, it also reflects deeper structural pressures, including currency depreciation eroding capital, rising non-performing loans, and the substantial funding required to support Nigeria’s development needs. Even giants are discovering that yesterday’s capital is no longer sufficient for tomorrow’s challenges.

Reform Without Deception

As the Nigerian banking sector recapitalization exercise comes to a close by March 31, 2026, the ultimate test will be whether the reforms deliver on their transformational promise.

Some of the concerns in the minds of Nigerians today will be to see a system that supports inclusive growth, equitable credit distribution, world-class customer service, and resilient financial intermediation. Or will we see a sector that, despite larger capital bases, still reflects old hierarchies, geographic biases, and operational friction? The cynic might say that recapitalisation simply made big banks bigger and empowered dominant shareholders. But a more hopeful perspective invites stakeholders, including regulators, customers, civil society, and bankers themselves, to co-design the next chapter of Nigerian banking; one that balances scale with inclusion, profitability with impact, and stability with innovation. The difference will be made not by press releases or shareholder announcements, but by deliberate regulatory action and measurable improvements in how banks serve the economy.

For now, the capital has been raised, but the true capital that counts is the confidence Nigerians place in their banks every time they log into an app, make a transfer, or deposit their life’s savings. Only when that trust is visible in everyday experience can we say that recapitalisation has truly succeeded.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]

Alpha Morgan Bank Backs Cultural Preservation at the 2025 Iganmode Festival

Alpha Morgan Bank has reaffirmed its commitment to cultural preservation and community development as one of the major sponsors of the recently concluded Iganmode Cultural Festival (Odun Omo Iganmode) held in Sango-Ota, Ogun State.

The annual festival, a landmark cultural celebration in the ancient town of Ota, showcased the rich heritage, history, and identity of the Awori people. The event came alive with vibrant displays of traditional music, dance, colourful regalia, and performances that reflected the deep-rooted customs and values of the community.

Alpha Morgan Bank’s sponsorship followed closely on the heels of the recent launch of its Sango-Ota branch, further underscoring the Bank’s dedication to supporting local initiatives, promoting indigenous culture, and fostering sustainable community development in Ota and its environs.

The ceremony attracted an impressive array of dignitaries, including former President of Nigeria, His Excellency Chief Olusegun Obasanjo; Deputy Governor of Ogun State, Engr. (Mrs.) Noimot Salako-Oyedele; and the Olota of Ota, His Majesty, Prof. Adeyemi Obalanlege, alongside several other traditional rulers and members of royal households from across the state. Their presence highlighted the cultural and historical significance of the festival to Ogun State and the wider Yoruba nation.

Alpha Morgan Bank’s participation as a major sponsor reflects its broader corporate vision of strengthening community values and supporting initiatives that promote Nigeria’s rich cultural heritage. The Bank joined thousands of attendees in celebrating a festival that continues to serve as a symbol of unity, pride, and cultural continuity for the people of Ota.

The 2025 edition of the Iganmode Festival was widely acclaimed as a success, leaving guests and participants with lasting impressions of a colourful, well-coordinated celebration that honoured tradition while fostering communal harmony.

*Dangote, Monopoly Power, and Political Economy of Failure*

BY BLAISE UDUNZE

Nigeria’s refining crisis is one of the country’s most enduring economic contradictions. Africa’s largest crude oil producer, strategically located on the Atlantic coast and home to over 200 million people, has for decades depended on imported refined petroleum products. This illogicality has drained foreign exchange, weakened the naira, distorted investment incentives, and hollowed out state institutions. Instead of catalysing industrialisation, Nigeria’s oil wealth became a mechanism for capital flight, rent-seeking, and institutional decay.

With the challenges surrounding the refining of crude oil, the establishment of Dangote Refinery signifies an important historic moment. The refinery promises to reduce fuel imports to a bare minimum, sustain foreign exchange growth, ensure there is constant fuel domestically, and strategically position Nigeria as a regional exporter of refined oil products if functioned at full capacity. Dangote Refinery symbolises what private capital, technology, and ambition can achieve in Africa following years of fuel queues, subsidy scandals, and global embarrassment.

Nigerians must have a rethink in the cause of celebration. Nigeria’s refining problem is not simply about capacity; it is about systems. Without addressing the policy failures and institutional weaknesses that made Dangote an exception rather than the rule, the country risks replacing one failure with another, this time cloaked in private-sector success.

For a fact, Nigeria desperately needs the emergence of Dangote refinery, and its success is in the national interest. Hence, this is not an argument against the Dangote Refinery. But history warns that structural failures are not solved by scale alone. Over the year, situations have shown that without competition and strong institutions, concentrated market power, whether public or private, can undermine price stability, energy security, and consumer welfare.

The Long Silence of Refinery Investments

Perhaps the most troubling question in Nigeria’s oil history is why none of the global oil majors like Shell, ExxonMobil, Chevron, Total, or Agip has built a major refinery in Nigeria for over four decades. These companies operated profitably in Nigeria, extracted their crude, and sold refined products back to the country, yet never committed capital to domestic refining.

Over the period, it has been shown that policy incoherence has been the cause, not a matter of technical incapacity, such as price controls, resistant licensing processes, subsidy arrears, frequent regulatory changes, and political interference, which made refining an unattractive investment. Importation, by contrast, offered quick returns, lower political risk, and guaranteed margins, often backed by government subsidies.

Nigeria carelessly designed a system that rather rewarded importers and punished refiners. Dangote did not succeed because the system improved; he succeeded despite it. His refinery exists largely because of the concessions from the government, exceptional financial capacity, political access, and a willingness to absorb risks that institutions should ordinarily mitigate. This raises a deeper concern; when institutions fail, progress becomes dependent on extraordinary individuals rather than predictable systems.

The Tragedy of NNPC Refineries

If private investors stayed away, Nigeria’s state-owned refineries should have filled the gap. Instead, the Port Harcourt, Warri, and Kaduna refineries became monuments to mismanagement. Records have shown that between 2010 and 2025, Nigeria reportedly wasted between $18 billion and $25 billion, over N11 trillion, just for Turn Around Maintenance and rehabilitation. Kaduna Refinery alone is estimated to have consumed over N2.2 trillion in a decade.

Despite these expenditures, output remained negligible. This was not merely a technical failure but a governance one. Contracts were poorly monitored, accountability was absent, and consequences were nonexistent. In functional systems, such outcomes trigger investigations, sanctions, and reforms. In Nigeria, the cycle simply repeated itself, eroding public trust and deepening dependence on imports.

Where Is BUA?

Dangote is not the only Nigerian conglomerate to announce refinery ambitions. In 2020, BUA Group unveiled plans for a 200,000-barrels-per-day refinery. Years later, progress remains unclear, timelines have shifted, and execution appears stalled.

This pattern is revealing. When multiple large investors struggle to translate plans into reality, the issue is not ambition but environment. Refinery projects in Nigeria appear viable only at a massive scale and with extraordinary political leverage. Smaller or mid-sized players are effectively crowded out, not by market forces, but by systemic dysfunction.

Policy Failure and the Singapore Comparison

Nigeria often aspires to emulate Singapore’s refining and petrochemical success. The comparison is instructive. Singapore has no crude oil, yet built one of the world’s most sophisticated refining hubs through consistent policy, investor protection, infrastructure planning, and regulatory certainty.

Nigeria chose a different path: price controls, subsidies, weak contract enforcement, and politically motivated policy reversals. Refineries became tools of patronage rather than productivity. Capital exited, infrastructure decayed, and import dependence deepened. The outcome was predictable.

The Cost of Import Dependence

For years, Nigeria spent billions of dollars annually importing petrol, diesel, and aviation fuel. This placed constant pressure on foreign reserves and the naira. Petrol subsidies alone were estimated at N4-N6 trillion per year, often exceeding national spending on health, education, or infrastructure.

Even after subsidy removal, legacy costs remain: distorted consumption patterns, weakened public finances, and entrenched interests built around importation. These interests did not disappear quietly.

Who Really Benefited from the Subsidy?

Although framed as pro-poor, fuel subsidies disproportionately benefited importers, traders, shipping firms, depot owners, financiers, and politically connected intermediaries. Smuggling across borders meant Nigerians subsidised fuel consumption in neighbouring countries.

Ordinary citizens received marginal relief at the pump but paid far more through inflation, deteriorating infrastructure, and underfunded public services. The subsidy system functioned less as social protection and more as elite redistribution.

The Traders’ Dilemma

Why did major fuel marketers like Oando invest in refineries abroad but not in Nigeria? Again, incentives explain behaviour. Importation offered faster returns, lower capital requirements, and political insulation. Domestic refining demanded long-term investment under unstable rules.

In an irrational system, rational actors optimise accordingly. Importation thrived not because it was efficient, but because policy made it so.

FDI and the Confidence Problem

Sustainable Foreign Direct Investment follows domestic confidence. When local investors, who best understand political and regulatory risks, avoid long-term industrial projects, foreign investors take note. Capital flows to environments with predictable pricing, rule of law, and policy consistency.

Nigeria’s challenge is not attracting speculative capital, but building conditions for patient, productive investment.

Dangote and the Monopoly Question

Dangote Refinery deserves credit. But scale brings power, and power demands oversight. If importers exit and no competing refineries emerge, Dangote could dominate refining, pricing, and supply. Nigeria’s experience with cement, where domestic production rose but prices soared due to limited competition, offers a cautionary tale.

Markets function best with competition. Without it, price manipulation, supply risks, and weakened energy security become real dangers, especially in countries with fragile regulatory institutions.

The Way Forward: Competition, Not Replacement

Nigeria does not need to weaken Dangote; it needs to multiply Dangotes. The goal should be a competitive refining ecosystem, not a replacement of a public monopoly with a private monopoly.

This requires transparent crude allocation, open access to pipelines and storage, fair pricing mechanisms, and strong antitrust enforcement. State refineries must either be professionally concessional or decisively restructured. Stalled projects like BUA’s should be unblocked, and modular refineries should be supported.

The Litmus Test

Nigeria’s refining crisis was decades in the making and cannot be solved by one refinery, however large. Dangote Refinery is a turning point, but only if embedded within systemic reform. Otherwise, Nigeria risks trading one form of dependency for another.

The true test is not whether Nigeria can refine fuel, but whether it can build fair, open, and resilient institutions that serve the public interest. In refining, as in democracy, excessive concentration of power is dangerous. Competition remains the strongest safeguard.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]