SEC Chief Emphasises Bank Recapitalisation as Key to Nigeria’s $1tn Economy Ambition
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Emomotimi Agama, Director General of the Securities and Exchange Commission (SEC), has highlighted the ongoing bank recapitalisation as a pivotal step towards realising Nigeria’s potential to achieve a $1tn economy. Speaking at a recent forum in Abuja, Agama underscored the necessity for comprehensive economic reforms to complement a robust banking sector.
In a statement provided to our correspondent, Agama articulated the importance of diversifying Nigeria’s economy beyond oil exports and investing in critical areas such as infrastructure, human capital, and innovation. He stressed that enhancing the business environment, reducing regulatory obstacles, and promoting financial inclusion are essential for driving sustainable growth.
“Recapitalised banks will play a critical role in supporting these efforts,” Agama stated. He explained that bank recapitalisation involves increasing a bank’s capital to meet regulatory requirements, improve financial stability, and enhance lending capacity. “Recapitalisation through the capital market can help banks meet regulatory capital requirements, improve capital adequacy ratios, and increase lending capacity. This, in turn, will enhance financial stability and restore investor confidence.”
Agama noted that a stronger banking sector could lead to increased lending to key sectors such as agriculture, manufacturing, and infrastructure. “Such lending will drive economic growth by supporting big projects and industries, attracting foreign investors, and boosting capital inflows,” he said. This would also deepen the capital market and encourage the listing of banks and other companies on the Nigerian Exchange Limited.
To facilitate the recapitalisation process, the SEC has recently released a framework aimed at ensuring a transparent and efficient capital-raising process for banks and holding companies participating in the recapitalisation programme. The framework outlines guidelines for raising capital through rights issuances, private placements, or other approved methods during the 2024–2026 recapitalisation period.
This initiative follows the Central Bank of Nigeria’s (CBN) directive in March, which requires deposit money banks to enhance their capital base. According to the CBN recapitalisation circular, commercial banks with international authorisation must increase their capital base to N500bn, national banks to N200bn, and regional banks to N50bn.
Agama acknowledged the challenges associated with recapitalisation, such as share price dilution and increased debt servicing. However, he reiterated that the benefits, including enhanced investor confidence and better risk management, outweigh the potential drawbacks. “The SEC is committed to facilitating a transparent and efficient capital-raising process to support the CBN’s objectives,” he stated.
Looking ahead, Agama noted Nigeria’s ambition to achieve a $1tn economy by 2030, with the SEC’s recapitalisation framework being a crucial step in strengthening the banking sector’s asset base and supporting economic growth. “The capital market is pivotal in enabling banks to access the necessary funds and explore various business combinations, ultimately fostering a stable financial system and promoting economic stability,” he remarked.
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