Africa’s financial institutions will need to look beyond capital accumulation and strengthen governance, cybersecurity and risk-management systems as the continent becomes increasingly exposed to global financial, technological and climate-related shocks.
That broader African perspective emerges from the Central Bank of Nigeria’s assessment of the country’s recently concluded banking recapitalisation programme, which saw 33 Nigerian banks raise ₦4.65 trillion and meet revised minimum capital requirements.
CBN Deputy Governor, Corporate Services, Dr Muhammad Sani Abdullahi, said stronger capital provides financial institutions with greater capacity to absorb losses and finance economic expansion, but warned that capital alone cannot guarantee resilience.
Speaking at the 38th Seminar for Finance Correspondents and Business Editors, Abdullahi said the increasingly interconnected environment in which banks operate means shocks can spread across borders through financial markets, trade and technology.
He identified geopolitical uncertainty, climate-related risks, cyber threats and rapid technological change among emerging challenges capable of affecting capital flows, exchange rates and external buffers.
While the address focused primarily on Nigeria, the risks identified are inherently cross-border, making the issues relevant to the wider debate about how African financial systems build resilience.
Nigeria’s Recapitalisation Offers a Test Case
Nigeria’s banking recapitalisation programme was announced in March 2024, giving banks two years to raise capital appropriate to their licence categories.
By the end of the programme, 33 banks had met the revised requirements and raised ₦4.65 trillion, according to the
The objective was not simply to create bigger banks.
The CBN said stronger capital buffers should enable institutions to finance infrastructure, support industrial expansion, facilitate international trade and compete more effectively in regional and international markets.
That regional dimension is particularly important from an African perspective.
As financial institutions become more interconnected, their ability to withstand economic disruptions becomes relevant not only to their home markets but also to customers, businesses and investments connected to their operations.
The CBN’s message is that adequate capital provides the first layer of protection, but governance and effective management determine how that capital is deployed.
“Capital, however, is a starting point. Boards and management must maintain sound controls, recognise risks early and lend on the strength of viable projects,” Abdullahi said.
Cybersecurity Emerging as Major Financial Risk
Digitalisation presents another challenge for banking resilience.
As more financial services migrate to digital platforms, the CBN said institutions must continuously invest in cybersecurity, data protection, disaster recovery and business continuity.
Banks must also expand their risk frameworks beyond traditional credit exposures.
According to Abdullahi, financial institutions need to account for market, liquidity and operational risks alongside cybersecurity threats, third-party dependencies and climate-related financial risks.
The implication is that future financial resilience cannot be measured solely by the amount of capital sitting on a bank’s balance sheet.
An institution could be adequately capitalised but remain vulnerable if its digital infrastructure, governance systems or operational controls cannot withstand disruptions.
The CBN said customer confidence increasingly depends on the ability of financial institutions to protect personal information, keep payment systems functioning and ensure customers can access their money even when technology comes under pressure.
Stronger Banks Must Finance Africa’s Productive Economy
Another significant lesson from the Nigerian experience concerns what banks do with additional capital.
The CBN argues that the success of recapitalisation should ultimately be measured by the quality of financial services and productive lending generated by stronger balance sheets.
In Nigeria, the apex bank identified agriculture, manufacturing, services and infrastructure among sectors requiring financing suited to their investment horizons and cash flows.
Greater financing capacity can also support investments in technology, energy, transportation and power.
Businesses, however, have responsibilities of their own.
The CBN encouraged companies seeking financing to strengthen corporate transparency, governance and sustainability because these factors increasingly influence how banks assess creditworthiness.
For African economies seeking greater industrialisation and infrastructure investment, this shifts the recapitalisation discussion from merely having stronger financial institutions towards whether those institutions can effectively channel capital into productive economic activities.
Financial Inclusion Must Accompany Stronger Balance Sheets
The CBN also warned against measuring financial-sector strength exclusively through large institutions and headline capital figures.
According to Abdullahi, the benefits of stronger banking institutions must reach rural communities, women and young entrepreneurs, alongside customers already participating in the formal financial system.
Consumer protection and financial inclusion were described as integral components of resilience because a financial system that people can access, understand and trust is better positioned to support sustainable economic growth.
“Stronger bank balance sheets should translate into wider access and better service,” the Deputy Governor said.
Building Financial Systems Capable of Absorbing Shocks
Nigeria’s experience therefore provides a useful lens through which to examine a wider question confronting African financial systems: what comes after recapitalisation?
The CBN’s position is that the answer lies in combining adequate capital with disciplined supervision, corporate governance, cybersecurity, responsible innovation, financial inclusion and stronger risk management.
Its supervisory approach will continue to emphasise risk-based supervision, macroprudential surveillance and enhanced stress testing, alongside consumer protection, fintech regulation, crisis preparedness and resolution planning.
Abdullahi said regulators, financial institutions, businesses, investors, the media and the public all have roles in developing a financial system capable of withstanding shocks while supporting innovation and broadening economic opportunities.
For the wider African financial sector, the central lesson from the material is therefore not that Nigeria’s recapitalisation model should automatically be replicated elsewhere. Rather, the Nigerian experience highlights a broader principle: capital can strengthen the foundation of a banking system, but resilience ultimately depends on how institutions are governed, how risks are managed and whether stronger balance sheets translate into productive financing and wider financial access.
