In a resounding show of support, the Presidency has thrown its weight behind the Central Bank of Nigeria’s (CBN) strategic move to bolster the capital base of deposit money banks across the nation.
This endorsement, articulated by President Bola Tinubu during the 40th-anniversary celebration of The Guardian Newspapers in Lagos, underscores the administration’s commitment to fostering economic growth through a robust financial sector.
President Tinubu, represented by his Special Adviser on Information and Strategy, Bayo Onanuga, delivered a compelling goodwill message at the momentous event.
Amidst acknowledging the global economic challenges, the President expressed unwavering confidence in Nigeria’s ability to achieve a $1 trillion economy, emphasizing the collective determination and divine assistance necessary for this ambitious goal.
“To arrive at the $1 trillion economic destination, we believe that we must address the capital adequacy of our banks that will provide the fuel for the journey,” President Tinubu asserted.
The acknowledgment of the pivotal role played by the banking sector in propelling economic advancement set the tone for a renewed focus on strengthening financial institutions.
Last Friday, CBN Governor Olayemi Cardoso underscored the urgency of the situation, stating that commercial banks must augment their capital base to meet the demands of a burgeoning $1 trillion economy.
Reflecting on the current state of affairs, Cardoso noted that Nigerian banks presently lack sufficient capital relative to the financial system’s needs.
“Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy,” he emphasized.
While acknowledging the current stability of the financial system, Cardoso raised pertinent questions about the ability of Nigerian banks to meet the capital requirements essential for servicing a $1 trillion economy in the near future.
In a decisive move, Cardoso declared, “Therefore, we must make difficult decisions regarding capital adequacy.
As a first step, the Central Bank will be directing banks to increase their capital.”
This announcement echoes the proactive stance taken by the CBN, harking back to 2005 when the apex bank, under the leadership of Charles Soludo, increased the capital base from N2 billion to N25 billion.
The proposed recapitalization serves as a strategic step towards fortifying the banking sector, aligning it with the demands of a rapidly evolving economic landscape.
As the nation braces for the implementation of this crucial directive, the synergy between the Presidency and the CBN underscores a shared vision for a resilient financial system that can propel Nigeria towards its lofty economic aspirations.
