A professor of accounting at Lead City University, Godwin Oyedokun, has cautioned that the recently concluded bank recapitalisation exercise by the Central Bank of Nigeria (CBN) may not automatically stimulate growth in Nigeria’s real sector.

Speaking in an interview on Wednesday, Oyedokun acknowledged the significance of the recapitalisation programme but warned against assuming it would directly improve credit access, especially for small businesses and informal operators.

The CBN had earlier announced the successful completion of its recapitalisation initiative, which commenced in March 2024 and ended on March 31, 2026. According to the apex bank, 33 financial institutions met the new capital thresholds, collectively raising about N4.65 trillion to reinforce the stability of Nigeria’s banking sector.

Reacting to the development, Oyedokun noted that while stronger capital bases enhance banks’ resilience, they do not necessarily translate into increased lending to critical segments of the economy.

He explained that lending decisions in the banking sector are primarily influenced by risk-related factors rather than capital adequacy alone. Issues such as credit risk, lack of reliable borrower information, inadequate collateral, and prevailing macroeconomic uncertainties continue to shape banks’ willingness to extend credit.

The professor further highlighted that long-standing barriers facing small and medium-sized enterprises (SMEs) and informal businesses—such as poor financial documentation and weak credit histories—remain unresolved, making them less attractive to lenders under conventional banking frameworks.

According to him, even well-capitalized banks may still prioritize safer investment options, including government securities or lending to large, established corporations, rather than extending credit to smaller, higher-risk ventures.

Oyedokun stressed that for recapitalization to yield meaningful impact on the real sector, it must be supported by targeted reforms and policy measures. These include the introduction of credit guarantee schemes, improved credit information systems, and stronger collateral frameworks to reduce lending risks.

He also underscored the role of development finance institutions and innovative financial solutions in bridging the financing gap. In particular, he pointed to digital lending platforms and fintech collaborations as effective tools for reaching underserved segments of the economy.

On the policy front, he advocated for incentive-driven regulatory measures such as differentiated capital requirements and targeted lending quotas to encourage banks to support SMEs.

Oyedokun warned that without these complementary interventions, the recapitalization exercise may strengthen the banking sector without significantly improving financial inclusion or addressing the country’s credit challenges.

He concluded that while recapitalization is an essential step in strengthening the financial system, it is not a standalone solution, emphasizing that structural inefficiencies, informality, and weak financial documentation must also be addressed to unlock sustainable economic growth.