By Adedapo Adesanya
President Bola Tinubu has thrown his full weight behind the plan by the Central Bank of Nigeria (CBN) to increase the capital base of banks in the country.
The President expressed his views on this move, which last occurred in 2005, through his Special Adviser on Information and Strategy, Mr Bayo Onanuga, in his message at the 40th anniversary of The Guardian Newspapers in Lagos on Tuesday.
He said bank recapitalisation was crucial to Nigeria achieving a $1 trillion economy.
“Amidst the general lull in a global economy, our ambition to attain a $1 trillion economy appears daunting. But we believe it is achievable, with God on our side and our collective determination.
“This explains why the Vice President and I have been on the road, trying to attract huge investments in various facets of our economy: agriculture, oil and gas, renewable energy and others,” he said during the speech.
Last Friday, the CBN Governor, Mr Olayemi Cardoso, at a bankers’ dinner in Lagos, said commercial banks in the country would be directed to increase their capital base from the current N25 billion. However, he did not give the new ceiling.
He said commercial banks currently don’t have sufficient capital relative to the finance system needs in servicing a $1 trillion economy.
“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.
“It is not just about the stability of the financial system at the moment as we have already established at the current assessment to show stability.
“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,” Mr Cardoso said at the event.
“However, we need to ask ourselves: will Nigerian banks have sufficient capital relative to the finance system needs in servicing a $1trn economy in the near future?
“Therefore, we must make difficult decisions regarding capital adequacy. As a first step, the central bank will be directing banks to increase their capital,” he added.
Nigeria last increased the capital base for banks 18 years ago when the current Governor of Anambra State, Mr Charles Soludo, was the apex bank chief and raised the capital base by 1,150 per cent from N2 billion to N25 billion.
Aduragbemi Omiyale