By Blaise Udunze

Nigeria has always prided itself as Africa’s largest economy and most populous nation. Currently, its banking sector is confronting a moment of truth that should send shockwaves. Today, a single South African bank, Standard Bank Group, commands a market value at roughly $21-22 billion that rivals and, in some comparisons, exceeds the entire Nigerian banking industry. Though it may seem to be unbelievable, it is real. This striking imbalance is not merely about market valuations for individuals who are perturbed by this alarming revelation. Hence, it must be known that this reflects deeper structural challenges in Nigeria’s financial system and underscores why the Central Bank of Nigeria’s recapitalisation drive has become essential for restoring competitiveness, resilience, and global relevance.

Without any iota of doubt, for a nation of over 200 million people and Africa’s largest economy by several metrics, this reality is more than an uncomfortable statistic. This is truly a reflection of deeper structural weaknesses within the financial system. It highlights the urgent need for reform and explains why the ongoing recapitalisation drive by the Central Bank of Nigeria has become one of the most consequential policy interventions in the country’s banking industry in two decades.

Recapitalisation is not merely a regulatory exercise. If, genuinely, the key stakeholders consider this exercise as an attempt to reposition Nigerian banks to compete with global peers, strengthen financial stability, restore investor confidence, and enable the banking sector to support economic transformation, they must not handle this report with bias.

The disparity between Nigerian and South African banks illustrates the scale of the challenge.

While Standard Bank Group, the largest by assets, has a market capitalisation of roughly R372 billion ($21-22 billion = N32.66 trillion). Similar whooping amounts valued in the multi-billion-dollar range as of 2025 apply to several other South African banks, including FirstRand, Absa Group, and Nedbank. For apt juxtaposition from what is obtainable with the South African bank, the combined market capitalisation of 13 Nigerian banks listed on the Nigerian Exchange (NGX) stood at about N16.14 trillion ($10.87 billion) as of 2025-2026. However, the earlier benchmarks show that around May 2025, it was about N11.07 trillion. The current valuation of N16.14 trillion is a result of the funds tapped by some banks from the capital market through rights issues and public offerings.

Nigeria’s largest banks tell a different story. Guaranty Trust Holding Company, widely regarded as one of Nigeria’s most efficient banks, is valued at less than $2 billion (N3.3 trillion). Access Holdings, despite managing assets exceeding $70 billion, carries a market capitalisation of under $1 billion.

To further buttress Africa’s largest financial institution’s position, as of June 30, 2025, Standard Bank Group of South Africa reported total assets of R3.4 trillion. This amount is equivalent to $191.8 billion, and it points to the fact that it is at the top in Africa’s financial space. The equivalent in naira at Nigeria’s exchange rate of N1,484.50 to $1. Hence, $191.8 billion translates to approximately N284,983 trillion, or roughly N285 trillion. This means a single South African bank now outvalues the entire Nigerian banking industry, when compared to the 10 largest lenders collectively holding N218.99 trillion in assets. Though Nigerian banking industry assets were projected to reach N242.3 trillion ($151.4 billion) by 2025-2026.

The obvious and alarming disconnect between asset size and market value signals a deeper crisis of confidence as enumerated thus far. One underlying mistake is to understand that investors are not merely assessing balance sheets; they are evaluating governance standards, currency stability, regulatory predictability, and long-term growth prospects, as these remain their focal interests. The market’s verdict is clear: Nigerian banks remain undervalued because investors perceive higher systemic risks.

It would be recalled that Nigeria has travelled this road before, in 2004-2006, which didn’t end as planned. The then-governor of the Central Bank, Charles Soludo, launched a bold consolidation reform that reshaped the banking industry. Also, it would be recalled that Nigeria, in numbers, had 89 banks, which were more than what is in operation today, and many of them were small, fragile, and undercapitalised.

Similar steps are being witnessed today, as Soludo then raised the minimum capital base from N2 billion to N25 billion, triggering a wave of mergers and acquisitions that reduced the number of banks to 25. The industry witnessed the emergence of champions as the reform produced stronger institutions, such as Zenith Bank, United Bank for Africa, Guaranty Trust Bank, and Access Bank.

For a period, the experience was that Nigerian banks expanded aggressively across Africa and emerged as formidable competitors on the continent, but unfortunately, the momentum gradually faded because of certain missing pieces, and this must be addressed if the industry is ready for economic relevance.

The global financial crisis of 2008 exposed weaknesses in risk management and regulatory oversight. With the industry reacting, several banks were heavily exposed to the stock market and the oil sector. This led to another wave of reforms under former CBN governor Sanusi Lamido Sanusi in 2009.

Although one would say that those interventions stabilised the system. But more harm than good, they also ushered in a more conservative banking culture, as witnessed in the system, where many institutions prioritised survival over innovation.

Two decades after the Soludo reforms, Nigeria’s financial landscape has changed dramatically.

The size of the economy has expanded, inflation has eroded the real value of bank capital, and global regulatory standards have become more demanding. Banks that once appeared adequately capitalised now find themselves operating with limited buffers against economic shocks.

Recognising these vulnerabilities, the CBN introduced a new recapitalisation framework requiring banks to raise their capital bases to the following thresholds: N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks.

As has always been the case, these requirements are designed to ensure that Nigerian banks possess the financial strength required to compete with institutions in advanced economies.

The Nigerian banking sector should take a new leaf as the recapitalisation exercise comes to an end, with the understanding that capital adequacy is not merely a regulatory metric; it determines how much risk banks can absorb, how much they can lend, and how resilient they remain during economic crises, which must be accompanied by innovation.

In developed financial systems, banks operate with deep capital buffers, which is common with South African banks that allow them to finance infrastructure, industrial projects, and large corporate investments. Without similar capital strength, Nigerian banks cannot effectively support large-scale economic development.

One of the most persistent obstacles facing Nigeria’s banking sector is currency volatility. The Nigerian naira has experienced repeated devaluations in recent years, eroding investor returns and weakening confidence in local financial assets.

When the currency depreciates sharply, equity valuations expressed in dollars decline even if banks report strong profits in local currency. This dynamic partly explains why Nigerian banks appear profitable domestically yet remain undervalued in international markets.

In contrast, South Africa’s financial system benefits from a more stable currency environment and deeper capital markets.

The strength of the Johannesburg Stock Exchange allows South African banks to attract large pools of institutional capital from pension funds, asset managers, and international investors. Nigeria’s financial markets, though improving, remain comparatively shallow.

Another irony in Nigeria’s banking sector is the difference between reported profits and genuine productivity within the economy, and the contradiction is glaring. Though it is known that many Nigerian banks recorded extraordinary profit growth in recent years, partly driven by foreign-exchange revaluation gains following the depreciation of the naira but the contradiction is that such gains do not necessarily reflect improvements in efficiency, innovation, or lending performance.

One measure the apex bank adopted was recognising the risks and restricting banks from paying dividends derived from these gains, insisting they be retained as capital buffers.

This intervention revealed how much of the apparent profitability was linked to currency fluctuations rather than sustainable business growth.

True banking strength lies not in accounting windfalls but in the ability to finance real economic activity, and this should be one of the ongoing recapitalisation targets.

The core function of banks in any economy is to channel savings into productive investment.  Yet Nigerian banks have increasingly shifted toward safer and more profitable activities, such as investing in government securities, which has continued to weigh negatively on the growth of the real economy.

Other mitigating headwinds, such as high interest rates, regulatory uncertainty, and credit risks, discourage lending to manufacturing firms and small businesses. The result is a financial system that often prioritises short-term returns over long-term economic development.

By contrast, South African banks play a more significant role in financing infrastructure projects, corporate expansion, and consumer credit.

Recapitalisation aims to address this imbalance by strengthening banks’ capacity to support the real economy. The fact is that stronger balance sheets will allow Nigerian banks to finance large projects in sectors such as energy, transportation, agriculture, and manufacturing; alas, the narrative is totally different, going by what is obtainable in the Nigerian finance sector when compared to others.

Investor perception is shaped not only by financial performance but also by governance standards. International investors place significant emphasis on transparency, regulatory stability, and corporate accountability.

While Nigerian banks have made relative progress in improving governance frameworks, concerns remain about insider lending, regulatory inconsistencies and complex ownership structures, as these issues have continued to weigh on the industry, while some of these obvious factors may have contributed to the challenges observed in the operations of institutions such as First Bank Plc and another example is the liquidation of Heritage Bank.

Recapitalisation provides an opportunity to strengthen governance by attracting new institutional investors and enforcing stricter disclosure requirements, and not mainly dwelling on the pursuit of bigger capital because capital alone does not guarantee resilience, as it would be recalled that Nigeria has travelled this road before.

Larger, better-capitalised banks tend to operate with more robust governance systems because they face greater scrutiny from regulators and shareholders.

The global banking industry has become increasingly competitive, which should be a wake-up call for the Nigerian banking industry.

Technological innovation, cross-border expansion, and regulatory harmonisation have transformed how financial institutions operate, and this means that African banks, especially in Nigeria, known as the economic giant of Africa, must therefore compete not only with regional peers but also with global players.

Recapitalisation is essential if Nigerian banks are to participate meaningfully in this evolving landscape. On this aspect, it must be emphasised that stronger capital bases will enable banks to invest in digital infrastructure, expand internationally, and develop sophisticated financial products.

Besides, they will also enhance the ability of Nigerian banks to participate in large syndicated loans and international trade financing.

Without adequate capital strength, Nigerian banks risk being marginalised in the global financial system, and for this reason, the CBN must ensure that every dime injected or raised for recapitalisation is genuinely devoid of any form of irregularities.

At the same time, traditional banks face increasing competition from financial technology companies. Nigeria has emerged as one of Africa’s leading fintech hubs, attracting billions of dollars in venture capital investment. These companies are reshaping payments, lending, and digital banking services.

While fintech innovation presents opportunities for collaboration, it also poses a competitive threat to traditional banks. To remain relevant, banks must invest heavily in technology and digital transformation.

The CBN must ensure that the ongoing recapitalisation provides the financial capacity needed to support such investments, just like its counterpart in South Africa’s banking sector, which operates with a large pool of capital.

The success of Nigeria’s recapitalisation programme will depend on more than regulatory mandates, which is a fact that must be taken into cognisance. Since banks must demonstrate a genuine commitment to transparency, innovation, and long-term economic development.

Policymakers must also address the broader macroeconomic environment. Of a truth, the moment Nigeria maintains a stable exchange rate, lower inflation, and predictable regulatory policies, it will be essential to restoring investor confidence, and if aptly implemented effectively, recapitalisation could usher in a new era for Nigeria’s banking sector.

The country does not necessarily need dozens of weak banks competing for limited opportunities. What Nigeria truly needs are just fewer, stronger institutions capable of financing industrialisation, supporting entrepreneurs, and competing globally.

Nigeria often describes itself as the giant of Africa. But size alone does not determine financial strength. The comparison with South Africa’s banking sector serves as a sobering reminder that institutional quality matters far more than population size.

The ongoing recapitalisation exercise, which is due March 31, 2026, represents an opportunity to rebuild Nigeria’s financial architecture and position its banks for global competitiveness.

If the reforms succeed, Nigerian banks could once again emerge as powerful players on the African stage. If they fail, the uncomfortable reality will persist, one South African bank standing taller than an entire Nigerian banking industry.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com

By Ejiye Jimeta Ibhawoh

When the NBS rebased the Consumer Price Index in February 2025, and headline inflation fell overnight from 34.80% to 24.48%, yields compressed, and fixed income rallied. A question that should have been straightforward became almost impossible to answer: what is cash actually earning in Nigeria after inflation?

We know what the commentary said. Statistical fix or economic illusion. Cost of living still high. Basket weights shifted. All true, all well-covered. But nobody did the obvious next thing: build the bridge between the old series and the new one, then show what a continuous 15-year picture of Nigerian real returns actually looks like. We did.

The problem with two CPI series

The old NBS CPI ran from a November 2009 base, 740 items weighted by the 2003/04 Nigeria Living Standards Survey. The new methodology uses a 2024 average base, 934 items, and 2023 weights. Food and non-alcoholic beverages dropped from 51.8% to 40.1%. Restaurants and accommodation surged from 1.2% to 12.9%. A 13th COICOP division was added (Insurance and Financial Services). That alone tells you how much the consumption basket has shifted.

These are legitimate improvements. Nigeria’s spending patterns have genuinely changed since 2009. Nobody disputes that.

The problem is continuity. NBS published no officially chain-linked historical series. The old index ends in December 2024. The new one picks up in January 2025. Month-on-month rates don’t match across the boundary. Stops & Gaps documented a particularly egregious discontinuity: the rebased index implies prices fell 12.3% in a single month in December 2024. The largest actual single-month decline since 1995 was 3.5%.

For anyone maintaining a time series (pension fund benchmarking, fixed income attribution, real return measurement), the data is broken. Every analyst in Lagos knows this. Most shrugged and moved on.

Chain-linking: what we built and why

We followed the IMF CPI Manual, Chapter 9, for linking series across base-period changes. December 2024 is the overlap month where both old-base and new-base CPI levels exist. The chain-linking factor comes out at 0.11523. We rescaled the entire old series onto the new base.

The result: 204 continuous monthly CPI observations from February 2009 to January 2026. One hundred and ninety-one back-tested months on the old base, spliced to 13 live months on the new base. No interpolation. No estimation. Month-on-month rates are preserved through the splice point, and every calculation is reproducible from published NBS and CBN data.

We paired this CPI series with CBN 91-day T-bill stop rates from primary auctions to construct the VNG-CRR, the Venoble Nigeria Cash Real Return Index. Two inputs per month. NBS CPI level. CBN stop rate. Fisher equation. All compounds into an index.

The headline: over 204 months, Nigerian cash earned +9.48% annualised in nominal terms and −5.48% annualised in real terms. This is consistent, cumulative, and structural purchasing power destruction.

Put it differently. N1 million placed in 91-day T-bills in February 2009 would be worth roughly N4.7 million as of January 2026 in nominal terms. Adjust for what that money can actually buy, and the real value is closer to N380,000. The T-bill investor multiplied his digits and shrank his wealth.

Why this matters now

Start with pension fund allocation. Nigeria’s pension assets reached N26.66 trillion as of October 2025. Roughly 60% (c.N16 trillion) sits in FGN securities. If the annualised real return on government paper has been negative for 15 consecutive years, what does that mean for 10 million contributor accounts? The OECD flagged this in its 2024 pension report using 2023 data. Pension funds in Nigeria, Angola, and Egypt, where more than half of assets sit in bills and bonds, delivered negative real returns. PenCom raised equity limits in February 2026: RSA Fund I from 30% to 35%, RSA Fund II from 25% to 33% and while this is indeed a step in the right direction, it is not enough.

Then there is the visibility problem. Under the old methodology, a 91-day bill at 18% against 34.8% inflation was obviously underwater. Under the new CPI, the same bill at 15% against 15.15% inflation looks like a break-even. Did real returns improve, or did the statistical agency change the yardstick? In our view, both. Inflation has genuinely decelerated: monthly CPI growth dropped below 1.0% for several consecutive months in H2 2025. But the rebase also flatters the comparison by c.10 percentage points. Without a continuous series, you cannot separate the two effects.

And the sign has flipped. This is not speculation. From August 2025 through January 2026, the VNG-CRR recorded six consecutive months of positive real returns. January 2026 was the strongest at +4.39% real. Month-on-month CPI fell 2.88% while the nominal T-bill return was 1.38%. The real index climbed from

984 to 1,027, above its inception base of 1,000 for the first time.

After 15 years of negative returns, real returns have turned positive. Whether that holds is the question nobody can answer yet.

What we do not know

We don’t have a strong view on the persistence of the disinflation trend. The December 2025 CPI base effect is messy. The rebased December 2024 level was set at 100, which creates arithmetic distortions in year-on-year comparisons as that month rotates out. Headline YoY inflation could spike artificially in December 2025 data even if underlying prices remain stable. Anyone anchoring allocation decisions to year-on-year headline numbers will get whipsawed.

We also cannot tell you whether the new CPI basket accurately captures the cost-of-living reality for the median Nigerian. Restaurants and accommodation at 12.9% may reflect urban middle-class spending in Victoria Island and Wuse. It does not reflect what a civil servant in Kano or a smallholder farmer in Benue pays for food and transport. The CPI measures what it measures. It is not a cost-of-living index. That distinction matters more than most post-rebase commentary acknowledged, and it is the gap a continuous real return series is designed to fill.

The allocation question

Here is what the data does tell you. Over 204 months, the real return hurdle rate (what an alternative investment must beat just to match cash in purchasing-power terms) has been low. Negative, in fact. Any asset class generating positive real returns has beaten cash. Equities: the NGX ASI returned 51.19% in 2025. Real estate in Lekki and Abuja CBD. Dollar-denominated instruments accessed through NAFEM. All cleared the hurdle.

With real yields now positive, the calculus shifts. Cash is no longer guaranteed wealth destruction. But 15 years of compounded losses do not reverse in six months. The real index is at 1,027. It needs sustained positive real returns to recover the purchasing power lost over the prior decade.

For pension fund administrators and asset managers, the implication is straightforward: measure everything against the real return on cash. Not nominal yields. Not headline inflation. The actual, chain-linked, continuously compounded purchasing-power return. If your portfolio is not beating that number, you are losing money regardless of what the nominal statement says.

Why independent benchmarks matter

Nigeria has the largest economy in Africa and the largest pension assets on the continent. Its data infrastructure for institutional investors is among the weakest. South Africa has inflation-linked bonds, a real repo rate published by the SARB, and a mature index ecosystem. Nigeria has a CPI series with a structural break and no official chain-linked alternative.

The gap is not in analytical capacity. There’s no shortage of Nigerian research firms producing excellent work. The gap is infrastructure. Auditable, rules-based benchmarks that any market participant can verify.

Not commentary. Not opinions about what inflation feels like. Published, reproducible numbers.

That is what we built the VNG-CRR to provide. Two inputs. One equation. One index. Updated monthly.

Methodology published. Data downloadable. Every calculation is auditable against source data. All are completely free to the public.

The CPI rebase broke the data. We built the unbroken picture because nobody else did. Whether NBS eventually publishes its own chain-linked series, or the market continues relying on independent providers, says something about where Nigeria’s capital market infrastructure actually stands. We do not think anyone in Abuja is losing sleep over it, but maybe they should be.

E.J. Ibhawoh is the founder and CEO of Venoble Limited, an investment intelligence and capital management firm for African markets. He is a FINRA-qualified capital markets professional with a background spanning investment banking, trading, and software development.

By Abba Dukawa

Nigeria stands today at a painful and defining crossroads in its security journey. Across the nation, families live with growing fear as insecurity spreads—kidnappings, banditry, and terrorism have become harsh realities in too many communities. These threats do not respect state boundaries. Organised criminal networks move across states, leaving ordinary citizens feeling exposed and abandoned.

Nigerians are facing intertwined challenges. The anger is no longer whispered in private—it is now spoken openly with frustration and worry. Another pressing issue confronting Nigerians is the renewed debate over the creation of state police. When will the federal government strengthen the effectiveness of its security agencies? How much longer must communities endure this uncertainty?

At the same time, another urgent debate rises from the hearts of the people. In the face of this deepening crisis, should state governments be allowed to establish their own police forces to protect their citizens? Or will Nigeria continue to rely solely on a centralised system that many believe is struggling to respond quickly enough to local threats?

These are not just political questions. They are questions of safety, dignity, and the right of every Nigerian to live without fear. The nation is waiting, hoping for bold decisions that will restore trust, strengthen security, and protect the future of its people.  State police cannot be the answer to these pressing issues that bedevil federal security agencies.

Recently, the President appealed to the leadership of the National Assembly to consider constitutional amendments that would create a legal framework for state police, arguing that such reform is necessary to address Nigeria’s worsening security challenges. The fragmented policing structure could complicate efforts to combat crime effectively.

Reigniting the debate over state police comes as no surprise, given that he has long been seen as an advocate for the idea since his tenure as Governor of Lagos State. He supported the concept then and has continued to promote it as President. Many Nigerians, particularly in the South-West, have long called for state police as a means to address the country’s growing insecurity. Despite the constitutional considerations, discussions around state police continue to evoke strong emotions nationwide.

How will state police address security breaches committed by local militias or vigilante groups such as the OPC in the Southwestern states? What actions would state police take regarding the Amotekun group, which is openly endorsed by Southwest governors, if it were to commit serious violations of the rights of citizens, especially those from other parts of the country? How quickly have the proponents of state police chosen to erase from memory the horrific atrocities the OPC inflicted on the Northern community in Lagos in February 2002? The scars of that tragedy are still raw, yet some behave as though it never happened—as if the pain and the lives lost meant nothing. It is a bitter betrayal of justice and our collective conscience.

Reintroducing this issue at a time when the federal security apparatus is already strained shows a lack of sensitivity. Proponents overlook that Section 214(1) clearly states there is only one police force for the federation, the Nigeria Police Force and no other police force may be established for any part of the federation. The section does not permit the establishment of state police. Policing is on the Exclusive Legislative List, meaning only the federal government can create or control a police force.

Even today, the Nigeria Police Force, under the centralised command of the Inspector-General, faces accusations of harassment and intimidation of the weak and vulnerable citizens. If such problems persist under federal control, imagine the risks of placing police authority under state governors, who already wield significant influence over state and local structures.

Implications For The State Police Structures In The Hand Of The State Governors

I must state clearly: I do not support the establishment of state police—at least not at this stage of Nigeria’s development. Our institutions remain fragile, and introducing such a system carries significant risks of abuse. History offers reasons for caution: the Native Authority police of the past were often linked to political repression and misuse of power.

Supporters argue that state police would bring law enforcement closer to local communities and improve response to crime. However, there are serious concerns rooted in Nigeria’s social realities.

Nigeria is a diverse nation with multiple ethnic and religious sentiments. If recruitment into state police forces becomes dominated by particular groups, minority communities may feel marginalised or threatened.

State police could deepen divisions and weaken public trust. State-controlled Police could also become instruments of political intimidation, especially during election periods, potentially targeting opposition figures, critics, and journalists.

Financial capacity is another major concern. Establishing and maintaining a professional police force requires substantial investment in training, equipment, salaries, welfare, and infrastructure. Many states already struggle to pay workers and provide essential services. How, then, can they adequately fund a state police? The likely outcome is poorly trained, under-equipped personnel—conditions that often foster corruption and inefficiency.

Even under federal oversight, Nigeria’s police system struggles with weak accountability and abuse of power. Transferring these weaknesses to the state level without safeguards could have severe consequences.

A poorly structured state police force could become loyal to governors rather than the Constitution, serving political interests rather than citizens’ interests. For these reasons, introducing state police, even with the constitutional amendment, could create more problems than it solves. Sustainability, accountability, and adherence to constitutional principles are critical and will likely be violated

Nigeria must strengthen law enforcement while protecting citizens’ rights and preserving national unity.  Mr President, please reconsider your decision on state police. Nigerians want a strong, effective, and unified police force, not one that risks further dividing a system already struggling to meet its constitutional obligations.

Dukawa can be reached at ab**********@***il.com