Feature/OPED

The Constitutionality of S. 396 (7) ACJA in Light of Provisions of Constitution

Published

7 years ago

14/12/2018

Modupe Gbadeyanka

By Benita Ayo

Overview

This is a commentary on the paper presented by a learned Senior Advocate of Nigeria, Asiwaju Adegboyega Awomolo where he examines the issue of the vacuum created when a judge who is conducting a criminal trial is elevated to the Court of Appeal, as well as the conflict between the provisions of the constitution and the Administration of Criminal Justice Act (ACJA) when this situation arises.

With the aid of decided cases, he concluded that in this instance, an elevated judicial officer cannot continue to hear the matter because from the point of elevation, he/she lacks the requisite jurisdiction to do so.

According to him, the only resolution to the issue, is for the matter to be commenced ‘de novo’ before another judge having the requisite jurisdiction to hear the matter.

The said Section 396 (7) ACJA provides as follows;

“Notwithstanding the provision of any other law to the contrary, A judge of the High Court who has been elevated to the Court of Appeal shall have dispensation to continue to sit as a high court Judge, only for the purpose of concluding any partly heard criminal matter pending before him at the time of his elevation, and shall conclude the same within a reasonable time, provided that this section shall not prevent him from assuming duty as a Justice of a Court of Appeal.”

Now, Section 1 (1) and 1 (3) of the 1999 Constitution of the Federal Republic of Nigeria provides that;

“1(1) This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federation Republic of Nigeria.”

For purposes of clarity, its Section 1(3) goes further to state:

“1(3) If any other law is inconsistent with the provision of this Constitution, this Constitution shall prevail, and other law shall to the extent of the inconsistency be void.”

COMMENTS

The issues arising from the conflicts are;

Jurisdiction of a Justice of the Court of Appeal to continue to sit over a matter at the State High Court
The doctrine of the supremacy of the constitution (1999 as amended)
Whether indeed, s. 396 (7) ACJA is inconsistent with the Constitution of the Federal Republic of Nigeria 1999 (As amended)
JURISDICTION OF A JUSTICE OF THE COURT OF APPEAL TO CONTINUE TO SIT OVER A MATTER AT THE STATE HIGH COURT.

Generally speaking, Jurisdiction means the official power to make legal decisions and judgments. It is also the extent of the power to make legal decisions and judgments.

In FBN LTD v. ABRAHAM (2008) LPELR-1281 (SC), the Court defined jurisdiction thus, ‘What is the meaning of jurisdiction? By judicial authorities, jurisdiction is the authority by which a court has to decide matters that are laid before it for litigation or to take cognizance of matters presented in a formal way for its decision. Let it be said that the limits of this authority are, by practice, imposed by statute or law under which the court is constituted. It may be extended or restricted by similar means. If no restriction is imposed, the jurisdiction is said to be unlimited’.

Furthermore, the Supreme Court per OPUTA, JSC (Pp. 39-40, paras. C-A) has defined jurisdiction in the case of ONYEMA & ORS v. OPUTA & ANOR (1987) LPELR-2736 (SC) that; ‘It is thus necessary for the proper appreciation of the issues in this case to understand the concept and content of “jurisdiction”. Briefly stated jurisdiction as it applies to courts can mean one of two things:-

1. The abstract right of a court to exercise its powers in causes of a certain class, or

2. The right of a court or tribunal to exercise its powers with respect to a particular subject matter.

In one sense, the broader sense, jurisdiction refers to the legal authority, the legal capacity, to adjudicate at all; while in the narrower sense it refers to the power of the court over the particular subject matter in dispute, over the res or property in contest. This latter sense may be referred to, as territorial jurisdiction, or venue, or the area of authority – the geographical area beyond which the court’s power (or legal jurisdiction) is not to be extended.’

CLASSES/TYPES OF JURISDICTION

Jurisdiction may be any of the following;

Territorial (This is the power or authority to preside over a particular location or venue e.g. the Federal High Court has jurisdiction over the entire territory of Nigeria but the State High Court only have jurisdiction over the state in which it is located)
Subject matter (The authority to adjudicate over certain causes of action. An example is the jurisdiction of the Federal High Court to preside over Admiralty matters and Issues bordering on the interpretation of the provisions of CAMA)
Exclusive (This is the right to hear a matter to the exclusion of other courts e.g, the Supreme Court have exclusive jurisdiction to hear matters between the Federation and the State)
Concurrent (This is where the right to hear a matter is shared between more than one court)
Original (This is right to hear a matter before any other court. e.g, the Court of Appeal has original jurisdiction to hear matters on whether the President or Vice-President has been validly elected, whether the term of the President has ceased or become vacant See s. 239(1) CFRN 199 (As amended).
Appellate (This is the authority to hear appeals from lower courts e.g. is the Court of Appeal has the appellate jurisdiction over appeal from the Federal High Court, State High Court, National Industrial Court)
Substantive (This pertains to matters which the court may specifically adjudicate upon as stipulated by statute)
Procedural ( This pertains to the compliance of certain rules and principles of the court. this type of jurisdiction can be waived)

It is settled law that jurisdiction is the foundation of any court proceeding. Its importance is so fundamental to the matter that it can be raised at any time even up to the Supreme Court for the first time. A court cannot assume jurisdiction or confer itself with jurisdiction where it lacks same. In the case of CBN v. AUTO IMPORT EXPORT & ANOR (2012) LPELR-7858 (CA) the court held as follows;

“It has been stated, time without number, in a plethora of authorities, that jurisdiction is the threshold and livewire that determines the authority of a Court of law or tribunal to entertain a case before it. This is absolutely so, because it is only when a Court is imbued or conferred with the necessary jurisdiction by the Constitution and law that it will have the judicial power and authority to entertain, hear and adjudicate upon any cause or matter brought before it by parties. Conversely, the absence of such requisite jurisdiction would render any proceedings purportedly conducted by Court an exercise in futility, thus null, void and of no effect whatsoever, no matter how well conducted. ……………….

It is equally a well settled principle, that where a Court lacks jurisdiction to try a matter or case, it fundamentally lacks the vires to hear, and adjudicate upon any issue therein. Thus, due to the complex and fundamental nature thereof, the issue of jurisdiction can be raised at any stage and point in time of the proceedings, at the trial Court, the Court of Appeal, or even the apex Court itself. This trite principle has been settled in a plethora of authorities, including the locus classicus thereof, MADUKOLU VS. NKEMDILM (1952) NSCC 374; (1952) 2 SCNLR 341.”

In the instant situation the question which comes to mind is whether a Judge of the High Court presiding over a criminal trial has the requisite jurisdiction to continue the hearing of the matter after he has been elevated to the Court of Appeal as a Justice.

I will say no because subject to the principles of hierarchy of courts in Nigeria, the Court of Appeal do not share concurrent jurisdiction with the State High Court in respect of any matter.

The Court of Appeal only has Appellate Jurisdiction to hear appeals from the High Court to it whereas the State High Court has jurisdiction to hear civil and criminal actions.

As stated before now, jurisdiction cannot be conferred on a court nor can parties by agreement confer same on the court where the statute creating such courts like in this case, the constitution has not conferred such jurisdiction.

I will like to bring to our minds the provisions of the constitution conferring jurisdiction on the High Court and Court of Appeal accordingly.

Section 239 (1) of the constitution of the Federal Republic of Nigeria 1999 (As amended) conferred original jurisdiction of the Court of Appeal on the following matters and it expressly provides that;

(1) “Subject to the provisions of this Constitution, the Court of Appeal shall, to the exclusion of any other court of law in Nigeria, have original jurisdiction to hear and determine any question as to whether-

(a) any person has been validly elected to the office of President, Vice-President, Governor or Deputy Governor under this Constitution; or

(b) the term of office of the President, Vice-President, Governor or Deputy-Governor has ceased; or

(c) the office of President, Vice-President, Governor or Deputy has become vacant

(2) In the hearing and determination of an election petition under paragraph (a) of subsection (1) of this section, the Court of Appeal shall be duly constituted if it consists of at least three Justices of the Court of Appeal”.

Section 240 provides that;

S. 240 “Subject to the provisions of this constitution, the Court of Appeal shall have Jurisdiction to the exclusion of any other court of law in Nigeria, to hear and determine appeals from the Federal High Court, the High Court of the Federal Capital Territory, Abuja, High Court of a State, Sharia Court of Appeal of the Federal Capital Territory, Abuja, Sharia Court of Appeal of a State, Customary Court of Appeal of the Federal Capital Territory, Customary Court of Appeal of a State and from decisions of a court martial or other tribunals as may be prescribed by an Act of the National Assembly.

Furthermore, the Court of Appeal is properly constituted where there are at least 3 Justices sitting. It does not have the requisite Jurisdiction to hear Criminal or Civil matters except on appeal from the State High Court.

On the other hand, section 270 of the constitution created the High Court of a State and section 272 (1) specifically confers the State High Court with its general jurisdiction where it provides that;

(1) “Subject to the provisions of section 251 and other provisions of this constitution, the High Court of a State shall have jurisdiction to hear and determine any civil proceedings in which the existence or extent of a legal right, power, duty, liability, privilege, interest, obligation or claim is in issue or to hear and determine any criminal proceedings involving or relating to any penalty, forfeiture, punishment or other liability in respect of an offence committed by any person.”

(2) The reference to civil or criminal proceedings in this section includes a reference to the proceedings which originate in the High Court of a State and those which are brought before the High Court to be dealt with by the court in the exercise of its appellate or supervisory jurisdiction.”

As it may be seen from the foregoing provisions, there is no where within the said sections as well as the ones stated above that a Justice of the Court of Appeal may continue with a matter he was previously hearing as a Judge of the State High Court. He simply lacks the jurisdiction to do so as the constitution never conferred it.

THE DOCTRINE OF THE SUPREMACY OF THE CONSTITUTION (1999 AS AMENDED)

This doctrine postulates that the constitution is the supreme law of the land and all other statutory enactment of the National Assembly where it is inconsistent with the provisions of the constitution shall to the extent of its inconsistency be null and void. (See s. 1 (3) 1999 CFRN (As amended))

This doctrine has been affirmed in the case of FBN PLC v. T.S.A. INDUSTRIES LTD (2010) LPELR-1283 (SC) where the court pronounced on the nature and effect of the supremacy of the constitution and held that;

“By virtue of the provision of Section 1(3) of the 1999 Constitution , the doctrine of supremacy of the Constitution demands that if any law is inconsistent with the provision of the 1999 Constitution, the Constitution shall prevail and the other law shall to the extent of the inconsistency be void. “

Also, in ABACHA & ORS. v. FAWEHINMI (2000) LPELR-14 (SC), the court stated that;

“The Constitution is the supreme law of the land; it is the grundnorm. Its supremacy has never been called to question in ordinary circumstances. For avoidance of doubt, the 1979 Constitution stated categorically in its Chapter 1, Section 1(1) as follows:

“1(1) This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federation Republic of Nigeria.”

For purposes of clarity, its Section 1(3) goes further to state:

“1(3) If any other law is inconsistent with the provision of this Constitution, this Constitution shall prevail, and other law shall to the extent of the inconsistency be void.”

The nature of this doctrine is that there is no other law which is above the constitution of Nigerian. It is immaterial that such law was enacted by the National Assembly and assented to by the President. Such law, in as much as it is not in tune or in line with what has been provided for by the constitution shall to the extent of such inconsistency be void. Such law cannot stand and should not be regarded or enforced by the courts.

In the instant situation, the provision of the S. 396 (7) ACJA which provides as follows;

Section 1 (3) of the CFRN 1999 (As Amended) provides that;

“If any other law is inconsistent with the provisions of this Constitution, this Constitution shall prevail, and that other law shall to the extent of the inconsistency be void.”

Thus, in the instant case, it is unconstitutional for a Judge of the High Court elevated to a Justice of the Court of Appeal to continue to preside over a criminal matter in the High Court as he is no longer a Judge of the High Court no longer has jurisdiction over matters in such court.

Going further, the constitution has provided for the composition/constitution of a State High Court under S. 273 of the constitution where it provides that;

“For the purpose of exercising any jurisdiction conferred upon it under this constitution or any law, a High Court of a State shall be duly constituted if it consists of at least one Judge of that Court”

Going by the above provision, a Justice of the court of Appeal is not a judge of the State High Court and as such does not have the jurisdiction to preside over any matter whether partly heard by him or not in that court. Any decision of a court lacking the prerequisite jurisdiction constitutes a nullity and no one should submit to such jurisdiction and cannot agree to confer such jurisdiction where the statute creating such court has not created such jurisdiction.

WHETHER INDEED S. 396 (7) ACJA IS INCONSISTENT WITH THE CONSTITUTION OF THE FEDERAL REPUBLIC OF NIGERIA 1999 (AS AMENDED)

Section 396 (7) of the ACJA provides that;

And Section 1 (1) and (3) of the Constitution says;

“1(1) This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federation Republic of Nigeria.”

For purposes of clarity, its Section 1(3) goes further to state:

“1(3) If any other law is inconsistent with the provision of this Constitution, this Constitution shall prevail, and other law shall to the extent of the inconsistency be void.”

The constitution has conferred different jurisdictions upon the High Court of a State and the Court of Appeal and they are no way similar. While the State High has jurisdiction to hear Civil and Criminal matters, the Court of Appeal has amongst others the jurisdiction to hear appeals from the State High Court, Federal High Court, National industrial Court and so on.

The composition of a State High Court according to the constitution is at least a Judge of the Court and I have stated earlier on that a Justice of the Court of Appeal is not a Judge of the State High Court at least not stated so by the Constitutional provisions creating the Court of Appeal.

Thus, it is not proper for a Justice of the Court of Appeal to continue with a matter which he was handling prior to his elevation as a Justice of the Court of Appeal. Jurisdiction, where it is non-existent, cannot be conferred on oneself nor can parties agree to it.

In the instant case, in light of the provisions of S. 1 (1) & (3) of the constitution, the provisions of S. 396 (7) ACJA is inconsistent with the constitution and is to the extent of its inconsistency null and void.

CONCLUSION

In conclusion, having found that S. 396 (7) ACJA is inconsistent with the constitution, the said section should be expunged completely form the Act. It is my advise that where a Judge of a State High Court has been elevated to a higher office, any criminal matter that is being handled by him should be transferred to another trial Judge with concurrent jurisdiction as the former Judge prior to elevation and be allowed to commence de novo.

I completely agree with the submissions of the learned Senior Advocate that where a Judge has been elevated from the High Court to the Court of Appeal, any partly heard criminal matter by him should be allowed to commence de novo before another Judge with the requisite jurisdiction to hear same.

Benita Ayois a legal practitioner based in Lagos, Nigeria.

Feature/OPED

From Convenience to Culture: How Streaming Will Shape Entertainment in Nigeria in 2026

Published

10 hours ago

16/01/2026

Business Post Contributor

Not too long ago, streaming in Nigeria was seen as a convenience, an alternative to traditional television, used mostly to catch up on missed shows or explore international content. Today, it has evolved into something far more ingrained. Streaming is now a culture: a daily habit that shapes conversations, influences pop culture, drives fandoms and even dictates how stories are told.

From late-night binge sessions and group watch parties to live-tweeting reality shows and football matches, streaming has become woven into how Nigerians experience entertainment. As mobile devices, smart TVs and affordable data options continue to expand access, the platform has moved from the fringes to the centre of everyday life. In 2026, this cultural shift will become even more pronounced.

Here’s what to expect as streaming continues to evolve in Nigeria and across Africa.

Value Will Define Loyalty in an Overcrowded Streaming Market: As streaming becomes mainstream, Nigerian audiences are becoming more discerning. Subscription fatigue is real, and users are no longer impressed by platforms with limited libraries or infrequent updates.

In 2026, loyalty will belong to platforms that offer sustained value, not just headline titles. This means:

Deep content libraries that go beyond a handful of popular shows
A healthy mix of live TV, sports and on-demand entertainment
Regular content refreshes that keep audiences engaged month after month
Viewers now understand value, and they will gravitate towards platforms that consistently deliver variety and relevance.

Local Stories Will Drive Cultural Relevance: Streaming has amplified the power of Nigerian storytelling, giving local productions the scale and visibility once reserved for traditional TV. Viewers are showing a clear preference for stories that feel familiar, authentic and culturally grounded.

In Nigeria, titles like Omera, Glass House, Italo, The Real Housewives of Lagos, Nigerian Idol and Big Brother Naija have become shared cultural moments, driving online conversations and real-world buzz. These shows are not just being watched; they are being experienced.

Across the continent, similar patterns are emerging, reinforcing the role of hyperlocal content in building loyalty and identity. In 2026, investment in African creators will remain central to streaming growth.

Streaming Becomes Personal and Predictive: As streaming matures, platforms will increasingly rely on AI to understand viewers on a deeper level. In 2026, Nigerian users can expect:

More intuitive recommendations tailored to individual tastes
Smarter content discovery that reduces the time spent searching
Interactive experiences that respond to viewer behaviour

Beyond content, AI will also enhance advertising relevance and customer support, creating a smoother, more personalised user journey.

Live Sports Will Continue to Anchor Streaming Culture: While binge-worthy series drive daily engagement, live sports remain one of streaming’s biggest cultural anchors. Football, in particular, continues to command passionate followership in Nigeria.

With the 2026 FIFA World Cup scheduled for June–July, live streaming will dominate viewing behaviour once domestic leagues conclude. Nigerian football fans demand quality, reliability and immediacy, making official platforms with full broadcast rights, such as SuperSport, essential destinations during major tournaments.

In 2026, sports will further reinforce the value of legitimate, high-quality streaming experiences.

Security Becomes Non-Negotiable: As streaming cements its cultural relevance, content protection will take on greater importance. Premium sports and entertainment remain prime targets for piracy, but the response is becoming more sophisticated.

Technologies from cybersecurity firms like Irdeto now enable real-time monitoring, rapid takedowns and legal action against illicit streaming networks. These measures protect not just platforms, but creators and the broader creative ecosystem, a critical consideration as local production continues to grow.

Innovation Makes Streaming More Inclusive: One of the most significant shifts in Nigeria’s streaming landscape is how inclusive it has become. Platforms are innovating around:

Flexible pricing
Bundled services that combine TV and streaming
Multi-device access, including mobile-first options

Whether premium or entry-level, users can now find options that suit their lifestyle and budget, reinforcing streaming’s position as an everyday entertainment staple.

A More Conscious Streaming Audience Emerges: As streaming culture matures, so does audience awareness. Nigerian viewers are increasingly able to identify illegal streaming platforms and understand the long-term damage piracy causes to the industry.

In 2026, conscious viewing will continue to gain ground, with users learning to avoid red flags such as “free” premium streams, unofficial apps, VPN-only access and excessive pop-up advertising.

Streaming is no longer simply about watching content, it is about belonging to moments, communities and conversations. In Nigeria, it has evolved into a cultural force that shapes how stories are told, shared and celebrated.

As 2026 unfolds, streaming will continue to thrive at the intersection of technology, culture and creativity, offering entertainment that is accessible, relevant and deeply local.

Feature/OPED

How Compliance through Technology among Banks can Promote Intra-Africa Trade

Published

13 hours ago

16/01/2026

Business Post Contributor

By Anne Mureithi

Provision of banking services in Africa continues to undergo profound digital transformation where most transactions are conducted virtually via digital devices and cash moved electronically. Mobile banking, fintech innovation, and cross-border digital payments have reshaped how individuals and businesses consume financial services.

In Nigeria and across the continent face, banks face sharp scrutiny from expanding regulatory landscape, including Anti-Money Laundering (AML), combating the financing of terrorism (CFT) and combating the financing of proliferation (CPF) that involves disrupting funds for weapons of mass destruction (WMD) through targeted financial sanctions.

With increased cross border trade, everyone including governments look upon banks to provide Know Your Customer (KYC) services, fraud risk management, and increasingly adhere to stringent data protection and privacy regulations as well as Environmental, Social, and Governance (ESG) reporting standards.

Compliance is no longer a back-office obligation, and this calls for increased investments in technology, particularly Artificial Intelligence (AI) and Machine Learning (ML) to enable banks to meet compliance requirements.

This is important as local traders want a banking partner who offers one-stop shop services on compliance matters. For banks, this is a competitive advantage, a core capability, and a source of differentiation. By embedding compliance into product and process design, banks can meet regulatory obligations efficiently while fostering innovation through a compliance-by-design approach.

In March 2025, the Central Bank of Kenya published the results of a survey on AI adoption in the banking sector, revealing moderate uptake, with 50% of respondents indicating some level of implementation. The survey found that among institutions that had adopted AI and machine learning, the leading applications were credit risk assessment (65%), cybersecurity (54%) and customer service (43%), followed by e-KYC (41%) and fraud risk management (40%).

These findings underscore significant untapped potential for AI to transform customer experience and strengthen risk management, particularly in AML and compliance monitoring. As intra-Africa trade continues to increase, compliance teams within banks must play a leading role in establishing strong governance, ensuring transparency, and preparing institutions for emerging regulatory expectations.

The Central Bank of Kenya has confirmed that it is in the final stages of developing a Guidance Note on Artificial Intelligence, with 95% of surveyed institutions having requested formal regulatory direction. The anticipated principles-based framework will focus on governance, risk management, transparency, and the ethical use of AI, laying the foundation for responsible innovation in the financial sector.

AI and ML models offer practical solutions to compliance challenges by learning and tracking typical behavioural patterns by customer, product, and corridor, flagging anomalies such as unusual counterparties, transaction values, or routing patterns in cross-border flows. These tools can also generate more accurate and complete assessments of ongoing customer due diligence and customer risk, which can be updated to account for new and emerging threats in real time.

By detecting potential violations of normal customer profiles in data or groups of customers with higher-risk characteristics, AI has streamlined priorities towards high-risk cases and reduced the time spent on false positives. This capability is increasingly critical as transaction volumes and complexity grow. Such technological advances transform compliance from a costly obligation into a strategic advantage.

Customers do not need to know one another to execute a transaction since AI-powered identity authenticates customer identity through document scanning, biometric verification and mobile-based identity solutions. These solutions have also enabled banks to onboard new customers remotely without the need to visit a physical bank to fill in registration details.

Accounts are fully secure and only users who pass the mobile-based identity verification are allowed access thereby preventing fraud. This also supports financial inclusion by enabling access to financial services for individuals who struggle to provide adequate identification documents for opening bank accounts.

In addition, Regulatory Technology (RegTech) solutions enable financial institutions to monitor regulatory developments, map obligations across their operations, conduct initial gap assessments, ensure that policies and procedures are always up to date and streamline regulatory reporting.

This capability is particularly valuable for pan-African institutions in ensuring agility while responding to regulatory changes across multiple jurisdictions. With its presence in 34 African countries, Ecobank advocates for harmonised payment systems and regulatory frameworks as a catalyst for accelerating intra-African trade.

Regional regulatory alignment further amplifies these gains. As African regulators work towards greater harmonisation of standards, banks with pan-African footprints are uniquely positioned to bridge local realities with global expectations, enabling smoother cross-border transactions and reducing friction for businesses operating across multiple markets.

The convergence of digital innovation and regulation presents an opportunity to support regional integration and strengthen public confidence. Banks that integrate compliance into their digital strategies, invest in ethical AI, enforce strong governance, and actively engage regulators will be best positioned to compete, facilitate trade, and protect financial integrity.

On an Africa-wide platform, traders from Nigeria want a synchronised platform that provides them with end-to-end solutions. Say Ecobank Group’s AML monitoring and sanctions screening capabilities within its SWIFT payment infrastructure ensure that all cross-border payment messages undergo real-time compliance checks prior to fund settlement.

With increased intra-Africa trade that rides on online platforms, accelerated digitalisation of cross-border transactions, timely, efficient, and secure payment processing is paramount. Real-time compliance monitoring is a non-negotiable cornerstone of safeguarding the integrity of international payment flows.

Ultimately, the future of banking in Africa will be defined by how institutions harness technology to meet regulatory obligations, deter financial crime, and foster trust among businesses, consumers, and public institutions alike. Compliance is no longer a constraint on growth; it is a foundation for sustainable innovation, regional integration, and long-term confidence in Africa’s financial system.

Ms Mureithi is a director in charge of compliance at Ecobank, Central, Eastern and Southern Africa (CESA)

Feature/OPED

The Missing Pieces in Nigeria’s Banking Recapitalisation

Published

2 days ago

14/01/2026

Business Post Contributor

By Blaise Udunze

Nigeria’s economy will be experiencing yet another round of reform; after the new tax implementation, the banking sector recapitalisation exercise will begin within less than three months until the March 31, 2026, deadline. The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, disclosed that 27 banks have tapped the capital market via public offers and rights issues.

The figures show that of 21 the 37 commercial, merchant, and non-interest banks in the country have met or exceeded the revised minimum capital thresholds of N500 billion for internationally authorised banks, N200 billion for national banks, N50 billion for regional banks, and N10-20 billion for non-interest banks. With the developments above, policymakers are betting that stronger balance sheets will help banks withstand macroeconomic shocks, finance growth, and restore confidence in the financial system. On the surface, the logic is sound, capital matters. But history warns us that capital alone is not a cure-all.

Nigeria has been here before, going by the 2004-2005 era of the then-governor of CBN, Charles Soludo, whose banking consolidation dramatically reduced the number of banks from 89 to 25 and created national champions. Yet barely five years later, the system was back in crisis, requiring regulatory intervention, bailouts, and the creation of the Asset Management Corporation of Nigeria (AMCON) to absorb toxic assets. The lesson here is clear, which revealed that recapitalisation that ignores structural weaknesses merely postpones failure.

If the current exercise is to succeed, the CBN must use it not only to raise capital but to repair the deeper fault lines that have long undermined the stability, credibility, and effectiveness of Nigeria’s banking sector.

More Capital isn’t Always Better Capital

The first and most critical issue is the quality of capital being raised. Disclosures made by the banks have shown that the combined capital base of about N5.142 trillion is already locked in by lenders across the different licence categories. Bigger numbers on paper mean little if the capital is not genuinely loss-absorbing. In past recapitalisation cycles, concerns emerged about funds being raised through related parties, short-term borrowings disguised as equity, or complex arrangements that ultimately recycled the same risks back into the system.

This time, the CBN must insist on transparent, verifiable sources of capital. Every naira raised should be traceable, free from conflicts of interest, and capable of absorbing real losses in a downturn. Otherwise, recapitalisation becomes an accounting exercise rather than a resilience-building one.

Why Corporate Governance Remains the Achilles’ Heel

Perhaps the most persistent weakness in Nigeria’s banking sector is corporate governance failure. Many bank crises have not been caused by macroeconomic shocks alone, but by poor board oversight, insider abuse, weak risk culture, and excessive executive power.

Recapitalisation provides a rare regulatory leverage point. The CBN should use it to reset governance standards, not just capital thresholds. Boards must be independent in substance, not just in form. Being one of the critical aspects of the banking challenge, insider lending rules should be enforced without exception. Risk committees in every financial institution must be empowered, not sidelined by dominant executives.

Without the apex bank fixing governance, new capital risks become fresh fuel for old excesses.

The Unresolved Burden of Non-Performing Loans (NPLs)

Data from the CBN’s latest macroeconomic outlook showed that the banking industry’s Non-Performing Loans ratio climbed to an estimated 7 percent, pushing the sector above the prudential ceiling of 5 percent. Nigeria’s banking sector continues to be drowned with high volumes and recurring non-performing loans (NPLs), and this is often concentrated in sectors such as oil and gas, power, and government-linked projects. Though with the trend of events, one may say that regulatory forbearance has helped maintain surface stability in the sector, no doubt it has also masked underlying vulnerabilities.

The truth is that a credible recapitalisation exercise must confront this reality head-on. Loan classification and provisioning standards should reflect economic truth, not regulatory convenience. Banks should not be allowed to carry impaired assets indefinitely while presenting healthy balance sheets to investors and the public.

Transparency around asset quality is not a threat to stability; it is a foundation for it.

How Foreign Exchange Risk Quietly Amplifies Financial Shocks

Few risks have damaged bank balance sheets in recent years as severely as foreign exchange volatility. Many banks continue to carry significant FX mismatches, borrowing short-term in foreign currency while lending long-term to clients with naira revenues.

During periods of FX adjustment, these mismatches can rapidly erode capital, no matter how well-capitalised a bank appears on paper. Recapitalisation must therefore be accompanied by tighter supervision of FX exposure, stronger disclosure requirements, and realistic stress testing that assumes adverse currency scenarios, not best-case outcomes.

Ignoring FX risk is no longer an option in a structurally import-dependent economy.

Concentration Risk and the Narrow Credit Base

Another long-standing weakness is excessive concentration risk. A disproportionate share of bank lending is often tied to a small number of large corporates or government-related exposures. While this may appear safe in the short term, it creates systemic vulnerability when those sectors face stress.

At the same time, the real economy, particularly SMEs and productive sectors, remains underfinanced because, over the years, Nigeria’s banks faced significant concentration risk, particularly in the oil and gas sector and in foreign currency exposure, while grappling with a narrow credit base characterised by limited lending to the private sector. This is due to high credit risk and tight monetary policy. Owing to this trend, recapitalisation should therefore be in alignment with policies that encourage credit diversification, improved credit underwriting, and smarter risk-sharing mechanisms, and not the other way round.

Therefore, it will be right to say that banks that grow larger but remain narrowly exposed do not strengthen the economy; they amplify its fragilities.

Risk Management in a Volatile Economy

The recurring inflation shocks, interest-rate swings, fiscal pressures, and external shocks are frequent features, not rare events, which show that Nigeria is not a low-volatility environment.

Currently, the Nigerian banking sector’s financial performance and investment returns are equally affected by various risks, including credit, liquidity, market, and operational risks.

Today, many banks still operate risk models that assume stability rather than disruption. Time has proven that risk management is essential for mitigating these risks and ensuring stability and profitability.

The apex bank must ensure that the recapitalisation process mandates robust, Nigeria-specific stress testing, and banks must demonstrate resilience under severe but plausible scenarios. This includes sharp currency depreciation, interest-rate spikes and sovereign stress. It must evolve from a compliance function to a strategic discipline.

Transparency and Financial Reporting

Investors, depositors, and analysts must be able to understand banks’ true financial positions without navigating a lack of transparent disclosures or creative accounting. Hence, public trust in the banking sector depends heavily on credible financial reporting.

The CBN should use recapitalisation to strengthen the International Financial Reporting Standard enforcement, disclosure standards, and audit quality. In championing this course, banks’ financial statements should clearly reflect capital adequacy, asset quality, related-party transactions, and off-balance-sheet exposures. Transparency is to enable confidence, not about exposing weakness.

Regulatory Consistency and Credibility

Policy credibility has been one of the greatest challenges for Nigeria’s financial regulators.

Abrupt changes, unclear timelines, and inconsistent enforcement undermine investor confidence and weaken reform outcomes.

Recapitalisation must be governed by clear rules, predictable timelines, and consistent enforcement. Both domestic and foreign investors need assurance that the rules of the game will not change midstream. Regulatory credibility is itself a form of capital.

Consumer Protection and Banking Ethics

While recapitalisation focuses on banks’ balance sheets, the public experiences banking through fees, service quality, dispute resolution, and ethical conduct. Persistent complaints about hidden charges and poor customer treatment erode trust in the system and a stronger banking sector must also be a fairer and more accountable one. It must be noted that strengthening consumer protection frameworks alongside recapitalisation will help rebuild public confidence and reinforce financial inclusion goals.

Too Big to Fail and How to Resolve Failure

Looking at what is obtainable in the system, larger, better-capitalised banks can also become systemically dangerous if failure resolution frameworks are weak. This requires that recapitalisation should therefore be accompanied by credible plans for resolving distressed banks without destabilising the entire system or resorting to taxpayer-funded bailouts, which has been the norm in the Nigerian banking sector today. The cynic might say that recapitalisation simply made big banks bigger and empowered dominant shareholders. However, a more prospective approach invites all stakeholders, including regulators, customers, civil society and bankers themselves, to co-design the next chapter of Nigerian banking; one that balances scale with inclusion, profitability with impact, and stability with innovation.

Clear resolution mechanisms reduce moral hazard and reinforce market discipline.

A Moment That Must Not Be Wasted

Recapitalisation is not merely a financial exercise; it is a governance and trust reset opportunity. If the CBN focuses solely on capital numbers, Nigeria risks repeating a familiar cycle of apparent stability followed by crisis.

The banking sector can lay a solid foundation that truly supports economic transformation if recapitalization is used to address governance failures, asset quality, FX risk, transparency, and regulatory credibility.

Nigeria does not just need bigger banks. It needs better banks, institutions that are resilient, transparent, well-governed, and trusted by the public they serve. Hence, it must be a system that creates a more robust buffer against shocks and positions Nigerian banking as a global competitor capable of funding a $1 trillion economy, as the case may be.

This recapitalisation moment must be about building durability, not just size. The cost of missing that opportunity would be far greater than the cost of getting it right.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]