There are interesting times for the Nigerian banking and financial service industry as the Central Bank of Nigeria said it plans to raise capital requirements for lenders.
In his new five-year term agenda as the Central Bank Governor, Mr. Godwin Emefiele said the bank is looking at upping minimum capital for bankers to N230 billion an equivalent of $638.3 million in current FX rate.
According to his statement quoted by Guardian Newspaper, Emefiele said: “In the next five years, we intend to pursue a programme of recapitalizing the banking industry so as to position Nigerian banks among the top 500 in the world. Banks will, therefore, be required to maintain a higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.”
Nigeria is Africa’s largest economy but the country has been bedeviled by poor and sometimes non-existing infrastructure capital needed for economic growth. Nigerian banks have also been weakened by their exposure to poorly performing energy and volatile oil sector.
The last time the Central Bank raised the capital base was in 2004 under the term of Chukwuma Soludo. The apex bank raised the capital base from N2 billion to N25 billion.
Andrew Nevin, CEO of the local unit of PwC estimated that total lending in Nigeria is estimated at $97 billion.