Nigeria: Governor Cardoso Stresses the Need for Increased Bank Capital to Support the Economy

During the Nigeria Sustainability Summit 2023 at Access Bank Towers in Lagos, Mr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), highlighted the necessity for banks to raise their capital to better support the economy. The summit, organized by the European Organisation for Sustainable Development, focused on initiating a transformation from a low-value and crisis-prone economy to a high-value, socially inclusive, green, and climate-friendly economy through a sustainability-driven corporate sector.

Represented by Mr. Haruna Mustafa, the Director of Financial Policy and Regulation at CBN, Cardoso addressed the audience, stating, “To be able to cushion unexpected losses and support the aspiration of the President to build a $1tn economy that is rooted in sustainable principles warrants that we need to take a second look at the capitalization of our banks.”

Highlighting the prevailing macroeconomic challenges faced in 2023, Cardoso emphasized the importance of revisiting the capitalization of banks to mitigate unforeseen losses and align with the goal of building a sustainable economy. He pointed out instances of banks breaching prudential guidelines, such as single obligor limits, which are crucial for monitoring risk exposures.

Cardoso acknowledged that the banking sector initiated sustainability banking principles voluntarily a decade ago. However, due to the threats posed by climate risks to financial stability and the industry’s long-term sustainability, he stressed the increasing importance of regulations in this regard. He mentioned ongoing efforts to develop regulations addressing climate-related risks to further enhance the stability and sustainability of the financial industry.