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Managing Director of First City Monument Bank (FCMB), Yemisi Edun, has highlighted that the ongoing recapitalisation of Nigerian banks is poised to significantly improve credit availability to the private sector, particularly Small and Medium-sized Enterprises (SMEs), which are key drivers of economic growth.
Speaking at the 17th Annual Banking and Finance Conference in Abuja, Edun emphasized the critical need for increased private sector lending to stimulate Nigeria’s economic development. She noted that domestic lending to the private sector currently stands at just 13% of the country’s Gross Domestic Product (GDP), far below the global average, where private sector credit typically accounts for around 80% of GDP in larger economies.
This shortfall, according to Edun, presents a significant challenge to Nigeria’s economic progress, as access to credit is vital for SMEs, which play a central role in job creation and economic expansion. “SMEs are facing severe limitations in accessing credit, which hampers their ability to grow and contribute meaningfully to the economy,” Edun remarked. She added that the recapitalisation of banks would enhance their capacity to provide more affordable loans, enabling SMEs to scale and drive Nigeria’s GDP growth.
Edun also underscored the importance of the financial services sector in achieving Nigeria’s long-term economic goals. To reach a $1 trillion economy, she noted, the financial services industry must outpace overall economic growth. Currently contributing around 4.7% to GDP, the sector needs to expand by over 18% annually to meet the target of 5.5% by 2030. The ongoing recapitalisation, which is expected to increase banking sector shareholders’ funds by over 50%, will be instrumental in driving this expansion.
“With a strengthened capital base, banks will be better equipped to meet the financing needs of critical sectors like infrastructure and manufacturing, both essential for Nigeria’s sustainable economic growth,” Edun explained.
In addition to traditional lending, Edun advocated for alternative financing mechanisms such as joint ventures, venture capital, and loan guarantee schemes to support high-potential SMEs. “Diverse funding options, including equity and debt partnerships, are essential to help businesses overcome the capital constraints they face,” she recommended, stressing the need for innovative approaches to financing as a way to unlock the full potential of Nigeria’s private sector.
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