CBN recapitalization shines: Fitch ranks Nigeria ahead of African counterpart

By: ThinkBusiness Africa

The ongoing banking sector recapitalisation programme initiated by the Central Bank of Nigeria (CBN) has received strong commendation from global credit rating agency, Fitch Ratings, which recently affirmed that Nigeria’s progress in strengthening its banking capital buffers is outpacing its Sub-Saharan African (SSA) peers.

The rating agency in its “Sub-Saharan African Banks’ New Paid-In Capital Rules” report noted the impressive strides made by Nigerian banks to meet the aggressive new capital requirements, a development seen as crucial for bolstering the financial system’s resilience against economic shocks and enabling the banks to underwrite larger-scale transactions necessary for the government’s ambitious

The scale of the CBN’s recapitalisation exercise distinguishes it within the SSA financial landscape. In comparative terms, Nigeria’s new minimum capital requirement of N500 billion ($327 million) for banks with international licences is significantly higher than the equivalent thresholds in other major African banking markets.

For instance, the minimum capital levels in major financial hubs like South Africa ($90 million) and Egypt ($104.7 million) are substantially lower. While countries like Kenya and members of the West African Economic and Monetary Union (WAEMU) have also pursued capital increases, the sheer magnitude of the CBN’s 1900% increase (from N25bn to N500bn) and the speed of compliance by top-tier banks have positioned Nigeria as a clear leader in fortifying banking sector capital buffers across the region.

In its recent report, the agency confirmed that the majority of Fitch-rated Nigerian banks are “generally on track” to meet the revised minimum paid-in capital threshold before the March 31, 2026, deadline.

“Nigeria’s new requirements stand out from those of other markets in terms of business model differentiation and scale.” Fitch said.

Several top-tier banks have already secured or are nearing the required capital targets, primarily through rights issues and public offers. Notably:

• Access Holdings and Zenith Bank were among the first major institutions to announce securing sufficient fresh capital to meet the N500 billion requirement for a bank with an international operating licence.
• Smaller banks like Ecobank Nigeria and Jaiz Bank have also met their respective requirements through targeted capital injections.

In Nigeria, the fresh capital needed to meet the new requirements amounts to 1.1% of GDP. The CBN has explicitly linked the reforms to broader economic development goals, aiming to reduce credit concentration risks and support larger-scale lending.

CBN Governor, Dr. Olayemi Cardoso, has consistently maintained that the initiative is critical for creating “stronger, healthier, and more resilient banks” capable of absorbing losses.

While the top-tier banks are moving ahead, Fitch Ratings indicated that Mergers and Acquisitions (M&A) or licence downgrades remain a more likely path for some third-tier banks that may struggle to raise the substantial capital required.

The Central Bank has provided a clear 24-month window, which commenced on April 1, 2024, for banks to comply.