Foreign Investors Fund 28% of Bank Recapitalisation

The global appetite for Nigerian bank stocks is returning. The Central Bank of Nigeria (CBN) has revealed that offshore sources provided 28% of the total funds raised in the ongoing bank recapitalisation exercise. Hakama Sidi-Ali, the CBN’s Acting Director of Corporate Communications, shared these figures on Friday at the Enugu International Trade Fair. She argued that this level of foreign participation acts as a vote of confidence in the reforms led by Governor Olayemi Cardoso. With the March 31 deadline looming, 32 banks have already crossed the new capital finish line.

The banking sector is bracing for a shift toward “inflation targeting.” This move signals the CBN’s transition to a rules-based monetary policy designed to anchor long-term price stability. By focusing on inflation rather than just exchange rate management, the bank hopes to limit the chaos caused by supply-side shocks. This transparency is a key reason why foreign investors are willing to commit capital to a market that was previously considered too volatile. The goal is to build a financial system resilient enough to withstand external economic tremors.

Capital is flowing, but credit remains expensive for local businesses. Nnayelugo Onyemelukwe, President of the Enugu Chamber of Commerce, noted that while confidence is up, the cost of borrowing is still prohibitive. Even after a marginal cut from 27.00% to 26.50% in February, interest rates remain at levels that stifle small-scale industry. The private sector is now calling for a shift toward single-digit rates to ensure that the “recapitalised” banks actually lend to the productive economy rather than just holding government paper.

The recapitalisation is a survivalist measure for a $1 trillion economy. By forcing banks to hold more “skin in the game,” the CBN is ensuring they can support the large-scale infrastructure and industrial projects the government envisions. The influx of foreign currency also provides a secondary benefit by boosting the nation’s external reserves. For the 32 banks that have met the requirement, the focus now turns from raising money to deploying it.

Market expectations are beginning to align with the bank’s “orthodox” stance. The CBN’s Special Day in Enugu served as a platform to reassure the business community that the era of arbitrary interventions is over. If the bank can successfully transition to its new inflation-targeting framework, it may finally break the cycle of runaway prices. However, the true test of this reform will be whether the “renewed confidence” of foreign investors eventually trickles down to lower costs for Nigerian entrepreneurs.