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The Centre for the Promotion of Private Enterprise (CPPE) is sounding the alarm regarding a growing “widening gap between Nigeria’s banking sector and the real economy,” even as “32 banks meeting the Central Bank of Nigeria’s recapitalisation requirement ahead of the March 31 deadline.”
In an announcement released this “Sunday, CPPE Chief Executive Officer, Muda Yusuf,” pointed out that although financial institutions have solidified their “capital base,” there remains “an urgent need to ensure that the financial system delivers meaningful support to productive sectors.”
The policy group argues that the core concern has moved past “capital adequacy” to whether this more robust “banking system will translate into improved economic outcomes,” specifically regarding “businesses and job creation.”
The “CPPE noted that access to credit remains a major challenge, especially for small and medium enterprises (SMEs).” The organization “revealed that SME lending accounts for only about one per cent of total bank credit in Nigeria,” a figure that sits “far below the sub-Saharan African average of five per cent.” This disparity is particularly jarring given that “SMEs contributing roughly 50 per cent of the country’s Gross Domestic Product and over 80 per cent of employment, with an estimated financing gap of about N48 trillion.”
The think tank “described the situation as a significant weakness in Nigeria’s financial structure.”
“The evidence suggests that this linkage remains weak,” the statement said.
The report “further noted that private sector credit as a percentage of GDP stands at about 17 per cent in 2025,” which trails the “average of 25 per cent in sub-Saharan Africa” and “around 34 per cent in lower-middle-income countries.” Meanwhile, nations like “South Africa, Mauritius, and Cape Verde record significantly higher levels of financial intermediation.”
The “CPPE stressed” that this gap serves as evidence of a “persistent structural disconnect between the financial system and the productive sectors of the economy.”
“The ultimate success of this reform will be determined not just by stronger balance sheets, but by the extent to which the banking system supports investment, enterprise, job creation, and economic transformation.
“At this critical juncture, the priority must shift from capital adequacy to economic impact. Nigeria needs not just stronger banks, but banks that work for the economy,” the statement added.