CIBN urges banks to deploy fresh capital to MSMEs as Nigeria targets $1 trillion economy

The Chartered Institute of Bankers of Nigeria (CIBN) is calling on Nigerian banks to deploy their recently raised capital towards financing micro, small, and medium-sized enterprises (MSMEs). CIBN President and Chairman of the Council, Dele Alabi, stated that increased lending to this sector is critical for achieving stronger economic growth and Nigeria's ambition of building a $1 trillion economy.

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Capitalisation provides a buffer for shocks. It insulates banks’ balance sheets, but it does not stop there.

Alabi made this call at a press conference for the institute's 19th Annual Banking and Finance Conference. He explained that while recent bank recapitalization has strengthened balance sheets, this additional capital should be directed towards productive economic sectors rather than being concentrated in government securities or large corporate loans. "Capitalisation provides a buffer for shocks. It insulates banks’ balance sheets, but it does not stop there," he said.

He argued that the banking landscape has evolved, with declining interest rates and tighter borrowing margins making traditional approaches less attractive. "Smart bankers, smart bank CEOs have to think of a more ingenious way of utilising this capital. Capital is not cheap. Capital is the most expensive source of funds," Alabi noted. He urged banks to look further down the economic ladder by increasing financing for MSMEs, which he described as vital drivers of economic growth, particularly in emerging markets.

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Smart bankers, smart bank CEOs have to think of a more ingenious way of utilising this capital. Capital is not cheap. Capital is the most expensive source of funds.

This shift, according to Alabi, would also advance the CIBN's vision of inclusion, extending financial inclusion beyond basic services to ensure critical economic participants, especially small businesses, have access to finance. "MSMEs represent the critical growth source for the engine of the growth of the economy. Not only in Nigeria, globally for emerging markets, but MSMEs are also the ones that drive the economy," he stated. Increased SME financing, he added, would yield benefits beyond the banking industry by creating employment, improving business activity, and supporting overall economic development.

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MSMEs represent the critical growth source for the engine of the growth of the economy. Not only in Nigeria, globally for emerging markets, but MSMEs are also the ones that drive the economy.