Foreign Investors Boost Nigerian Banking Sector Amid Recapitalization Efforts
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, revealed that foreign investors are injecting funds into Nigerian banks as part of the ongoing recapitalization exercise.
Vigilance Against Illicit Funds
Speaking at the Afrinvest 2024 Banking Sector Report Launch in Abuja, Cardoso emphasized the vigilance of his team in preventing illicit funds and unsuitable individuals from infiltrating the Nigerian banking industry. Represented by the Acting Director of Financial Policy and Regulations, Mr. John Onoja, Cardoso highlighted the recapitalization exercise’s role in achieving the federal government’s $1 trillion economy goal by 2030.
Strengthening Nigerian Banks
“The recapitalization exercise is a pivotal strategy to strengthen the resilience of Nigerian banks and promote a sound financial system,” Cardoso stated. He noted that the initiative supports the government’s $1 trillion GDP target by 2030. The exercise has already stimulated activity across various sectors, increasing banks’ lending capacity and liquidity.
Increased Foreign Investments
Cardoso pointed out that foreign investments are on the rise, with banks confirming the influx of foreign direct investments and foreign exchange liquidity. Certificates of capital importation indicate significant forex inflows, positively impacting the forex market’s liquidity.
Strict Compliance Measures
The CBN will enforce stringent Fit and Proper Persons criteria for new shareholders, board members, and senior management. This ensures that only cleared and legitimate funds enter the system, safeguarding the integrity of Nigerian financial institutions.
Impact on GDP Growth
Cardoso emphasized the recapitalization exercise’s positive impact on the nation’s GDP. Improved risk management, better credit ratings, and enhanced forex credits for banks are expected outcomes. The exercise also offers retail investors opportunities to own shares in well-performing financial institutions, boosting the equity market.
Assurances to Foreign Investors
Cardoso assured foreign investors that their capital would be secure and repatriated without loss if not utilized. “We are working on policies to ensure foreign investors can repatriate their funds at the same value brought into the country,” he said.
MTN Nigeria’s Forex Losses
MTN Nigeria Plc reported a net forex loss of N887.6 billion in the first six months of 2024, a sharp increase from N454.6 billion in the first half of 2023. The company’s CEO, Karl Toriola, cited higher inflation and significant naira depreciation as factors eroding earnings and impacting the EBITDA margin.
Conclusion
The recapitalization exercise aims to bolster the resilience of Nigerian banks, attract foreign investments, and contribute to the nation’s economic growth. With strict compliance measures in place, the initiative supports the federal government’s $1 trillion economy goal by 2030.
