Business
Experts Task FG On Debt Profile
Some financial experts in Lagos have advised the Federal Government to take aggressive steps to curb persistent increase in the domestic debt profile.
They gave the advise in an interview with our correspondent last Friday in Lagos.
Our correspondent recalls that the Minister of Finance, Dr Ngozi Okonjo-Iweala, said on Monday in Abuja that the nation’s domestic debt profile had increased to N5.9 trillion.
Okonjo-Iweala, the Coordinating Minister of the nation’s economy spoke at a consultative meeting with the organised private sector and civil society organisations.
She said that with the debt profile, it had become expedient for Nigeria to slow down its domestic borrowing and diversify its earning as the current interest rate continued to widen the debt net.
Dr Isaac Nwaogwugwu, a Senior Lecturer in the Department of Economics, University of Lagos, said that the rising internal debt profile was due to misplacement of priorities.
Nwaogwugwu said that most funds borrowed were diverted to other unproductive areas of the nation’s economy.
He said that persistent increase of the debt profile would put pressure on the economy and retard its growth.
“The ability of government to effectively use funds borrowed on specific projects would forestall further increase in domestic debt profile.
Nwaogwugwu, however, advised the government to diversify into other areas of untapped resources which would add value to the Gross Domestic Products (GDP).
He said that this would make government to have more revenues to spend on capital projects and reduce the debt profile.
Mr Eddie Osarenkhoe, the immediate past President, Finance Houses Association of Nigeria (FHAN), said that the expansionary increase in the government spending had contributed to rise in the internal debt level.
Osarenkhoe said that there were no effective monetary measures that could absorb the effect of the increasing government spending.
“If government can apply some discipline in its spending by placing its priorities right and tighten up its monetary policy, this will reduce the internal debt,’’ he said.
Osarenkhoe, however, urged both the State and Federal Governments to encourage indirect labour in projects execution to discourage over invoicing of contract sum.
Dr Kazeem Bello, Senior Lecturer, Department of Economics, University of Ibadan told NAN in a telephone interview that inability of government to implement efficient fiscal policy had affected the debt profile.
Bello said that the fiscal policy could either be used to tighten losses in the economy, depending on what government intended to achieve.
He said that strict fiscal policy was needed to control the continuous rising of debt by reducing its expenditures.
Bello also advised government to prevent diversion of public funds meant to be pay for domestic debt and ensure proper supervision of contracts to avoid over estimation of project sum.
“The ability of government to tackle diversion of funds and over estimation of project sum would reduce the nation’s debt profile,’’ he said.
Mr Olumide Adegoke, the General Manager, Standard Alliance Insurance Ltd., urged government to block all the leakages to check the internal debt.
Adegoke said that high level of corruption in various system of the economy was the major leakage that had adversely affected the debt profile.
He said that corruption was an impediment to the national development and urged government to reduce it to the barest minimum.
The Central Bank of Nigeria (CBN) yesterday said 33 banks have met new minimum capital requirements under its recapitalisation programme, raising a combined N4.65 trillion to strengthen the financial system.
The apex bank disclosed this in a statement marking the end of the exercise, which commenced in March 2024 and drew participation from domestic and foreign investors.
The statement was jointly signed by the Director of Banking Supervision, Olubukola Akinwunmi, and the Acting Director of Corporate Communications, Hakama Sidi-Ali.
The statement said “Over the 24-month period, Nigerian banks raised a total of N4.65tn in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy.”
The regulator said local investors accounted for 72.55 per cent of the funds, while international investors contributed 27.45 per cent, reflecting continued confidence in the sector.
Commenting on the outcome, the CBN Governor, Olayemi Cardoso, said in the statement, “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
It added that while 33 banks have complied with the new thresholds, a few others are still undergoing regulatory and legal processes.
The statement noted, “The CBN confirms that 33 banks have met the revised minimum capital requirements established under the programme.
“A limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks.
“All banks remain fully operational, ensuring continued access to banking services for customers.”
The apex bank stressed that the exercise was executed without disrupting banking operations, ensuring uninterrupted access to services nationwide.
It further stated that key prudential indicators have improved, particularly capital adequacy ratios, which remain above global Basel benchmarks.
The minimum ratios were set at 10 per cent for regional and national banks and 15 per cent for banks with international licences.
The bank also said the recapitalisation coincided with a gradual exit from regulatory forbearance, a move it said improved asset quality, strengthened balance sheet transparency, and enhanced overall stability.
To preserve these gains, the CBN said it has reinforced its risk-based supervision framework, mandating periodic stress tests and adequate capital buffers for banks.
It added that supervisory and prudential guidelines would be reviewed regularly to strengthen governance, risk management, and resilience across the sector.
“The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the statement said.
The Tide learnt that foreign capital inflows into Nigeria’s banking sector rose by 93.25 per cent year-on-year to $13.53bn in 2025, up from $7.00bn recorded in 2024, amid the ongoing recapitalisation drive by the Central Bank of Nigeria.
Data from the National Bureau of Statistics capital importation report showed that the banking sector remained the dominant destination for foreign capital, accounting for $13.53bn of the total $23.22bn recorded in 2025, representing 58.26 per cent of total inflows, up from 56.81 per cent in 2024.
The surge reflects heightened investor interest in Nigerian banks as they raised fresh capital to meet new regulatory thresholds introduced by the apex bank, with industry-wide recapitalisation activities driving large-scale inflows across all quarters of the year.
However, the Centre for the Promotion of Private Enterprise (CPPE) recently raised concerns over weak credit flows to small businesses despite recent banking sector reforms.
The CPPE, led by a renowned economist, Dr Muda Yusuf, acknowledged that the ongoing bank recapitalisation exercise by the CBN has strengthened the financial system, but warned that the benefits have yet to translate into meaningful support for the real economy.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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