Business
Budget:Experts Differ On Crude Oil Benchmark
Some financial experts have expressed mixed reactions to the advice by the IMF that crude oil price benchmark used for 2013 budget should not be increased above 75 dollars per barrel.
Our correspondent reports that the revenue projects for the 2013 budget was based on 75 dollars per barrel.
This has caused some disagreement between the executive arm and legislature with the National Assembly insisting that the benchmark be reviewed upward.
The IMF Senior Resident Representative in Nigeria, Mr Scot Rogers, last week cautioned Nigeria against increasing the 2013 oil benchmark above the 75 dollars per barrel.
IMF said that Nigeria needed to reduce spending to avoid putting pressure on the economy.
While some experts said the crude oil price benchmark was low, others said that they supported the position of the IMF not to review the benchmark up.
Mr Henry Boyo, an economist, said that the nation had experienced unfettered inflation, increased debt accumulation and high unemployment because of conservative budget planning.
Boyo, who is the Chief Executive Officer of Abel & Sell Nig. Ltd, said that in the last three years budget benchmark were conservatively calculated below 25 per cent of the actual average.
“In spite of the actual reality of average crude prices over 100 dollars per barrel in 2012, domestic borrowings in excess of N720 billion was induced by conservative crude oil benchmark.
“This obtuse fiscal strategy has increased national debt accumulation as our consolidated national debt of over N8 trillion is now more than our current reserve base of about 40 billion dollars,”he said.
Mr Okeowo Oderinde, a former Chairman of Ikeja District of Institute of Chartered Accountants of Nigeria, said that the government benchmark was in order.
Oderinde said that the government adopted the position to ensure effective fiscal management to cushion against the unexpected developments in the international market.
He said that raising the crude oil price benchmark should not be an issue for the IMF, but for Nigerians.
Oderinde said that what the country needed was good governance especially if the price fell at the international market.
He, however, warned government of frivolous spending, adding that there was a development in 1985 when crude oil price fell below the benchmark.
Oderinde said that country then did not feel the price difference because of good leadership and accountability.
The Managing Director, Partnership Investment Company, Mr Victor Ogiemwonyi, said that the IMF’s warning was very apt.
Ogiemwonyi said that inflation rate at 11.3 per cent not good for any economy.
He said that a very high oil price benchmark would mean high revenue projections which would mean bigger spending for the nation.
Ogiemwonyi also said that an increase in oil benchmark would also stoke up inflation, which would consequently result to higher interest and exchange rates.
He said that these would affect the economy negatively, adding that there was even the problem of gloal recession.
Ogiemwonyi said that a higher price benchmark would lead to bigger deficit in budget projections.
He, however, suggested that there was the need to take a conservative position on oil price benchmark for the budget to be more realistic.
Ogiemwonyi pointed out that there was no point in projecting higher revenue that would not be realised.
The Managing Director of APT Securities and Funds Ltd., Malam Garba Kurfi, said that “a situation where Federal Government was floating bonds to meet recurrent expenditure was not good for the nation”.
Kurfi said that the nation’s inflation rate was still very high at 11.3 per cent, adding that other frontier markets like Ghana and Morocco were already having single digit inflation rate.
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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