…Flags Election-Year Risks to Macro Stability, Urges Prudence
By Babajide Komolafe
The Central Bank of Nigeria (CBN), Thursday assured that the ongoing banking sector recapitalisation will translate into increased credit flow to the real sector, a critical step toward achieving the country’s $1 trillion economic growth target.
Deputy Governor, Economic Policy, Dr. Mohammed Sani Abdullahi, speaking at the NESG 2026 Macroeconomic Outlook presentation in Lagos, emphasized that while Nigeria has made strides in stabilizing its macroeconomic environment, election-year dynamics could pose significant risks if fiscal and monetary policies are not carefully managed.
“Our focus is to ensure that stronger banks do not only reflect larger balance sheets, but also provide productive and well-targeted credit to SMEs, industries, and priority sectors that drive inclusive growth,” Dr. Abdullahi said. “Recapitalisation is just the first step. The real impact comes when lending supports the broader economy.”
He highlighted the Central Bank’s commitment to closely monitoring banks’ post-recapitalisation activities, ensuring that the enhanced capital base effectively reaches the private sector and stimulates economic activity. According to Abdullahi, regulatory oversight, technology deployment, and collaboration with private sector actors are key to this process.
On risks to macro stability, the CBN deputy governor noted that 2026 being a pre-election year could heighten procyclical fiscal behavior and trigger policy volatility. “We must remain disciplined. Complacency or self-inflicted policy mistakes could undermine the hard-won gains from recent reforms,” he warned.
Abdullahi also reassured that the central bank will continue its data-driven approach to monetary policy, balancing inflation control, interest rates, and foreign exchange management while supporting productive sector growth. He stressed that transparency and consistency in policy implementation are essential to sustaining investor confidence, both domestic and international.
The CBN official added that ongoing reforms in the banking sector, coupled with robust credit provision, will help unlock private sector-led growth and deepen financial inclusion. He cited the importance of backward integration by large industrial players, which could create linkages for SMEs and smaller enterprises, amplifying the benefits of financial sector strengthening.
“Stability alone is not enough. We need banks to channel their enhanced capacity into productive credit, and we need the private sector to leverage these resources to grow the economy. That is how we approach our $1 trillion ambition,” Dr. Abdullahi concluded.
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