Many Nigerian banks are increasingly looking to the stock market to boost their capital reserves. This trend comes as the country grapples with high inflation, currency devaluation, and stagnant economic growth.
On 28 March 2024, the Central Bank of Nigeria (CBN) announced new capital requirements for banks to meet by 1 April 2026 to enable them to support President Bola Tinubu's target of a $1 trillion economy. Since then, the apex bank has tightened regulatory requirements, mandating higher capital adequacy ratios for banks.
This new policy has prompted financial institutions to seek additional funds through equity issuance. Banks also use the raised capital to fund expansion plans, invest in technology, and enhance service offerings in an increasingly competitive market.
Investor response has been positive, reflecting confidence in the banking sector despite economic headwinds. However, challenges remain. The success of these capital-raising efforts will depend on the bank's ability to generate returns for investors in a challenging economic environment.
