By Dr. Abiola Salami

Nigeria is now in the middle of one of the most consequential transformations of its financial system in years. The Central Bank’s banking-sector recapitalisation has pushed institutions to strengthen their capital bases, while the broader financial system is also experiencing higher capital requirements. The direction is for bank to build stronger institutions that can withstand shocks and support growth towards the trillion dollar economy.

This doesn’t only sound great; it is necessary.

But here is where Performance Leadership™ asks a different question -Does a stronger bank automatically mean a higher-performing bank?

We must ask this question because capital is an input, resilience is a capability but economic value is the outcome.

Imagine two families.Family A earns N1 million a month. They decide to increase their emergency savings from N1 million to N3 million. That’s excellent.Family B on the other hand although also has N3 million in savings, but that money is sitting untouched while the family continues borrowing to pay school fees, fund a small business and handle emergencies.

Both families have capital but are they experiencing the same financial performance?Of course not.

The question is not simply, “How much do you have?”The question is, “What are you able to produce with what you have?”That is the question Nigeria should now be asking of its banking industry.

The recapitalisation question cannot end with capital. The 2024 CBN recapitalisation exercise raised minimum capital requirements to N500 billion for international banks, N200 billion for national banks and N50 billion for regional banks, with banks required to meet the new requirements by March 31, 2026.The objective was not to make Nigerian banks look impressive on paper.It was to create institutions capable of supporting a larger, more resilient economy.And this is where the conversation becomes interesting.

Nigeria has experienced a substantial increase in capital inflows. In 2025, capital inflows reached $23.22 billion, up almost 90 per cent from $12.32 billion in 2024. But approximately 85 per cent of that inflow was foreign portfolio investment, while foreign direct investment was only $923 million.

That tells us something.Money is returning.But much of it is still interested in financial returns, not necessarily long-term productive investment.

So we should ask, Can Nigeria’s financial system convert capital into productive capacity?Because that is where performance begins.

A bank can report impressive profits while the economy around it still struggles to finance the next factory.A bank can have a beautiful digital app while a small manufacturer cannot obtain affordable working capital.A bank can have an enormous balance sheet while an entrepreneur spends six months trying to secure financing.A bank can be technologically sophisticated while the real economy remains starved of long-term capital.That is the paradox.

Financial-sector strength and economic-sector strength are related. But they are not the same thing.

What should we actually measure?

If we are serious about banking performance, perhaps we should stop measuring success only through the traditional scorecard of profitability, capital adequacy, liquidity, asset quality and shareholder return. Of course, these five matter but there should be another dashboard. Let us call it the Banking Value Conversion Dashboard.

We should ask the following three questions:
1. How much capital is being converted into productive lending?
This is not just how much money sits on the balance sheet.It is asking, how much reaches agriculture, manufacturing, technology, infrastructure, healthcare, housing and growing businesses?

2. How much banking activity is creating real economic activity?
A million transactions can look impressive but what happened because of those transactions?Did a business expand?Did a company employ ten more people?Did a manufacturer increase production?Did a young entrepreneur move from informal activity to a structured enterprise?

3. Are banks financing tomorrow or simply managing today?

The SME Test
Let us make this even simpler.Imagine a woman who runs a food-processing company.She has customers.She has orders.She has a good product.She has five employees.She needs ₦30 million to buy equipment that would double her production capacity.She goes to the bank.

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About Dr. Abiola Salami
Dr. Abiola Salami is the Principal Performance Strategist at CHAMP – a full scale professional services firm trusted by high performing business leaders for providing Executive Coaching, Workforce Development & Advisory Services to improve performance.He is the Convener of Dr Abiola Salami International Leadership Bootcamp ; The Peak PerformerTM FestivalMade4More Accelerator Program and The New Year Kickoff Summit. You can reach his team on [email protected] and connect with him @abiolachamp on all social media platforms.