The Country Director of the World Bank in Nigeria, Matthew Verghis, has said the success of Nigeria’s banking recapitalisation will depend on how effectively funds raised are channelled into productive investment.

Speaking at the 2026 Economic Roundtable organised by Agusto & Co, Verghis said the real test of the exercise is whether it translates into tangible economic outcomes as the country moves from stabilisation to growth.

“The real measure of recapitalisation will lie in how effectively savings are channelled into productive investment, determining whether national ambition translates into tangible economic achievement,” he said.

He noted that strengthening financial intermediation is critical at this stage of Nigeria’s economic transition, stressing that capital alone will not deliver growth unless it is efficiently deployed.

At the roundtable, Agusto & Co said Nigeria’s banking sector has raised about N2.5 trillion as the recapitalisation exercise approaches its final phase, marking one of the most significant structural reforms in nearly two decades.

The firm noted that while the focus has largely been on meeting capital thresholds, the more pressing issue is how the funds will be deployed to support economic growth and development.

According to Agusto & Co, recapitalisation is a forward-looking reform aimed at strengthening the financial system, especially as exchange rate volatility and inflation have weakened capital buffers in real terms, while the demands of a growing economy require stronger balance sheets.

It added that the exercise raises deeper questions about financial intermediation, noting that domestic credit to the private sector remains low compared to peer economies, with loans accounting for only about a third of banking assets.

Agusto & Co said this reflects a significant gap between available capital and its deployment into the real sector, stressing that banks will face increasing pressure to lend more effectively as shareholders seek returns on expanded capital bases.

The firm identified financing for micro, small and medium enterprises and infrastructure as key areas where the impact of recapitalisation will be determined.

It noted that micro, small and medium enterprises account for 97 per cent of businesses in Nigeria and contribute roughly half of gross domestic product (GDP), yet less than five per cent have access to formal credit, leaving a N13 trillion financing gap.

It stressed that recapitalisation will only achieve its intended purpose if capital is channelled to these businesses, particularly women-led enterprises and agribusinesses, which remain underserved.

It added that de-risking tools such as credit guarantees, fintech partnerships and innovative financing models are needed to bridge the gap between capital availability and real sector demand.

On infrastructure, the firm said Nigeria continues to face a significant deficit despite growing demand from its expanding population, noting that while recapitalisation has improved banks’ capacity for large transactions, long-term projects remain exposed to macroeconomic and currency risks.

It stated that mechanisms such as infrastructure credit guarantee platforms could help improve risk allocation, project preparation and investor confidence.

It maintained that recapitalisation should not be seen as an end in itself but as a structural reset aimed at supporting risk absorption, strengthening capital markets and driving inclusive growth.

The roundtable concluded that while capital has been raised, the greater challenge lies in ensuring that it is deployed to support businesses, infrastructure and a more resilient economy.