The Chartered Institute of Bankers of Nigeria has urged banks to lend more to micro, small and medium enterprises as returns on government securities keep falling.
CIBN President and Chairman of Council, Dele Alabi, says banks need new lending opportunities as their traditional income sources come under pressure. He made the comments at the 2026 Lagos Bankers’ Nite. Alabi noted that banks have long parked significant funds in government securities or channeled loans to large companies. However, he warned that falling yields will make that old strategy far less profitable.
Meanwhile, large companies still hold enough bargaining power to demand cheaper loans. This dynamic could squeeze the margins banks earn from corporate lending even further.
“Smart banks now need to move away from the conventional strategic thought process of parking their money with government securities,” Alabi said. He urged lenders to look further down the business ladder instead.
Alabi’s comments come months after Nigerian banks wrapped up a major recapitalisation exercise. The Central Bank of Nigeria confirmed that banks raised ₦4.65 trillion during the two-year programme. Domestic investors provided 72.55% of that capital, while foreign investors contributed 27.45%.
The CBN also confirmed that 33 banks met the revised minimum capital requirements. The regulator introduced the exercise in March 2024 to strengthen banks and boost their capacity to support the economy. Now, Alabi argues, banks need to put that stronger capital base to real use.
Government securities have long given banks an easy way to earn returns without taking on the credit risk that comes with business lending.But Alabi believes that advantage will shrink as yields continue to drop. The CBN currently pegs the 91-day Treasury bill rate at 16.3% as of August 12, 2026.
Consequently, Alabi wants banks to respond by expanding credit to smaller companies. That shift could open up fresh financing opportunities for Nigerian SMEs, many of which still struggle to secure loans because of collateral requirements, short repayment periods and lenders’ lingering concerns about credit risk.
Alabi acknowledged those risks. Still, he insists banks can manage them with stronger controls, better data and the right lending systems.
“Lending to MSMEs in a secure and profitable manner is not mutually exclusive,” he said.
In other words, banks carry the responsibility to build lending models that can spot viable small businesses rather than avoid the sector altogether. They can use transaction histories, digital payments and other business data to assess borrowers. They can also design credit products around the actual cash flow patterns of different industries.
Also Read: CIBN Urges Banks to Strengthen Risk Management for SME Lending
More Capital, More Room for SME Loans
This push comes at a time when banks hold significantly stronger capital positions than before.
Under the CBN recapitalisation programme, commercial banks with international licences had to raise their minimum capital to ₦500 billion. National banks needed ₦200 billion, while regional banks needed ₦50 billion.
The CBN concluded the exercise on March 31, 2026, and said the ₦4.65 trillion raised strengthened the financial system and boosted the sector’s overall lending capacity.For small businesses, though, stronger bank balance sheets will only matter if lenders actually convert that capital into accessible credit.
CIBN Lagos State Branch Chairman Akinwunmi Lawal echoed this call, urging financial institutions to widen access to finance for MSMEs, entrepreneurs and emerging businesses. He believes stronger cooperation between banks, regulators, investors, technology companies and government could expand economic opportunities across Lagos.
Godwin Ehigiamusoe, founder of LAPO Microfinance Bank, added that finance needs to work hand in hand with innovation. He argued that businesses and public institutions need both capital and better systems to improve productivity and create jobs.
The Bottom Line
For Nigeria’s small businesses, the real question now is whether banks will actually respond to CIBN’s call. Recapitalisation has handed lenders more capital, and falling government yields could push them to search harder for other profitable assets.
If banks do move more money into MSME lending, the next test will center on pricing, collateral requirements and repayment terms. Ultimately, those factors will decide whether small businesses can truly put the additional credit to work.