Nigeria is striving towards a $1 trillion economy by 2030, a goal that requires significant effort and strategic financial planning. Oliver Alawuba, Group Managing Director (GMD) of the United Bank for Africa (UBA), emphasized the necessity of achieving double-digit GDP growth to realize this ambitious target. Speaking at the 36th edition of the Finance Correspondents and Business Editors Seminar, organized by the Central Bank of Nigeria (CBN) in Abuja, Alawuba highlighted the critical role of the banking sector and the broader economic framework in achieving this objective.

Alawuba pointed out that a 10 percent growth rate is essential and achievable, but it requires strong institutional frameworks and government support to enable banks to invest in critical infrastructure. He noted that the Nigerian banking sector currently accounts for only 12 percent of the country’s GDP, compared to 70 to 100 percent in more advanced economies, indicating substantial potential for financial institutions to contribute more significantly to the nation's development.

The UBA GMD stressed that the ongoing recapitalization plan is highly beneficial for the economy, as strong banks with robust reserves are crucial for supporting economic growth. He also addressed concerns about the current 50 percent cash reserve ratio (CRR), suggesting it could impede economic expansion. Alawuba expressed optimism that as inflation decreases, the CRR would also be reduced, fostering a more conducive environment for economic growth.

Furthermore, Alawuba underscored the need for greater financial inclusion, improved security, and investments in infrastructure, particularly roads, ports, and power, to drive long-term growth. He advocated for tax incentives and a shift from a resource-based economy to a diversified, industrialized model to create jobs and boost productivity.

Echoing the sentiments, the Central Bank of Nigeria (CBN) has urged local manufacturers and exporters to explore financing opportunities available through various government agencies. This call is part of a broader effort to ease pressure on the naira and strengthen the country’s export base. During a town hall meeting in Lagos, Dr. Aisha Olatiwon, Director of Consumer Protection and Financial Inclusion at the CBN, emphasized the importance of coordinated support for Nigerian-made goods and services in global markets.

Olatiwon encouraged producers to leverage interventions from government-backed institutions like the Bank of Industry (BoI) and other development financial institutions, which offer lower interest rates compared to commercial banks. This strategy aims to reduce reliance on the central bank and promote export-led growth.

CBN Deputy Governor, Corporate Services, Ms. Emem Usoro, highlighted the inevitability of bank recapitalization to fund and finance the proposed $1 trillion economy by 2030. Speaking at the CBN seminar in Abuja, Usoro emphasized that improving banks’ capital base would enable them to compete globally. She noted that the global financial system has evolved, necessitating that financial institutions remain strong and stable to finance development projects.

Usoro referenced the 2004 banking sector consolidation and recapitalization exercise, which reduced the number of banks from 89 to 25, as a pivotal step in aligning with emerging developments. She called for collective effort to build a $1 trillion economy, requiring careful planning, clear policy direction, and commitment from stakeholders.

CBN Director, Banking Supervision Department, Dr. Olubukola Akinwunmi, clarified that the recapitalization drive was not due to existing problems in the banking industry but to prepare for future emergencies and global economic challenges. He affirmed that Nigerian banks are committed to funding critical growth sectors, including agriculture, infrastructure, and manufacturing.

Alawuba also suggested that the CBN consider releasing part of the Cash Reserve Requirement (CRR) for Deposit Money Banks (DMBs) to allow banks to finance long-term investments. He proposed tax breaks for banks funding infrastructure and mining, similar to practices in Brazil and China, and called for enabling legislation to mobilize long-term capital.

He said that achieving the $1 trillion economy requires decisive action, bold reforms, and visionary leadership. Consistent policies, effective regulation, strategic partnerships, and a committed press are essential for transformation. Alawuba highlighted that the path to a $1 trillion economy hinges on the financial sector’s ability to mobilize capital, support critical infrastructure, strengthen the real sector, and accelerate digital transformation.

Alawuba emphasized that Nigeria must harness its vast mining potentials to drive the economy, noting that mining has been a major driver of economic transformation in other African countries. He advocated for a well-diversified economy that looks beyond oil and gas, channeling capital to high-growth sectors such as ICT, mining, agriculture, renewable energy, creative industry, and manufacturing.

In conclusion, achieving Nigeria's ambitious $1 trillion economy target requires a multifaceted approach involving strategic bank recapitalization, supportive government policies, diversified economic activities, and a commitment to long-term investments in critical sectors. By addressing regulatory constraints, improving financial accessibility, and fostering innovation, Nigeria can pave the way for sustainable economic growth and global competitiveness.