By Blaise Udunze

The Central Bank of Nigeria’s recapitalisation exercise, which is scheduled for a March 31, 2026, deadline, has continued to reignite optimism across financial markets and is designed to build stronger, more resilient banks capable of financing a $1 trillion economy. With the ongoing exercise, the industry has been witnessing bank valuations rising, investors are enthusiastic, and balance sheets are swelling. However, beneath these encouraging headline numbers, unbeknownst to many, or perhaps some troubling aspects that the industry players have chosen not to talk about, are the human cost of consolidation and the infrastructure deficit.

CBN

Recapitalisation often leads to mergers and acquisitions. Mergers, in turn, almost always lead to job rationalisation. In Nigeria’s case, this process is unfolding against an already fragile labour structure in the banking industry, one where casualisation has become the dominant employment model.

One alarming fact in the Nigerian banking sector is the age-old workforce structure raised by the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), which says that an estimated 60 percent of operational bank workers today are contract staff. This reality raises profound questions about the sustainability of Nigeria’s banking reforms and the credibility of its economic ambitions.

A $1 trillion economy cannot be built on insecure labour, shrinking institutional knowledge, and an overstretched financial workforce.

Recapitalisation and the Hidden Merger Trap

History is instructive. Referencing Nigeria’s 2004-2005 banking consolidation exercise, which reduced the number of banks from 89 to 25, and no doubt, it produced larger institutions, while it also triggered widespread job losses, branch closures, and a wave of outsourcing that permanently altered employment relations in the sector. The current recapitalisation push risks repeating that cycle, only this time within a far more complex economic environment marked by inflation, currency volatility, and rising unemployment.

Mergers promise efficiency, but efficiency often comes at the expense of people. Speaking of this, duplicate roles are eliminated, technology replaces frontline staff, and non-core functions are outsourced. The troubling part of it is that this is already a system reliant on contract labour; mergers could accelerate workforce instability, turning banks into balance-sheet-heavy institutions with shallow human capital depth.

ASSBIFI’s warning is therefore not a labour agitation; it is a macroeconomic red flag.

Casualisation as Structural Weakness, Not a Cost Strategy

It has been postulated by proponents of job casualisation that it is a cost-control mechanism necessary for competitiveness. Contrary to this argument, evidence increasingly shows that it is a false economy. In reaction to this, ASSBIFI President Olusoji Oluwole, who kicked against this structural weakness, asserted that excessive reliance on contract workers undermines job security, suppresses wages, limits access to benefits and blocks career progression while affirming that over time, this erodes morale, loyalty, and productivity.

More troubling are the systemic risks. Casualisation creates operational vulnerabilities, higher fraud exposure, weaker compliance culture, and lower institutional memory.

One of the banking regulators, the Nigeria Deposit Insurance Corporation (NDIC), has not desisted from repeatedly cautioning that excessive outsourcing and short-term staffing models increase security risks within banks. On the negative implications, when employees feel disposable, ethical commitment weakens, and reputational risk grows.

Banking is not a factory floor. It is a trust business. And trust does not thrive in insecurity.

Inside Outsourcing Web of Conflict of Interest

Beyond cost efficiency, Nigeria’s casualisation crisis is also fuelled by a deeper governance problem, conflicts of interest embedded within the outsourcing ecosystem.

In many cases, bank chief executives and executive directors are reported to own, control, or have beneficial interests in outsourcing companies that provide services to their own banks. Invariably, it is the same firms supplying contract staff, cleaners, security personnel, call-centre agents, and even IT support. Structurally, this arrangement allows senior executives to profit directly from the same outsourcing model that strips workers of job security and benefits.

The incentive is clear. Outsourcing enables banks to maintain lean payrolls, bypass strict labour protections associated with permanent employment, and reduce long-term obligations such as pensions and healthcare. But when those designing outsourcing strategies are also financially benefiting from them, the line between efficiency and exploitation disappears.

This model entrenches casualisation not as a temporary adjustment tool, but as a permanent business strategy, one that externalises social costs while internalising private gains.

Exploitation and Its Systemic Consequences

The human impact is severe because the contract staff employed through executive-linked outsourcing firms often face poor working conditions, low wages, limited or no health insurance, and zero job security, which is demotivating. Many perform the same functions as permanent staff but without benefits, voice, or career prospects.

ASSBIFI has warned that prolonged exposure to such insecurity leads to psychological stress, declining morale, and reduced productive life years. Studies on Nigeria’s banking sector confirm that casualisation weakens employee commitment and heightens anxiety, conditions that directly undermine service quality and operational integrity.

From a systemic standpoint, exploitation feeds fragility. High staff turnover erodes institutional memory. Disengaged workers weaken internal controls. Meanwhile, this should be a sector where trust, confidentiality, and compliance are paramount; this is a dangerous trade-off if it must be acknowledged for what it is.

Why Workforce Numbers Tell a Deeper Story

It is in record that as of 2025, Nigeria’s banking sector employs an estimated 90,500 workers, up from roughly 80,000 in 2021. The top five banks today, such as Zenith, Access Holdings, UBA, GTCO, and Stanbic IBTC, account for about 39,900 employees, reflecting moderate growth driven by digital expansion and regional operations.

At face value, truly, these figures suggest resilience. But when viewed alongside the 60 percent casualisation rate, they paint a different picture, revealing that employment growth is without employment quality. A workforce dominated by contract staff lacks the stability required to support long-term credit expansion, infrastructure financing, and industrial transformation.

This matters because banks are expected to be the engine room of Nigeria’s $1 trillion economy, funding roads, power plants, refineries, manufacturing hubs, and digital infrastructure. Weak labour foundations will eventually translate into weak execution capacity.

Nigeria’s Infrastructure Financing Contradiction

Nigeria’s infrastructure deficit is estimated in the hundreds of billions of dollars. Power, transport, housing, and broadband require long-term financing structures, sophisticated risk management, and deep sectoral expertise. Yet recapitalisation-induced mergers often lead to talent loss in precisely these areas.

As banks consolidate, specialist teams are downsized, project finance units are merged, and experienced professionals exit the system, either voluntarily or through redundancy. Casual staff, by design, are rarely trained for complex, long-term infrastructure deals. The result is a contradiction, revealing that larger banks have bigger capital bases but thinner technical capacity.

Without deliberate workforce protection and skills development, recapitalisation may produce banks that are too big to fail, but too hollow to build.

South Africa Offers a Useful Contrast

South Africa offers a revealing counterpoint. As of 2025, the country’s “big five” banks, such as Standard Bank, FNB, ABSA, Nedbank, and Capitec, employ approximately 136,600 workers within South Africa and about 184,000 globally. This is significantly higher than Nigeria’s banking workforce, despite South Africa having a smaller population.

More importantly, South African banks maintain a far higher proportion of permanent staff. While outsourcing exists, core banking operations remain firmly institutionalized compared to the Nigerian banking system. For this reason, South Africa’s career progression pathways are clearer, labour regulations are more robustly enforced, and unions play a more structured role in workforce negotiations.

The result is evident in outcomes. South Africa’s top six banks are collectively valued at over $70 billion, with Standard Bank alone boasting a market capitalisation of approximately $30 billion and total assets nearing $192 billion. Nigeria’s top 10 banks, by contrast, held combined assets of about $142 billion as of early 2025, even with a much larger population and economy, and its 13 listed banks reached a combined market capitalisation of about N17 trillion ($11.76 billion at an exchange rate of N1,445) in 2026.

Though this gap is not just about capital. It is about institutional depth, workforce stability, and governance maturity.

Bigger Valuations, But a Weaker Foundations?

Nigeria’s 13 listed banks reached a combined market capitalisation of about N17 trillion in 2026. It is no surprise, as it is buoyed by investor anticipation of recapitalisation and higher capital thresholds. Yet market value does not automatically translate into economic impact. Without parallel investment in people, systems, and long-term skills, valuation gains remain fragile.

South Africa’s experience shows that strong banks are built not only on capital adequacy, but on human capital adequacy. Skilled, secure workers are better risk managers, better innovators, and better custodians of public trust.

Labour Law and its Regulatory Blind Spots

ASSBIFI’s call for a review of Nigeria’s Labour Act is timely, and this is because the current framework lags modern employment realities, particularly in sectors like banking, where technology and outsourcing have blurred traditional employment lines. Regulatory silence has effectively legitimised casualisation as a default model rather than an exception.

The Central Bank of Nigeria cannot afford to treat workforce issues as outside its mandate. Prudential stability is inseparable from labour stability. Regulators must begin to view excessive casualisation as a risk factor, just like liquidity mismatches or weak capital quality.

Recapitalisation Without Inclusion Is Incomplete

If recapitalisation is to succeed, it must be inclusive; therefore, the industry must witness the enforcement of career path frameworks for contract staff, limiting the proportion of outsourced core banking roles, and aligning capital reforms with employment protection. It also means recognising that labour insecurity ultimately feeds systemic fragility.

South Africa’s banking sector did not avoid consolidation, but it managed it alongside workforce safeguards and institutional continuity. Nigeria must do the same or risk building banks that look strong on paper but crack under economic pressure.

True Measure of Reform

Judging by the past reform in 2004-2005, it has shown that Nigeria’s banking recapitalisation will be judged not by the size of balance sheets, but by the resilience of the institutions it produces. As part of the recapitalisation target for more resilient banks capable of financing a $1 trillion economy, it demands banks that can think long-term, absorb shocks, finance infrastructure, and uphold trust. None of these goals is compatible with a workforce trapped in perpetual insecurity.

Casualisation is no longer a labour issue; it is a national economic risk. If mergers proceed without deliberate workforce stabilisation, Nigeria may end up with fewer banks, fewer jobs, weaker institutions, and a slower path to prosperity.

The lesson from South Africa is clear, as it shows that strong banks are built by strong people. Until Nigeria’s banking reforms fully embrace that truth and the missing pieces are addressed, recapitalisation will remain an unfinished project. and the $1 trillion economy, an elusive promise.

Blaise, a journalist and PR professional, writes from Lagos, can be reached via: [email protected]