The former directors and owners of Union Bank did not just fail, they engineered a financial disaster. They manipulated reports, hid massive losses, diverted foreign loans and treated depositors’ money like a private wallet.

Union Bank

Investigators uncovered billions of dollars in misconduct. These directors buried over ₦250 billion in losses, piled a $300 million foreign loan onto the bank without protection and then forced Union Bank to carry the burden. They even used the bank’s own funds to buy its shares, an outrageous betrayal of trust.

It didn’t stop there. Over $100 million was pulled out improperly, leaving the bank exposed and struggling. Loans meant for customers were secretly diverted into shady transactions. False reports were sent to lenders. The system was deliberately deceived.

This was not incompetence. It was exploitation.

By 2025, their actions had created nearly ₦400 billion in losses and over ₦147 billion in unpaid charges. The bank was on the edge.

The Central Bank of Nigeria (CBN) stepped in just in time. Without that intervention, Union Bank could have collapsed, dragging others down with it.

Now, the bank is stabilising. But let’s be clear: this recovery is happening in spite of those former directors, not because of them.

They didn’t build value. They destroyed it.

And Nigerians deserve to never forget who was responsible.

By Blaise Udunze

Following the successful conclusion of the banking sector recapitalisation programme initiated in March 2024 by the Central Bank of Nigeria, the industry has raised N4.65 trillion. No doubt, this marks a significant milestone for the nation’s financial system as the exercise attracted both domestic and foreign investors, strengthened capital buffers, and reinforced regulatory confidence in the banking sector. By all prudential measures, once again, it will be said without doubt that it is a success story.

CBN

Looking at this feat closely and when weighed more critically, a more consequential question emerges, one that will ultimately determine whether this achievement becomes a genuine turning point or merely another financial milestone. Will a stronger banking sector finally translate into a more productive Nigerian economy, or will it be locked out?

This question sits at the heart of Nigeria’s long-standing economic contradiction, seeing a relatively sophisticated financial system coexisting with weak industrial output, low productivity, and persistent dependence on imports truly reflects an ironic situation. The fact remains that recapitalisation, by design, is meant to strengthen banks, enhancing their ability to absorb shocks, manage risks and support economic growth. According to the apex bank, the programme has improved capital adequacy ratios, enhanced asset quality, and reinforced financial stability. Under the leadership of Olayemi Cardoso, there has also been a shift toward stricter risk-based supervision and a phased exit from regulatory forbearance.

These are necessary reforms. A stable banking system is a prerequisite for economic development. However, the truth be told, stability alone is not sufficient because the real test of recapitalisation lies not in stronger balance sheets, but in how effectively banks channel capital into productive economic activity, sectors that create jobs, expand output and drive exports. Without this transition, recapitalisation risks becoming an exercise in financial strengthening without economic transformation.

Encouragingly, early signals from industry experts suggest that the next phase of banking reform may begin to address this long-standing gap. Analysts and practitioners are increasingly pointing to small and medium-sized enterprises (SMEs) as a key destination for recapitalisation inflows, which is a fact beyond doubt. Given that SMEs account for over 70 percent of registered businesses in Nigeria, the logic is compelling. With great expectation, as has been practicalised and established in other economies, a shift in credit allocation toward this segment could unlock job creation, stimulate domestic production, and deepen economic resilience. Yet, this expectation must be balanced with reality. Historically, and of huge concern, SMEs have received only a marginal share of total bank credit, often due to perceived risk, lack of collateral, and weak credit infrastructure.

Indeed, Nigeria’s broader financial intermediation challenge remains stark. Even as the giant of Africa, private sector credit stands at roughly 17 percent of GDP, and this is far below the sub-Saharan African average, while SMEs receive barely 1 percent of total bank lending despite contributing about half of GDP and the vast majority of employment. These figures underscore the structural disconnect between the banking system and the real economy. Recapitalisation, therefore, must be judged not only by the strength of banks but by whether it meaningfully improves this imbalance.

Nigeria’s economic challenge is not merely one of capital scarcity; it is fundamentally a problem of low productivity. Manufacturing continues to operate far below capacity, agriculture remains largely subsistence-driven, and industrial output contributes only modestly to GDP. Despite decades of banking sector expansion, credit to the real sector has remained limited relative to the size of the economy. Instead, banks have often gravitated toward safer and more profitable avenues such as government securities, treasury instruments, and short-term trading opportunities.

This is not irrational. It reflects a rational response to risk, policy signals, and market realities. However, it has created a structural imbalance in which capital circulates within the financial system without sufficiently reaching the productive economy. The result is a pattern where financial sector growth outpaces real sector development, a phenomenon widely described as financialisation without productivity gains.

At the center of this challenge is the issue of credit allocation. A recapitalised banking sector, strengthened by new capital and improved buffers, should theoretically expand lending. But this is, contrarily, because the more important question is where that lending will go. Will Nigerian banks extend long-term credit to manufacturers, finance agro-processing and value chains, and support scalable SMEs or will they continue to concentrate on low-risk government debt, prioritise foreign exchange-related gains, and maintain conservative lending practices in the face of macroeconomic uncertainty? Some of these structural questions call for immediate answers from policymakers.

Some industry voices are optimistic that the expanded capital base will translate into a broader loan book, increased investment in higher-risk sectors, and improved product offerings for depositors; this is not in doubt. There are also expectations that banks will scale operations across the continent, leveraging stronger balance sheets to expand their regional footprint. Yes, they are expected, but one thing that must be made known is that optimism alone does not guarantee transformation. The fact is that without deliberate incentives and structural reforms, capital may continue to flow toward low-risk assets rather than high-impact sectors.

Beyond lending, experts are also calling for a shift in how banking success is measured. The next phase of reform, according to the experts in their arguments, must move from capital thresholds to customer outcomes. This includes stronger consumer protection frameworks, real-time complaint management systems and more transparent regulatory oversight. A more technologically driven supervisory model, one that allows regulators to monitor customer experiences and detect systemic risks early, could play a critical role in strengthening trust and accountability within the system.

This dimension is often overlooked but deeply significant. A banking system that is well-capitalised but unresponsive to customer needs risks undermining public confidence. True financial development is not only about capital strength but also about accessibility, fairness, and service quality. Nigerians must feel the impact of recapitalisation not just in improved financial ratios, but in better banking experiences, more inclusive services, and greater economic opportunity.

The recapitalisation exercise has also attracted notable foreign participation, signaling confidence in Nigeria’s banking sector. However, confidence in banks does not necessarily translate into confidence in the broader economy. The truth is that foreign investors are typically drawn to strong regulatory frameworks, attractive returns, and market liquidity, though the facts are that these factors make Nigerian banks appealing financial assets; it must be made explicitly clear that they do not automatically reflect confidence in the country’s industrial base or productivity potential.

This distinction is critical. An economy can attract capital into its financial sector while still struggling to attract investment into productive sectors. When this happens, growth becomes financially driven rather than fundamentally anchored. The risk therefore, is that recapitalisation could deepen Nigeria’s financial markets but what benefits or gains when banks become stronger or liquid without addressing the structural weaknesses of the real economy.

It is clear and explicit that the current policy direction of the CBN reflects a strong emphasis on stability, with tightened supervision, improved transparency, and stricter prudential standards. These measures are necessary, particularly in a volatile global environment. However, there is an emerging concern that stability may be taking precedence over growth stimulation, which should also be a focal point for every economy, of which Nigeria should not be left out of the equation. Central banks in emerging markets often face a delicate balancing act and this is putting too much focus on stability, which can constrain credit expansion, while too much emphasis on growth can undermine financial discipline, as this calls for a balance.

In Nigeria’s case, the question is whether sufficient mechanisms exist to align banking sector incentives with national productivity goals. Are there enough incentives to encourage long-term lending, sector-specific financing, and innovation in credit delivery? Or does the current framework inadvertently reward risk aversion and short-term profitability?

Over the past two decades, it has been a herculean experience as Nigeria’s economic trajectory suggests a growing disconnect between the financial sector and the real economy. Banks have become larger, more sophisticated and more profitable, yet the irony is that the broader economy continues to struggle with high unemployment, low industrial output, and limited export diversification. This divergence reflects the structural risk of financialization, a condition in which financial activities expand without a corresponding increase in real economic productivity.

If not carefully managed, recapitalisation could reinforce this trend. With more capital at their disposal, banks may simply scale existing business models, expanding financial activities that generate returns without contributing meaningfully to production. The point is that this is not solely a failure of the banking sector; it is a systemic issue shaped by policy design, regulatory priorities, and market incentives, which needs the urgent attention of policymakers.

Meanwhile, for recapitalisation to achieve its intended purpose and truly work, it must be accompanied by a deliberate shift or intentional policy change from capital accumulation to productivity enhancement and the economy to produce more goods and services efficiently. This begins with creating stronger incentives for real sector lending with differentiated capital requirements based on sector exposure, credit guarantees for high-impact industries, and interest rate support for priority sectors can encourage banks to channel funds into productive areas and this must be driven and implemented by the apex bank to harness the gains of recapitalisation.

This transformative process is not only saddled with the CBN, but the Development finance institutions also have a critical role to play in de-risking long-term investments, making it easier for commercial banks to participate in financing projects that drive economic growth. At the same time, one of the missing pieces that must be taken into cognizance is that regulatory frameworks should discourage excessive concentration in risk-free assets. No doubt, banks thrive in profitability, as government securities remain important; overreliance on them can crowd out private sector credit and limit economic expansion.

Innovation in financial products is equally essential. Traditional lending models often fail to meet the needs of SMEs and emerging industries as this has continued to hinder growth. Banks must explore new approaches, including digital lending platforms, supply chain financing, and blended finance solutions that can unlock new growth opportunities, while they extend their tentacles by saturating the retail space just like fintech.

Accountability must also be embedded in the system. One fact is that if recapitalisation is justified as a tool for economic growth, then its outcomes and gains must be measurable and not obscure. Increased credit to productive sectors, higher industrial output and job creation should serve as key indicators of success. Without such metrics, the exercise risks being judged solely by financial indicators rather than its real economic impact.

The completion of the recapitalisation programme represents more than a regulatory achievement; it is a defining moment for Nigeria’s economic future. The country now has a banking sector that is better capitalised, more resilient, and more attractive to investors. These are important gains, but they are not ends in themselves.

The ultimate objective is to build an economy that is productive, diversified, and inclusive. Achieving this requires more than strong banks; it requires banks that actively power economic transformation.

The N4.65 trillion recapitalisation is a significant step forward. It strengthens the foundation of Nigeria’s financial system and enhances its capacity to support growth. However, capacity alone is not enough and truly not enough if the gains of recapitalisation are to be harnessed to the latter. What matters now is how that capacity is deployed.

Some of the critical questions for urgent attention are as follows: Will banks rise to the challenge of financing Nigeria’s productive sectors, particularly SMEs that form the backbone of the economy? Will policymakers create the right incentives to ensure credit flows where it is most needed? Will the financial system evolve from a focus on profitability to a broader commitment to the economic purpose of fostering a more productive Nigerian economy and the $1 trillion target?

The above questions are relevant because they will determine whether recapitalisation becomes a catalyst for change or a missed opportunity if not taken into cognizance. A well-capitalised banking sector is not the destination; it is the starting point. The real journey lies in building an economy where capital works, productivity rises, and growth becomes both sustainable and inclusive.

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

Federal government, The European Union (EU), and the United Nations Industrial Development Organisation (UNIDO) have called for urgent and coordinated action to curb food waste and promote sustainable consumption and production practices.

They warned that when food is wasted, the water, energy, and labour invested in its production are also lost, accelerating climate change and undermining global efforts to build a zero-waste, circular economy.

Speaking in Abuja at the commemoration of this year’s International Zero Waste Day, themed “Food Waste Reduction: Minimisation and Valorisation,” Zissimos Vergos, deputy Ambassador of the EU Delegation to Nigeria and ECOWAS, disclosed that Nigeria wastes approximately 38 million tonnes of food annually, more than any other country in Africa.

He further noted that globally, in 2022 alone, nearly one billion tonnes of food—almost one-fifth of all food available to consumers—was wasted.

“This is not just a loss of food; it is a squandering of precious resources, a missed opportunity to combat hunger, and a direct threat to our planet’s health,” he said.

Vergos stressed that food loss and waste are major drivers of environmental degradation, contributing up to 10 per cent of global greenhouse gas emissions—nearly five times the emissions of the entire aviation sector—and accounting for as much as 40 per cent of global methane emissions.

Highlighting Nigeria’s ongoing efforts, he said: “The Nigeria Circular Economy Roadmap, the establishment of the Interministerial Circular Economy Committee, the push to develop a National Plastic Waste Management Regulation, these are not small gestures. These are structural shifts.

“They signal that Nigeria is not waiting for someone else to solve its problem; it is building the system to solve it from within. Now, today’s theme: food waste reduction, minimisation and valorisation, is the right conversation at the right moment.”

Vergos also shared three key lessons from the EU’s experience to support Nigeria’s efforts. First, he urged investment in rural infrastructure, including roads, storage, and cold chains, to address post-harvest losses beyond the farm gate. Second, he emphasised the need to promote agro-processing by converting fresh produce into value-added products such as tomato paste and cassava flour, while linking smallholder farmers to processors and markets.

Third, he called for embedding zero-waste principles, recycling, and resource efficiency into school curricula from the primary level to foster a culture of sustainability among future generations.

Reaffirming the EU’s commitment, he stated, “The EU stands ready to be your partner in that work, through funding, through technical cooperation, and through genuine solidarity.”

In his keynote address, Balarabe Abbas Lawal, minister of Environment, reiterated the Federal Government’s commitment to environmental protection and sustainable practices aimed at safeguarding the health and well-being of Nigerians.

“Food waste remains a significant challenge that affects not only our environment but also our economy and society. Every discarded meal represents wasted resources such as water, energy, labour, and capital, while Nigerians continue to face food insecurity.

Addressing food waste is therefore central to sustainable development and ensuring a healthier future for all,” he said.

He added: “The Federal Ministry of Environment, in this year’s national appropriation, has developed projects on food waste elimination in major markets around Nigeria. And this is to show you that the Federal Ministry of Environment is tackling the issues of food waste at its core, especially post-harvest losses.”

Stressing the broader impact, he noted that addressing food waste aligns with the Ministry’s core objectives. “Reducing food waste will not only help to lower pollution and greenhouse gases, but also conserve valuable resources and promote more efficient and responsible consumption patterns across households, businesses, and institutions,” he added.

Also speaking, Amb. Philbert Johnson, Director and Representative of UNIDO’s Sub-Regional Office in Nigeria, emphasised that food must not be wasted, especially in a country grappling with food insecurity and malnutrition.

“Food is far more than a commodity: it is a foundation of wealth, a driver of health, and a pillar of security. It sustains our homes, supports industries, and underpins the stability of our societies.

“When food systems function efficiently, they generate income, enhance resilience, and improve well-being. When food systems fail, when food is lost or wasted, the consequences ripple across our economies, our environment, and our communities.”

He reaffirmed UNIDO’s commitment to supporting Nigeria in building resilient, inclusive, and sustainable agro-industrial systems.