The Chartered Institute of Bankers of Nigeria (CIBN) has urged commercial banks to increase lending to Micro, Small, and Medium Enterprises (MSMEs) as declining interest rates and falling yields on government securities threaten traditional banking revenue streams. Speaking at the 2026 Lagos Bankers’ Nite, Dele Alabi, President and Chairman of Council at CIBN, warned that relying heavily on government bonds and blue-chip corporations is no longer a sustainable growth strategy. He stressed that as the interest rate curve trends downward, returns on government securities will continue to drop, narrowing profit margins for financial institutions that fail to diversify their credit portfolios.
Alabi noted that following the recent banking sector recapitalisation, which raised ₦4.7tn with 72% sourced locally, financial institutions are now expected to deploy these newly acquired funds directly into the broader real economy rather than holding passive investments. Addressing common industry concerns regarding credit risks in small business financing, he emphasized that profitable MSME lending and effective risk management can co-exist, provided banks build robust risk-control frameworks, modern infrastructure, and proper credit capacity.
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The call to broaden credit access aligns with broader economic ambitions for the region. Guest speaker Godwin Ehigiamusoe, founder of LAPO Microfinance Bank, highlighted that Lagos currently operating with an estimated GDP of $260bn requires synchronized financing and innovation to achieve the targets set out in the Lagos State Development Plan 2052, which aims to expand the economy to between $800bn and $1tn. Reinforcing these points, Akinwunmi Lawal, Chairman of the CIBN Lagos State Branch, called for deeper collaboration among financial institutions, tech companies, and regulators to ensure entrepreneurs, young professionals, and emerging businesses across the state can secure the capital required to drive sustainable development.
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