“No Repeat of 2008”: Ike Chioke Warns CBN Against Allowing Banks Channel Recapitalisation Funds into StocksThe Group Managing Director of Afrinvest West Africa, Dr. Ike Chioke, has urged the Central Bank of Nigeria (CBN) to closely monitor banks following their recent recapitalisation exercise — warning against a potential repeat of the 2008 market crash.
In this wide-ranging interview, Chioke addressed bank recapitalisation risks, Nigeria’s $1 trillion economy target, capital gains tax concerns, and Afrinvest’s regional expansion strategy.
Here’s a detailed breakdown:
Recapitalisation: “CBN Must Prevent a Market Bubble”Following the March 2026 recapitalisation deadline:
• International banks must now hold ₦500 billion minimum capital
• National banks: ₦200 billion
• Regional banks: ₦50 billion
• Merchant banks: ₦50 billion
Chioke estimates that capital adequacy ratios could rise to 30–35%, significantly above peer African markets.
The WarningHe cautions that banks must not invest fresh recapitalisation funds into the stock market, citing lessons from the 2004 banking consolidation under Prof. Charles Soludo.
During that period:
• Banks raised new capital
• Diversified into capital market activities
• Fueled a stock market boom (2006–2007)
• The 2008 global financial crisis exposed leverage risks
• The market crashed as liquidity dried up
Chioke warns that allowing recapitalisation funds into equities now could create another financial bubble, especially as:
• The Nigerian Exchange All Share Index rose 50% in 2025
• Base case for 2026 projects 40% growth
• Bullish case suggests 80% growth
His stance:
Recapitalised banks should deploy capital into productive lending and economic expansion — not speculative stock investments.
$1 Trillion Economy by 2031? “No Clear Path”Chioke reaffirmed Afrinvest’s earlier report that Nigeria is unlikely to reach a $1 trillion economy by 2031 under current growth trends.
Current reality:
• GDP ≈ $240 billion
• Forecast 2025 growth ≈ 4%
To hit $1 trillion:
• Nigeria would need sustained 12–15% annual GDP growth
• Or even 25%+ compounded growth from now till 2031
He noted:
• Political distractions ahead of 2027 elections
• Structural inefficiencies
• Weak fiscal expansion
Conclusion:
Without double-digit sustained growth, the $1 trillion target remains unrealistic.
Capital Markets & Infrastructure: The Money Is ThereChioke stressed that Nigeria’s capital markets are capable of funding infrastructure — but many states fail to meet compliance standards.
He praised Lagos State for:
• Publishing audited accounts
• Maintaining credit ratings
• Being pension-compliant
• Raising over ₦240 billion recently
Meanwhile:
• Nigeria’s pension industry manages over ₦25 trillion
• Funds are available
• States simply need better governance and transparency
2026 Budget: Where Should Investors Focus?President Tinubu’s ₦58.28 trillion 2026 budget represents modest growth from ₦55 trillion in 2025.
However, Chioke noted:
• True double-digit GDP growth requires double-digit budget expansion
• Fiscal discipline remains a challenge
• Recurrent expenditure still crowds out capital spending
Sectors Likely to Benefit:
✔ Cement & infrastructure-linked firms
✔ Real estate suppliers
✔ Banking & insurance (post-consolidation strength)
✔ Consumer goods (population demand)
✔ Telecommunications
✔ Oil & gas
✔ Industrial stocks
Despite heavy capital inflows, banking and insurance stocks remain relatively attractive.
Capital Gains Tax (CGT): “Keep It Simple”Chioke criticized Nigeria’s new CGT framework:
• 25% for individuals (above ₦10m gains threshold)
• 30% for corporates
• Complex compliance rules
His argument:
Why not enforce the original flat 10% rate properly before raising it?
He emphasized:
• Simplicity improves compliance
• Complex tax systems encourage avoidance
• Market sentiment matters
He compared Nigeria’s rates with:
• South Africa (~18–21%)
• Ghana & Kenya (15%)
• Egypt (10%)
He warned that policy communication alone can unsettle investors.
Policy Consistency: The Confidence FactorChioke identified policy inconsistency as one of Nigeria’s biggest economic weaknesses.
He cited:
• FX policy distortions under former CBN Governor Godwin Emefiele
• The controversial 41-items FX restriction list
• Widening gap between official and parallel markets
• Investor confidence erosion
He acknowledged that the new CBN leadership has spent over two years rebuilding credibility.
Key takeaway:
Consistency builds markets. Policy flip-flops destroy them.
PlutusNeo: Afrinvest’s Digital ExpansionChioke highlighted PlutusNeo, Afrinvest’s investment and savings app:
• Allows naira and dollar investments
• Enables US stock trading
• Offers Nigerian mutual funds access
• Backed by 30 years of Afrinvest expertise
• Developed with advisory input from McKinsey & Company
Afrinvest plans regional expansion into Sub-Saharan Africa, leveraging PlutusNeo as a scalable technology platform.
Afrinvest’s 10-Year VisionAfrinvest aims to become:
The preferred financial solutions provider in Sub-Saharan Africa.
Plans include:
• Expansion into at least one new African market this year
• Scaling PlutusNeo regionally
• Leveraging digital integration with local exchanges
Final Takeaways
• CBN must guard against stock market speculation from recap funds.
• Nigeria’s $1 trillion economy goal requires unrealistic growth rates under current conditions.
• Capital markets have liquidity — but states lack compliance discipline.
• CGT reform needs simplification, not complexity.
• Policy consistency remains critical to investor confidence.
Chioke’s overarching message is clear:
Strong capital is good — but without discipline, history could repeat itself.