Ike Chioke: CBN Should Ensure Banks  Does Not Invest Fresh Capital in Stock Market

The Group Managing Director, Afrinvest West Africa, Dr. Ike Chioke in this interview with Kayode Tokede urges the Central Bank of Nigeria to ensure that banks do not invest part of the  raised funds from the  recent recapitalisation in the  stock market. He also speaks on Nigeria’s ambitious $1trillion economy plan, Capital Gain Tax among critical  issues. Excerpts  

With stability in the FX market, ease in inflation rate and increasing in foreign investment inflow into the country, has the Afrinvest’s report on Nigeria not achieving the $1trillion economy by 2031 changed?  

The report is still consistent. The report stated that with the current GDP growth momentum, there is no pathway for Nigeria to achieve a $1 trillion economy by 2031. To achieve a $1 trillion economy, Nigeria’s GDP will need a double digit growth compounded. 
So, we are saying that Nigeria needs double digit growth, maybe 12 to 15per cent per year, to achieve the $1 trillion economy target. So, imagine now that our GDP is around $240 billion and we are targeting 15 per cent growth. 

What that means is that after one year, our GDP will be at $278 billion,  and after five years that is by 2031 assuming we maintain the same 15per cent growth we will be around $550billion of GDP. Clearly, that is far below the $1 trillion target especially given that our 2025 GDP growth forecast is just above four per cent . So for Nigeria to achieve that $1 trillion economy by 2031, it would need to maintain a GDP growth rate above 25per cent from now until then. This would mean that the Nigerian economy by now will be pumping practically on all sectors consistently for us to come close to that target.  Meanwhile, we have elections coming in 2027 which means that the business of governance and policy execution would naturally be sidelined by politics.  This will further dampen our ability to make the target. 

How can the capital markets assist in funding  infrastructure development across the country? 

The capital market has always been there to support the government in funding development. However, the question is whether the government is willing to attain the fiscal discipline, governance standards, and disclosure requirements to access the capital markets. The Federal Government has done its own part, and the Federal Government, being at its level, is able to access the capital market and fund its deficit through domestic borrowing, and if it needs more, it goes internationally. It has a Debt Management Office, it’s got a Budget Office, it’s got a Ministry of Finance that follows statutory arrangements of filing reports that the capital markets can always look into.
Of all the 36 states, the only state that comes to the capital market consistently is Lagos State, because Lagos is disciplined. You know, they are PenCom-compliant, their audited accounts are available, they do their annual credit ratings, and as a consequence, they can come to the capital market and raise money. They raised over N240 billion during November last year, which is significant. Then you ask yourself if other states are really serious about accessing the Nigerian capital market to raise funds.

The essential nature of the capital markets is to assist governments to get cheap funds to support projects. However, if the state government wants to access funds from the capital markets, it must present audited accounts, undertake credit ratings, enroll in the defined contribution pension scheme, and maintain adequate financial discipline. What is lacking is perhaps the commitment of many states to simply focus and comply with the requirements. If they were to comply, they certainly would have access to funding, and the funds are there. The Nigerian pension fund industry has assets under management of over N25 trillion and growing every month.  That is your source of funds. So, the governments may be clamouring for money, but the money is there. All they have to do is just do what they need to do, and they can access the money.

President Tinubu recently presented N58.28trillion budget for 2026 fiscal year. What key sectors of the Nigerian stock market investors should be focused on and how positioned is your firm to guide investors in tapping into the budget opportunities?  

I have to commend President Tinubu and his economic team for presenting a N58 trillion budget. The N58 trillion is an improvement, though marginal, on the N55 trillion 2025 budget. It doesn’t suggest however that there is anxiety about rapid growth, as I was trying to explain earlier about the need to get to double-digit GDP growth. Double-digit GDP growth would also require double-digit budget growth. So, if I had a N55 trillion budget in 2025 and I grew that by 10 per cent, it means that I should be over N60 trillion for 2026. And if I want to grow more rapidly by, say targeting 20 per cent, then I should be looking at a N66 trillion budget. But the challenge with a budgeting in Nigeria is always one of: where is the revenue? What is the quality of the expenditure? In a business like mine, if I need to grow profit, it’s either I push to increase my revenue or I seek to reduce my expenditure, or both. And it is that combination— increasing my revenue and reducing my expenditure — that will free up more money so that I can generate a higher profit which I can either reinvest or payout as dividend. For the government, if you increase your revenue and reduce your recurrent cost, you then have more cash to spend on capital expenditure. Unfortunately, that has not been the case in Nigeria’s budget over the years. President Tinubu, like other past Presidents before him, has inherited a bloated government. The past administrations have not put in enough effort in terms of trimming the size of government so that you can actually free up more cash that goes into capital expenditure. Despite all these challenges, the government will still do some capital expenditure. So investors should expect the cement companies to do well and generate more revenue as the government sustains investments in infrastructure. Nigeria has a massive housing deficit, and so suppliers to the real estate sector will continue to do well. Because of the consolidation you see in the banking sector and the insurance sector, those sectors are poised to do well and continue to outperform. Even with the huge investments pouring into those two sectors, they’re still relatively fairly valued. So I’d expect the banking and insurance sectors to do well. The consumer sector will also boom this year as the country’s huge population needs to be fed. Then we come to places like the telecommunications sector performing better this year. In addition, the oil and gas sector. There is a lot happening in the oil and gas sector. And lastly, investors should also consider industrial stocks.

What advice would you give to the government regarding handling capital gains tax?
My main concern with the current CGT debate is that capital gains tax has always existed in Nigeria; it simply wasn’t effectively implemented. Historically, the rate was about 10 per cent, but enforcement was weak.

Now, the government has introduced a new tax act, raising the rate to 25 per cent for individuals and 30 per cent for corporates, with a strong signal that it will be enforced. My personal view is simple: why not start by properly implementing the original 10 per cent that has always been in the law? If the government was previously collecting little or nothing, moving straight to effective enforcement at 10 per cent would already be a meaningful improvement. That would have been a more pragmatic first step. A flat and uniform 10 per cent rate would also be much easier to administer and, in my view, would result in higher compliance. Simplicity matters. Today’s framework is quite complex: individuals face up to a 25 per cent CGT, but only when gains exceed N10 million or total proceeds exceed N150 million. Corporates are subject to 30 per cent CGT, but are allowed to treat it as part of their corporate income tax. Even as a financially literate person, I find the current CGT structure overly complicated. Complexity is a disadvantage in tax policy—when a system is difficult to understand, it becomes harder to implement and easier to avoid. By contrast, a clear rule like “CGT is 10 per cent flat” is easy for everyone to understand and comply with. That’s why I believe the government would have been better served by starting with the old law and enforcing a simple 10 per cent rate. Competitiveness also matters. When you compare Nigeria’s proposed CGT regime with other African markets, the difference is striking. In South Africa, effective CGT rates average around 18 per cent for individuals and 21 per cent for corporates. In Ghana and Kenya, CGT is 15 per cent flat for both individuals and corporates. Egypt operates a 10 per cent rate. Beyond the numbers, there is also a sentiment issue. Sometimes, merely announcing a policy that sounds negative to the market can create fear. Even though the CGT regime does not directly affect the majority of retail investors, the noise around it—and the fact that we are having this conversation at all—is enough to make people uneasy. Market confidence matters, and policy communication is just as important as policy design.

How important is policy consistency in restoring investors’ confidence in the Nigerian’s capital markets?

Policy consistency is critically important to our capital market. And I think that the saddest thing about Nigeria’s growth trajectory is how successive governments and successive administrators of government institutions such as the Central Bank, the SEC, or even the NGX, and even agencies like the Ministry of Finance, have sometimes flipped and flopped on policies. I won’t even bother with this one on capital gains tax. Look at what the former Governor of the CBN, Mr. Godwin Emefiele, did in terms of the policy on foreign exchange. For example, Emefiele came up with a list of 41 items that were no longer eligible for foreign exchange. But before, there was never any list. It became so bad that the gap between the two markets — official and parallel — became very wide. That led to FX roundtripping and soon enough it became a matter of who you know at CBN before you got foreign exchange allocation from the official window. That period destroyed investor confidence in our foreign exchange market, and it has taken the new CBN Governor over two years to restore integrity, transparency and trust in the same FX market. So, you can see that with policy inconsistency, a robust FX market that supported thousands of businesses daily can suddenly dry up. So that tells you a lot about the issues of policy consistency in our economy.

After the March 2026 deadline for banking sector recapitalisation, what role do you expect Nigerian banks to play in both the local and international markets going forward?  

If I look at the report we published in 2025 at the 20th anniversary of the banking sector report, the capital adequacy ratio for Nigerian banks was about 24–25 per cent on average, and it was before they capitalised. That is higher than all the other markets that we compared. So, if you look at South Africa, it’s probably closer to 18 to 20 per cent. Ghana, below. By the time we published the report, we were looking at sort of half-year 2025 data. So now all these banks have raised hundreds of billions. International banks: minimum capital of N500 billion; national banks: minimum capital of N200 billion; regional banks should have at least minimum capital of N50 billion; and merchant banks, N50 billion. With all this capital, it means that the capital adequacy equity ratio for Nigerian banks is expected to shoot up. You could be looking at an average of 30–35 per cent capital adequacy ratio.  The fear is that the banks will now have the balance sheet to do bigger deals and help propel the economy towards that $1 trillion economy President Tinubu wants. But often, these noble objectives can have unintended consequences. As an illustration, I shall need to then go back to the last banking recapitalisation in 2004 under Prof. Soludo to explain. You recall then in 2004 that the minimum capital for a bank was then N2 billion, and it was increased to N25 billion. By the deadline of December 2005, 25 banks had qualified and each had attained a minimum capital of N25 billion. But what did they do with that extra capital? Some of them diversified into the capital markets and created subsidiaries in investment banking, stock brokerage, asset management, trust services, etc. Soon enough all kinds of issuances started coming into the market which helped to fuel the extended boom of the market. And then, while the market was booming between 2006–2007, all of us were very happy. Then the 2008 global financial crisis hit and liquidity dried up because some of those banks had raised their capital from what we now call “hot money”. They had sort of leveraged the capital in their balance sheets. With these structures being forcibly unwound, this accelerated the decline of the stock exchange which led to the market crash. So given the painful lessons of the past, we advise that the CBN should be vigilant to ensure that the banks don’t carry any part of the capital they have raised into the capital market. The Nigerian Exchange All Share Index grew 50 per cent in 2025 and our base case scenario for 2026 is that the market will go to 40 per cent. Our bullish case is about 80 per cent growth in the market and that does not include any bank recapitalization funds coming into the capital markets. If recapitalization funds enter the capital markets, it increases the chances of a financial bubble which a scenario where many stocks become hugely overvalued. And if we create another financial bubble, then it means we have not learned from the lessons of the past. With increased capital, banks will have the capacity to create more risk assets by giving out more loans. The banks will have the capacity to help grow the Nigerian economy domestically and can look at international deals abroad, of course, subject to conforming with their internal credit, governance and risk management principles.

What are the unique selling points of PlutusNeo by Afrinvest? 

PlutusNeo by Afrinvest is an investment and savings app that is available to all Nigerians who have smartphones. The app can be downloaded from the App Store on iPhone or the Play Store on Android. Once downloaded, you can onboard yourself as a customer of PlutusNeo from the comfort of your home or workplace and begin immediately to access our investment and savings products and services. The app allows our clients to invest and save in naira and in US dollars in an easy to use, simple interface.   PlutusNeo was developed in-house by Afrinvest and is supported by the 30 years of our financial advisory expertise in investment research, stock trading, and portfolio management, investment banking, and trustee services. So, although PlutusNeo is a new fintech app, it has arrived as a grown up because of the 30 years of capital markets experience, credibility and trust of Afrinvest that it is standing on. Aside from savings and investments in dollars and naira, our PlutusNeo customers can also trade US stocks and buy mutual funds listed on the Nigerian Exchange. PlutusNeo has a sister app called Afrinvestor which allows our customers buy and sell shares, Commercial Paper and Treasury Bills listed on the NGX.   What powers PlutusNeo is the ability to use technology to deliver real financial solutions. When we saw many fintech apps, we said: these people don’t understand finance, the rules, the market structure, or the regulations the way we do after decades in the industry. So, we then built our own from scratch. We started in 2020, brought in McKinsey, the global consulting firm, to advise us, and from their guidance, we developed and launched Optimus by Afrinvest in 2022.  At the beginning of this year, we renamed Optimus as PlutusNeo because it was time for the app to move to the next level.  That next level is coming soon. Watch this space.

What are your dreams for Afrinvest in the next 10 years? 

Afrinvest’s vision is to be the preferred financial solutions provider in Sub-Saharan Africa. This year, we plan to take a major step on that journey by expanding outside Nigeria for the first time since 2007 when we sold our UK affiliate. We’ve already identified one country, and by year-end, we may be in two. Over the next decade, we plan to be present across Sub-Saharan Africa. That vision is already in motion. Our plan is to take a version of PlutusNeo into the Sub-Saharan African markets we choose. Any market with treasury bills, a domestic bond market, and basic banking products already provides enough opportunity. There’s always a spread to unlock. With technology, we can deploy PlutusNeo and immediately start providing value.  After that, we assess the local stock exchange. If it is digitally enabled, we can integrate to PlutusNeo and offer domestic stock trading. In Nigeria, we now offer the full range of capital market services, including investment banking, issuing house, portfolio management, broker-dealer, investment research, consulting, and trustee services.