Bank dominance on NGX signals structural weakness, experts say

Bank dominance among Nigeria’s most valuable and best-performing listed companies reflects deeper structural weakness in the economy, not strength, according to business leaders Oluwatobi Joshua Ajayi and Olukayode Olusanya.

Ajayi, Founder and Chief Executive Officer of Nord Automobile Limited, and Olusanya, Founder of Oak Holdings, spoke on the Drinks and Mics podcast hosted by Ugodre Obi-Chukwu. Their comments came as banking stocks added more than N11 trillion in market value so far in 2026.

Banks should facilitate growth, not lead

Ajayi said the continued dominance of banks on Nigerian Exchange reflects an imbalance. "The most successful companies on our stock exchange are our banks. To me, that’s a sign of an economy that is not working well. It’s not."

He argued that sectors directly involved in production and value creation should occupy the top ranks of the capital market. "You should have your hard, boring sectors, agriculture, real estate, manufacturing. Those are the people that should be leading your top 20, not your banks. The banks are supposed to facilitate the growth."

Ajayi said banks should primarily serve as enablers of economic activity rather than dominant beneficiaries of it.

Olusanya calls for restructuring financial flows

Olusanya said Nigeria needs to rethink how capital flows through the economy. "The earlier we start restructuring our finance flows in this country, the better for everyone. Otherwise, we are just on a wild goose chase."

Asked what such restructuring would entail, he pointed to the banking sector recapitalisation exercise and recent foreign capital inflows as reasons lending rates should be easing rather than remaining elevated. "You’ve asked banks to recapitalize. A lot of FDIs has hit our economy, there’s a lot of liquidity, such that there should be no excuse on why your loans and your lending rates should increase, especially to the real sector, manufacturing."

When Obi-Chukwu noted that banks also contend with their own funding and operating costs, Ajayi directed responsibility toward the Central Bank of Nigeria (CBN). "No, no, no. I think the reason is this. And I think the problem is the regulator, which is CBN."

Olusanya argued that the structure of Nigeria’s banking system is geared toward short-term commercial transactions rather than long-term productive investments. "This current banking system we have is more of a short-term, very short-circle, trader system. You sell groundnut, buy, return my money, buy. It’s not designed for real estate, for example, where you want to borrow to build."

He said the financing model creates significant challenges for sectors that require patient capital and long investment horizons. "Before your foundation work starts, somebody’s already asking for his money back with interest. It’s not designed for any long-term thing."

Banking stocks outperform broader market

The comments come against a strong rally in Nigerian banking stocks in 2026. The NGX Banking Index gained 67.96% year-to-date as of September 14, outperforming the broader NGX All-Share Index, which returned 56.35% during the same period.

The rally increased the combined market capitalisation of 12 listed banks from N16.44 trillion at the end of December 2025 to N27.61 trillion by September 14, 2026. That represents a gain of approximately N11.17 trillion in less than nine months.

While banking stocks have delivered some of the strongest returns on the Nigerian Exchange this year, analysts note that many lenders still trade at relatively modest valuations compared with peers across Africa. Several banks continue to trade below book value, while others command lower earnings multiples than comparable institutions in Kenya, South Africa, Ghana and Tanzania.

The concerns raised by Ajayi and Olusanya go beyond market valuations. They argue that a healthy economy should see stronger representation from productive sectors that create goods, jobs and industrial capacity, with banks playing a supporting role in financing that growth rather than dominating the list of the country’s most successful companies.