Recapitalisation: Silent Layoffs, Infrastructure Deficit Menace to $1trn Economic system

BY BLAISE UDUNZE

The Central Bank of Nigeria’s recapitalisation train, which is scheduled for a March 31, 2026, deadline, has continued to reignite optimism throughout monetary markets and is designed to construct stronger, extra resilient banks able to financing a $1 trillion financial system. With the continued train, the trade has been witnessing financial institution valuations rising, buyers are enthusiastic, and steadiness sheets are swelling. Nevertheless, beneath these encouraging headline numbers, unbeknownst to many, or maybe some troubling facets that the trade gamers have chosen to not discuss, are the human price of consolidation and the infrastructure deficit.

Recapitalisation usually results in mergers and acquisitions. Mergers, in flip, nearly all the time result in job rationalisation. In Nigeria’s case, this course of is unfolding in opposition to an already fragile labour construction within the banking trade, one the place casualisation has turn out to be the dominant employment mannequin.

One alarming truth within the Nigerian banking sector is the age-old workforce construction raised by the Affiliation of Senior Employees of Banks, Insurance coverage and Monetary Establishments (ASSBIFI), which says that an estimated 60 p.c of operational financial institution employees immediately are contract employees. This actuality raises profound questions in regards to the sustainability of Nigeria’s banking reforms and the credibility of its financial ambitions.

A $1 trillion financial system can’t be constructed on insecure labour, shrinking institutional information, and an overstretched monetary workforce.

Recapitalisation and the Hidden Merger Lure

Historical past is instructive. Referencing Nigeria’s 2004-2005 banking consolidation train, which lowered the variety of banks from 89 to 25, and little question, it produced bigger establishments, whereas it additionally triggered widespread job losses, department closures, and a wave of outsourcing that completely altered employment relations within the sector. The present recapitalisation push dangers repeating that cycle, solely this time inside a much more complicated financial surroundings marked by inflation, foreign money volatility, and rising unemployment.

Mergers promise effectivity, however effectivity usually comes on the expense of individuals. Talking of this, duplicate roles are eradicated, expertise replaces frontline employees, and non-core features are outsourced. The troubling a part of it’s that that is already a system reliant on contract labour; mergers might speed up workforce instability, turning banks into balance-sheet-heavy establishments with shallow human capital depth.

ASSBIFI’s warning is subsequently not a labour agitation; it’s a macroeconomic purple flag.

Casualisation as Structural Weak spot, Not a Price Technique

It has been postulated by proponents of job casualisation that it’s a cost-control mechanism crucial for competitiveness. Opposite to this argument, proof more and more reveals that it’s a false financial system. In response to this, ASSBIFI President Olusoji Oluwole, who kicked in opposition to this structural weak spot, asserted that extreme reliance on contract employees undermines job safety, suppresses wages, limits entry to advantages and blocks profession development whereas affirming that over time, this erodes morale, loyalty, and productiveness.

Extra troubling are the systemic dangers. Casualisation creates operational vulnerabilities, greater fraud publicity, weaker compliance tradition, and decrease institutional reminiscence.

One of many banking regulators, the Nigeria Deposit Insurance coverage Company (NDIC), has not desisted from repeatedly cautioning that extreme outsourcing and short-term staffing fashions enhance safety dangers inside banks. On the unfavourable implications, when workers really feel disposable, moral dedication weakens, and reputational threat grows.

Banking isn’t a manufacturing facility flooring. It’s a belief enterprise. And belief doesn’t thrive in insecurity.

Inside Outsourcing Net of Battle of Curiosity

Past price effectivity, Nigeria’s casualisation disaster can be fuelled by a deeper governance downside, conflicts of curiosity embedded throughout the outsourcing ecosystem.

In lots of instances, financial institution chief executives and govt administrators are reported to personal, management, or have useful pursuits in outsourcing firms that present companies to their very own banks. Invariably, it’s the identical companies supplying contract employees, cleaners, safety personnel, call-centre brokers, and even IT assist. Structurally, this association permits senior executives to revenue straight from the identical outsourcing mannequin that strips employees of job safety and advantages.

The inducement is obvious. Outsourcing permits banks to take care of lean payrolls, bypass strict labour protections related to everlasting employment, and cut back long-term obligations comparable to pensions and healthcare. However when these designing outsourcing methods are additionally financially benefiting from them, the road between effectivity and exploitation disappears.

This mannequin entrenches casualisation not as a brief adjustment instrument, however as a everlasting enterprise technique, one which externalises social prices whereas internalising personal positive factors.

Exploitation and Its Systemic Penalties

The human impression is extreme as a result of the contract employees employed by executive-linked outsourcing companies usually face poor working situations, low wages, restricted or no medical insurance, and nil job safety, which is demotivating. Many carry out the identical features as everlasting employees however with out advantages, voice, or profession prospects.

ASSBIFI has warned that extended publicity to such insecurity results in psychological stress, declining morale, and lowered productive life years. Research on Nigeria’s banking sector verify that casualisation weakens worker dedication and heightens anxiousness, situations that straight undermine service high quality and operational integrity.

From a systemic standpoint, exploitation feeds fragility. Excessive employees turnover erodes institutional reminiscence. Disengaged employees weaken inside controls. In the meantime, this needs to be a sector the place belief, confidentiality, and compliance are paramount; it is a harmful trade-off if it should be acknowledged for what it’s.

Why Workforce Numbers Inform a Deeper Story

It’s in file that as of 2025, Nigeria’s banking sector employs an estimated 90,500 employees, up from roughly 80,000 in 2021. The highest 5 banks immediately, comparable to Zenith, Entry Holdings, UBA, GTCO, and Stanbic IBTC, account for about 39,900 workers, reflecting average progress pushed by digital growth and regional operations.

At face worth, really, these figures counsel resilience. However when seen alongside the 60 p.c casualisation price, they paint a unique image, revealing that employment progress is with out employment high quality. A workforce dominated by contract employees lacks the steadiness required to assist long-term credit score growth, infrastructure financing, and industrial transformation.

This issues as a result of banks are anticipated to be the engine room of Nigeria’s $1 trillion financial system, funding roads, energy crops, refineries, manufacturing hubs, and digital infrastructure. Weak labour foundations will finally translate into weak execution capability.

Nigeria’s Infrastructure Financing Contradiction

Nigeria’s infrastructure deficit is estimated within the lots of of billions of {dollars}. Energy, transport, housing, and broadband require long-term financing buildings, refined threat administration, and deep sectoral experience. But recapitalisation-induced mergers usually result in expertise loss in exactly these areas.

As banks consolidate, specialist groups are downsized, challenge finance items are merged, and skilled professionals exit the system, both voluntarily or by redundancy. Informal employees, by design, are not often skilled for complicated, long-term infrastructure offers. The result’s a contradiction, revealing that bigger banks have larger capital bases however thinner technical capability.

With out deliberate workforce safety and abilities growth, recapitalisation could produce banks which might be too huge to fail, however too hole to construct.

South Africa Provides a Helpful Distinction

South Africa provides a revealing counterpoint. As of 2025, the nation’s “huge 5” banks, comparable to Commonplace Financial institution, FNB, ABSA, Nedbank, and Capitec, make use of roughly 136,600 employees inside South Africa and about 184,000 globally. That is considerably greater than Nigeria’s banking workforce, regardless of South Africa having a smaller inhabitants.

Extra importantly, South African banks preserve a far greater proportion of everlasting employees. Whereas outsourcing exists, core banking operations stay firmly institutionalized in comparison with the Nigerian banking system. For that reason, South Africa’s profession development pathways are clearer, labour rules are extra robustly enforced, and unions play a extra structured function in workforce negotiations.

The result’s evident in outcomes. South Africa’s prime six banks are collectively valued at over $70 billion, with Commonplace Financial institution alone boasting a market capitalisation of roughly $30 billion and whole belongings nearing $192 billion. Nigeria’s prime 10 banks, in contrast, held mixed belongings of about $142 billion as of early 2025, even with a a lot bigger inhabitants and financial system, and its 13 listed banks reached a mixed market capitalisation of about N17 trillion ($11.76 billion at an change price of N1,445) in 2026.

Although this hole is not only about capital. It’s about institutional depth, workforce stability, and governance maturity.

Greater Valuations, However a Weaker Foundations?

Nigeria’s 13 listed banks reached a mixed market capitalisation of about N17 trillion in 2026. It’s no shock, as it’s buoyed by investor anticipation of recapitalisation and better capital thresholds. But market worth doesn’t robotically translate into financial impression. With out parallel funding in folks, techniques, and long-term abilities, valuation positive factors stay fragile.

South Africa’s expertise reveals that sturdy banks are constructed not solely on capital adequacy, however on human capital adequacy. Expert, safe employees are higher threat managers, higher innovators, and higher custodians of public belief.

Labour Regulation and its Regulatory Blind Spots

ASSBIFI’s name for a evaluate of Nigeria’s Labour Act is well timed, and it is because the present framework lags fashionable employment realities, notably in sectors like banking, the place expertise and outsourcing have blurred conventional employment strains. Regulatory silence has successfully legitimised casualisation as a default mannequin quite than an exception.

The Central Bank of Nigeria can’t afford to deal with workforce points as outdoors its mandate. Prudential stability is inseparable from labour stability. Regulators should start to view extreme casualisation as a threat issue, similar to liquidity mismatches or weak capital high quality.

Recapitalisation With out Inclusion Is Incomplete

If recapitalisation is to succeed, it should be inclusive; subsequently, the trade should witness the enforcement of profession path frameworks for contract employees, limiting the proportion of outsourced core banking roles, and aligning capital reforms with employment safety. It additionally means recognising that labour insecurity in the end feeds systemic fragility.

South Africa’s banking sector didn’t keep away from consolidation, but it surely managed it alongside workforce safeguards and institutional continuity. Nigeria should do the identical or threat constructing banks that look sturdy on paper however crack below financial stress.

True Measure of Reform

Judging by the previous reform in 2004-2005, it has proven that Nigeria’s banking recapitalisation will likely be judged not by the scale of steadiness sheets, however by the resilience of the establishments it produces. As a part of the recapitalisation goal for extra resilient banks able to financing a $1 trillion financial system, it calls for banks that may assume long-term, take up shocks, finance infrastructure, and uphold belief. None of those objectives is appropriate with a workforce trapped in perpetual insecurity.

Casualisation is now not a labour concern; it’s a nationwide financial threat. If mergers proceed with out deliberate workforce stabilisation, Nigeria could find yourself with fewer banks, fewer jobs, weaker establishments, and a slower path to prosperity.

The lesson from South Africa is obvious, because it reveals that sturdy banks are constructed by sturdy folks. Till Nigeria’s banking reforms totally embrace that reality and the lacking items are addressed, recapitalisation will stay an unfinished challenge. and the $1 trillion financial system, an elusive promise.

Blaise, a journalist and PR skilled, writes from Lagos, might be reached through: blaise.udunze@gmail.com