Credit to Nigeria’s private sector recorded only a marginal increase in March 2025, rising by just 0.03% to ₦76.27 trillion barely up from ₦76.25 trillion in February, according to newly released data from the Central Bank of Nigeria (CBN).
This slight uptick comes in the context of a broader decline in credit activity over the first quarter of the year. In January, private sector credit stood at ₦77.38 trillion, meaning the total drop between January and March amounts to ₦1.11 trillion. Analysts say the trend reflects tightening monetary conditions, heightened inflationary pressures, and a risk-averse stance from financial institutions.
The apex bank’s ongoing monetary policy tightening highlighted by a steep benchmark interest rate of 27.5% has made credit more expensive, dampening the appetite for borrowing. As inflation persists and the cost of funds remains high, banks are increasingly cautious in extending credit, particularly amid concerns over rising non-performing loans (NPLs) and weak consumer demand.
While the CBN has yet to publish detailed sectoral credit data for March, earlier figures indicate that credit allocation remains concentrated in manufacturing, general commerce, and the oil and gas sectors. In its January 2025 Economic Report, the CBN noted that the services sector accounted for the largest share of credit at 54.87%, followed by the industrial sector at 40.02%, and agriculture with just 5.11% a slight improvement from 4.82% in the previous month.
The sluggish pace of credit growth could have broader implications for economic performance, especially in a country where private enterprise drives a significant share of GDP. Limited access to finance may hinder investment, slow job creation, and stall productivity across key sectors.
Although the federal government has introduced various intervention programs most notably the newly launched Nigerian Consumer Credit Corporation their effectiveness is being undermined by the overarching tightening of monetary policy.
Financial sector stakeholders are urging the implementation of targeted reforms to stimulate lending to productive segments of the economy, including MSMEs. Proposed solutions include the introduction of credit guarantee schemes, regulatory incentives for inclusive lending, and enhanced risk-sharing mechanisms between lenders and the government.
As economic headwinds persist, the tug-of-war between inflation control and credit availability is likely to remain a defining challenge for Nigeria’s financial landscape in 2025.
