Private Sector Credit Hits N76.27tn in Q1 2025

Credit extended to Nigeria’s private sector reached N76.27 trillion in March 2025, showing a slight increase of 0.03% from the N76.25 trillion recorded in February. However, the figure still falls short of the N77.38 trillion recorded in January 2025, indicating a trend of tightening credit amid ongoing economic challenges.

The Central Bank of Nigeria (CBN) noted that although the increase from February was minimal, the total decline from January to March represents a drop of N1.11 trillion. This decline highlights the cautious approach adopted by financial institutions in light of rising interest rates, inflation, and tighter monetary policies.

The slowdown in credit growth in the private sector may reflect concerns over high non-performing loans (NPLs), sluggish consumer demand, and a tough business environment. Banks, responding to these challenges, have become more conservative with their lending practices.

Though the CBN did not provide a detailed breakdown of credit distribution for March 2025, earlier reports suggest that sectors such as manufacturing, general commerce, and oil and gas continue to receive the largest shares of credit. In its January 2025 report, the CBN revealed that the services sector accounted for 54.87% of total credit, followed by the industrial sector at 40.02%, with agriculture receiving 5.11%. Notably, the agriculture sector saw a slight increase from the previous month.

The limited growth in private sector credit is driven by both demand and supply-side issues. On the demand side, businesses are increasingly reluctant to borrow due to high borrowing costs. On the supply side, banks have tightened their lending criteria, largely due to concerns about credit risks and limited access to long-term funds.

The decline in private sector credit over the first quarter of 2025 aligns with the CBN’s stringent monetary policy aimed at controlling inflation and stabilizing the naira. With the benchmark monetary policy rate (MPR) at 27.5%, borrowing has become more expensive, further reducing the demand for credit.

A slowdown in credit growth could impact investment, job creation, and overall economic growth, especially in a country where the private sector plays a central role in driving economic activity.

Despite government initiatives, such as the establishment of the Nigerian Consumer Credit Corporation, their effectiveness has been limited due to the overall tightening of monetary policies. Experts are urging for targeted reforms to improve access to credit, especially for key sectors and micro, small, and medium-sized enterprises (MSMEs). Proposals include credit guarantees, regulatory incentives, and enhanced frameworks for risk-sharing to create a more favorable lending environment.