Credit to Nigeria’s private sector recorded a marginal increase in February 2026, signalling early signs of recovery in lending activity, though broader trends suggest the sector is still grappling with lingering pressures.
Latest monetary and credit statistics released by the Central Bank of Nigeria showed that private sector credit rose to N75.62 trillion in February, up slightly from N75.24 trillion in January. The figure reflects total loans and credit facilities extended by banks and other financial institutions to businesses and households—widely regarded as a key engine for economic growth through investment and consumption.
However, a deeper analysis of the data reveals a more cautious outlook. On a year-on-year basis, private sector credit declined from N76.26 trillion recorded in February 2025, highlighting a contraction in lending over the past 12 months. The trend underscores the challenges faced by businesses in accessing finance amid a tough macroeconomic environment.
Data from the apex bank further showed that credit to the private sector peaked at N78.07 trillion in April 2025 before entering a downward trajectory. The decline bottomed out at N72.53 trillion in September 2025, reflecting a period marked by tighter financial conditions and risk-averse lending practices among financial institutions.
While the modest rebound in February suggests a gradual return of lending confidence, analysts note that the recovery remains fragile and insufficient to offset the sustained decline recorded over much of the past year.
In contrast, total credit in the economy continued to expand, largely driven by increased lending to the public sector. Net domestic credit rose to N111.40 trillion in February from N109.43 trillion in January. Notably, credit to the government surged to N35.77 trillion, compared to N34.19 trillion in the previous month.
This sustained increase in government borrowing has raised concerns among economists about potential crowding-out effects, where the public sector’s demand for funds limits the availability of credit to private enterprises. Such a development could further constrain business expansion and economic productivity.
The credit dynamics are unfolding within a delicate monetary policy environment. In a bid to stimulate economic activity, the Monetary Policy Committee of the Central Bank reduced the Monetary Policy Rate by 50 basis points to 27 per cent in September 2025, before maintaining the rate at its November meeting. The cautious stance reflects the bank’s effort to strike a balance between supporting growth and curbing inflation.
Despite these policy interventions, borrowing conditions remain tight. High interest rates, persistent inflation, and exchange rate volatility have continued to dampen both demand for and supply of credit. Financial institutions, wary of rising default risks, have adopted stricter lending criteria, particularly for sectors considered vulnerable.
The lack of detailed sectoral breakdown in the data makes it difficult to pinpoint the exact drivers of the recent uptick in private sector credit. Nonetheless, the improvement may indicate early stabilisation in macroeconomic conditions and a slow rebuilding of lender confidence.
Meanwhile, the Centre for the Promotion of Private Enterprise has previously highlighted structural challenges within Nigeria’s credit system. The group warned that despite the successful recapitalisation of banks, lending remains skewed and insufficiently aligned with productive sectors critical to economic transformation.
The Central Bank also confirmed that 33 banks met the revised minimum capital requirements under its recently concluded recapitalisation programme—an exercise expected to strengthen the resilience of the banking sector and enhance its capacity to support economic growth.
Overall, while February’s figures offer a glimmer of optimism, stakeholders say sustained policy support and structural reforms will be crucial to unlocking robust and inclusive credit growth in Nigeria’s private sector.
WHAT YOU SHOULD KNOW
Nigeria’s private sector credit edged up to N75.62 trillion in February 2026, but this modest recovery masks a deeper problem: lending to businesses and households is still lower than it was a year ago, and the gains being recorded are being overshadowed by surging government borrowing — which climbed to N35.77 trillion in the same period.
With the CBN’s benchmark interest rate still sitting at an elevated 27%, inflation biting, and the naira under persistent pressure, banks remain reluctant to lend broadly — favouring safer government securities over productive private sector investments.
Even the completion of the banking recapitalisation exercise, which saw 33 banks meet new capital thresholds, has yet to translate into meaningful credit access for the businesses and individuals who need it most.
More money is circulating in Nigeria’s financial system, but it is flowing increasingly toward the government rather than the private sector.
Until borrowing costs fall significantly, inflation is tamed, and structural lending biases are addressed, any recovery in private sector credit will remain shallow.
