Credit to Nigeria’s private sector recorded a slight increase in February 2026, offering a faint signal of recovery after months of uneven lending activity…..
Latest data released by the Central Bank of Nigeria shows that total credit extended to businesses and households rose to N75.62 trillion, up from N75.24 trillion in January.
The figure reflects loans, trade credit, and other financial support provided by banks and financial institutions, critical components that drive investment, consumer spending, and overall economic momentum.
While the month-on-month improvement suggests some easing in lending conditions, a broader view reveals that credit growth remains under strain.
On a year-on-year basis, private sector credit is still below the N76.26 trillion recorded in February 2025, highlighting the lingering impact of tight monetary conditions and cautious lending practices.
Data trends over the past year further underscore the pressure. Credit levels reached a high of N78.07 trillion in April 2025 before entering a prolonged decline that bottomed out at N72.53 trillion in September. Although there has been some recovery since then, the pace has been gradual and uneven.
The latest increase, therefore, points more to stabilisation than a full rebound.
Government Borrowing Surges Ahead
In contrast to the modest growth in private sector lending, overall credit in the economy expanded more strongly driven largely by increased borrowing from the public sector.
Net domestic credit climbed to N111.40 trillion in February, rising from N109.43 trillion in January. A significant portion of this growth came from lending to the government, which jumped to N35.77 trillion within the same period.
This trend has raised concerns among analysts about the risk of “crowding out,” where heavy government borrowing reduces the pool of funds available to private businesses, making it harder for them to access financing.
Tight Conditions Still Weigh on Lending
The fragile state of private sector credit reflects a challenging macroeconomic environment.
Despite efforts by the Central Bank to stimulate growth including a 50-basis-point reduction in the Monetary Policy Rate to 27 percent in September 2025 borrowing conditions remain tough. The rate was subsequently held steady in November, signaling a cautious balancing act between supporting growth and containing inflation.
High interest rates, persistent inflation, and exchange rate volatility have continued to dampen appetite for credit, with banks becoming increasingly selective about who they lend to. Riskier sectors, in particular, have struggled to access financing, contributing to the uneven recovery pattern.
Structural Concerns Persist
Beyond short-term fluctuations, deeper structural issues remain unresolved.
The Centre for the Promotion of Private Enterprise has repeatedly flagged weaknesses in Nigeria’s credit system, warning that lending is still heavily skewed and not sufficiently supporting productive sectors of the economy.
Even with the recent banking recapitalisation exercise where 33 banks met new minimum capital requirements concerns persist about whether increased capital will translate into meaningful credit expansion for businesses.
A Mixed Outlook
Other monetary indicators paint a similarly mixed picture.
Broad money supply (M3) slipped slightly to N123.15 trillion in February, while key policy ratios including the Cash Reserve Ratio, Liquidity Ratio, and standing lending facilities remain unchanged, reflecting a steady but cautious policy stance.
For now, the modest rise in private sector credit offers a hint of improvement. But until borrowing conditions ease more significantly and structural bottlenecks are addressed, a strong and sustained recovery in lending may remain just out of reach.
