Lending to businesses continues to rise even as the central bank maintains a tight monetary policy stance to combat inflation……
Credit extended to Nigeria’s private sector rose to N81.04 trillion in May 2026, signaling continued lending activity across the economy despite elevated borrowing costs and the Central Bank of Nigeria’s aggressive anti-inflation measures.
Fresh monetary data released by the CBN showed that private sector credit increased from N80.59 trillion in April, adding nearly N450 billion within a month as businesses and economic operators continued to access financing amid challenging economic conditions.
The figures also revealed growth in broader credit indicators, with net domestic credit climbing to N121.42 trillion in May from N120.18 trillion in April. Meanwhile, net other assets increased to N12.63 trillion from N11.88 trillion over the same period.
The latest numbers suggest that credit demand has remained relatively resilient despite a high-interest-rate environment that has significantly increased borrowing costs for businesses and households.
Lending Activity Remains Positive
On a year-on-year basis, private sector credit expanded by 3.9 percent from N77.97 trillion recorded in May 2025.
The growth, although moderate, reflects continued financial sector support for economic activities at a time when many businesses are grappling with inflationary pressures, exchange rate volatility and rising operating costs.
Net domestic credit recorded even stronger growth, rising by 20.3 percent from N100.96 trillion in May last year.
Similarly, net other assets surged by 52.2 percent year-on-year, increasing from N8.29 trillion to N12.63 trillion, highlighting broader expansion within the financial system.
The CBN has yet to release a detailed breakdown showing which sectors received the highest share of private sector lending during the month.
Tight Monetary Policy Still in Place
The rise in lending comes despite the central bank’s decision to maintain one of the highest interest rate regimes in recent years.
At its 305th Monetary Policy Committee (MPC) meeting held in May, the apex bank retained the Monetary Policy Rate (MPR) at 26.5 percent, while leaving other key monetary policy parameters unchanged.
The decision was aimed at sustaining the fight against inflation and preserving macroeconomic stability amid ongoing economic uncertainties.
Financial analysts say the CBN is walking a delicate line between containing inflation and ensuring that businesses retain access to credit needed for investment and expansion.
While lending growth has remained positive, experts note that high financing costs continue to weigh on borrowing decisions, particularly among small and medium-sized enterprises.
Businesses Still Face Financing Challenges
Economic analysts argue that several structural challenges continue to limit the flow of affordable credit to productive sectors of the economy.
These challenges include high interest rates, exchange rate instability, risk aversion within the banking sector and a growing preference among financial institutions for government securities, which often offer attractive returns with lower risk.
Stakeholders have repeatedly warned that these factors could constrain stronger credit growth and slow private sector investment if not addressed.
The Centre for the Promotion of Private Enterprise (CPPE) has previously highlighted weaknesses in Nigeria’s credit ecosystem, noting that many productive sectors still struggle to access the financing needed to drive industrial growth, job creation and economic diversification.
Credit Growth Still Trails Economic Needs
Although lending to the private sector continues to expand, experts believe the current pace remains insufficient to support the scale of economic transformation required in Africa’s largest economy.
Recent data from the African Development Bank (AfDB) showed that credit to Nigeria’s private sector accounts for just 9.4 percent of Gross Domestic Product (GDP), a ratio considered low compared to many emerging and developing economies.
The development underscores longstanding concerns about limited access to long-term financing and the need for deeper reforms to strengthen financial intermediation.
The latest figures come shortly after data showed Nigeria’s broad money supply (M3) increased to N129.21 trillion in May from N124.99 trillion in April, pointing to continued liquidity expansion within the economy.
While the upward trend in private sector credit offers a positive signal for business activity, economists maintain that lasting improvements in access to finance will depend on broader reforms aimed at lowering borrowing costs, improving investor confidence and directing more capital toward productive sectors of the economy.
