CBN data shows mixed lending trends as analysts warn that weak credit flow could slow economic recovery….
Nigeria’s financial system is showing signs of tightening credit conditions, even as monetary authorities begin to ease policy, with new data from the Central Bank of Nigeria (CBN) revealing a year-on-year decline in Net Domestic Credit (NDC).
According to the CBN’s latest money and credit report, NDC which measures total bank lending to both the public and private sectors fell by 6.9 percent in January 2026 to N109.4 trillion, compared to N102.4 trillion recorded in the same period of 2025.
The figures highlight a complex lending environment, where policy adjustments aimed at stimulating growth are yet to fully translate into stronger credit expansion.
A closer look at the data shows that bank lending to the government rose significantly to N34.2 trillion in January 2026, up from N25.03 trillion a year earlier. In contrast, credit to the private sector declined to N75.2 trillion from N77.4 trillion, suggesting that businesses may still be struggling to access financing.
On a quarterly basis, the trend throughout 2025 reflects sustained pressure on domestic credit. In the first quarter, NDC dropped by 4.4 percent to N100.6 trillion from N105.2 trillion in December 2024. The downward trend continued in the second quarter with a 2.8 percent decline to N97.8 trillion, followed by a further 1.1 percent drop in the third quarter to N96.7 trillion.
However, the fourth quarter offered a slight rebound, with NDC rising by 2.6 percent to N99.2 trillion, an indication that policy adjustments may be starting to take effect.
Analysts attribute the overall contraction largely to evolving monetary conditions, particularly as inflation shows early signs of easing. The expectation is that lower interest rates and improved liquidity will gradually support lending activity.
Commenting on the development, Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), described the Central Bank’s recent policy direction as a step in the right direction.
He welcomed the Monetary Policy Committee’s decision to reduce the Monetary Policy Rate (MPR), noting that when combined with a lower Cash Reserve Requirement (CRR), it could improve banks’ ability to extend credit and reduce borrowing costs.
According to him, easier access to financing would support business expansion, drive output growth, and ultimately create jobs across the economy.
However, Yusuf cautioned that monetary policy alone cannot deliver sustained economic recovery. He stressed the need for complementary fiscal measures, particularly in infrastructure development, regulatory improvements, and fiscal discipline to maintain investor confidence.
The latest data underscores a delicate balancing act for policymakers, while easing monetary conditions may provide some relief, restoring strong and consistent credit growth will be critical to sustaining Nigeria’s economic momentum in the months ahead.
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