Nigerian banks have significantly increased their credit allocation to the agricultural sector, with a total of N3.86 trillion now directed to agriculture as of the second quarter of 2026, according to data from the Central Bank of Nigeria (CBN). This marks a 16.6% increase compared to the N3.31 trillion recorded in the previous quarter, reflecting a strategic rebalancing away from oil and gas, which saw its credit shrink to N3.09 trillion.
Agricultural Credit Surges Amid Economic Diversification
The CBN's sectoral allocation of bank credit report for Q2 2026 shows that agriculture now holds a larger share of commercial and merchant bank loans than oil and gas. The oil and gas sector, which previously attracted the largest portion of credit, dropped to N3.09 trillion from N3.21 trillion in Q1 2026, a 3.7% decline. This shift underscores a broader move by banks to align with Nigeria's economic diversification agenda, which prioritises agriculture as a key driver of non-oil growth.
According to the report, the increase in agricultural credit is part of a trend that has seen the sector receive growing support from financial institutions. The CBN data indicates that banks are responding to government policies that encourage lending to agriculture, including the Anchor Borrowers' Programme and other intervention schemes, although the report does not specify the exact mechanisms.
Manufacturing and Other Sectors See Mixed Trends
Beyond agriculture and oil and gas, the report reveals mixed trends across other sectors. Manufacturing credit rose to N3.75 trillion in Q2 2026, up from N3.69 trillion in the previous quarter, indicating continued support for industrial production. Meanwhile, general commerce and services saw a slight increase to N1.98 trillion from N1.94 trillion, reflecting modest growth in trade and service-related activities.
However, not all sectors experienced growth. Credit to the mining and quarrying sector fell to N0.15 trillion from N0.16 trillion, while credit to the construction sector declined to N0.48 trillion from N0.49 trillion. These declines suggest a cautious approach by banks to sectors with perceived higher risks or lower returns.
Implications for Nigeria's Economic Growth
The shift in bank credit allocation has significant implications for Nigeria's economic growth. By channelling more funds into agriculture, banks are supporting a sector that employs a large portion of the population and contributes to food security. The reduction in oil and gas credit, on the other hand, may reflect a strategic move to reduce exposure to the volatile global oil market, which has been subject to price fluctuations.
The CBN report highlights that total credit to the private sector grew to N15.5 trillion in Q2 2026, up from N15.2 trillion in Q1 2026, driven largely by the increase in agricultural lending. This overall growth indicates that banks are expanding their loan portfolios, albeit with a rebalanced sectoral focus.
According to the data, the agricultural sector's share of total credit now stands at approximately 25%, up from 21% in the previous quarter. This is a notable increase, reflecting the sector's growing importance in the eyes of lenders. The report does not provide a breakdown by bank, but it is clear that the collective action of commercial and merchant banks is driving this change.
Future Outlook and Policy Implications
Looking ahead, the trend towards increased agricultural lending is likely to continue, supported by government policies and the CBN's regulatory push. The central bank has repeatedly emphasised the need for banks to support key sectors of the economy, and agriculture is a priority. As a result, financial institutions are expected to maintain or even increase their exposure to agriculture in the coming quarters.
The decline in oil and gas credit, however, may raise concerns about the sector's ability to finance new projects, particularly those related to exploration and production. Nonetheless, the overall growth in private sector credit suggests that the Nigerian banking system remains robust and capable of supporting economic activity across diverse sectors.
In conclusion, the CBN's sectoral allocation data for Q2 2026 reveals a clear shift in bank credit towards agriculture, with N3.86 trillion now allocated to the sector, while oil and gas credit has shrunk to N3.09 trillion. This rebalancing is expected to contribute to Nigeria's economic diversification and long-term stability, as the country seeks to reduce its reliance on oil revenues.
