Private-sector credit in Nigeria dropped by N10.31 trillion between January and July 2026, according to money and credit statistics released by the Central Bank of Nigeria (CBN). The figures show credit fell from N93.74 trillion at the start of the year to N83.43 trillion by July, a decline of about 11% across the seven months.
Credit briefly climbed to N94.61 trillion in February before dropping sharply to N80.5 trillion in April. It then recovered partially, rising to N81.04 trillion in May, N83.2 trillion in June, and N83.43 trillion in July.
Year-on-Year Credit Remains Higher
On a year-on-year basis, however, credit to the private sector was still 9.21% higher than the N76.72 trillion recorded in July 2025. This suggests the contraction is concentrated within 2026 rather than part of a longer downward trend.
Private-sector credit covers loans, trade credits, and other financing support that banks extend to businesses and private borrowers.
Recapitalisation Fails to Boost Lending
The contraction follows a period of heavy investment in the banking sector, during which 33 lenders raised a combined N4.65 trillion under the CBN's recapitalisation programme. Despite this, access to affordable credit remains a challenge for many businesses.
President Bola Ahmed Tinubu addressed the issue directly at the 19th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria, calling on banks to channel more funds into productive economic activity rather than prioritising profits and shareholder returns. Tinubu said:
"A resilient banking system cannot exist indefinitely where businesses cannot obtain affordable credit, manufacturers struggle to finance expansion, and millions of productive MSMEs remain outside the formal financial system."
Expert Warns of Production and Jobs Risk
Financial expert Prof. Adebayo Adams said the fall in credit figures does not mean banks have stopped lending altogether. He described the trend as a shift in how banks are managing their loan portfolios, driven by concerns about non-performing loans and broader economic uncertainty. Adams said:
"It is not necessarily that banks are no longer lending. It is more of a portfolio shift."
He pointed to high borrowing costs as a key reason businesses, particularly manufacturers, are pulling back from taking on new credit. He said:
"Factories cannot expand at this cost of borrowing. Businesses are struggling with financing costs, and that is one of the reasons private-sector credit has fallen."
Adams cautioned that if the trend continues, it could dampen production, reduce investment, and slow job creation.
