Nigeria’s financial system is flashing red, and not because of a scarcity of money. Ironically, the Central Bank of Nigeria (CBN) and the nation’s banking proudly tout a historic rise in private-sector credit, announcing figures hovering around N75 trillion throughout 2024-2025. On paper, this looks like a funding boom, a sign that businesses are borrowing, investing, expanding, and building. But on the ground, the country’s real sector tells a very different story.
Manufacturers that are the backbone of industrial output have withdrawn en masse from bank loans, their loan books collapsing by an alarming 20.3 percent within a single year. SMEs, which constitute over 90 percent of Nigeria’s businesses and nearly half of the national GDP, remain shut out of formal credit. Banks themselves are quietly battling rising non-performing loans (NPLs), with several institutions breaching the CBN’s 5 percent regulatory threshold. Meanwhile, the official “N75 trillion” credit figure hangs in the air like an illusion that appeared to be big, impressive, but dangerously misleading. This feature unpacks the contradiction. If credit is indeed booming, where did the money go? And why is the real economy shrinking away from bank financing at a time when it should be expanding?
The financial statements of Nigeria’s top manufacturers for the first nine months of 2025 show a coordinated withdrawal from bank credit. Their aggregate bank borrowings plunged from N2.526 trillion in 2024 to N2.014 trillion in 2025, a dramatic 20.3 percent drop. The details are striking:
– BUA Foods fell from N1.559 trillion to N1.105 trillion;
– Nestlé Nigeria from N653.7 billion to N521.01 billion;
– Nigerian Breweries from N204.17 billion to N162.17 billion.
– NASCON’s borrowings dropped 98percent, from N3.3 billion to N67 million.
– Others: Dangote Cement, Dangote Sugar, Guinness, and International Breweries took no new loans.
These are not marginal firms but some of the most capital-intensive, employment-generating entities in the country. Their exodus from bank borrowing is a referendum on Nigeria’s brutal credit environment, where the Monetary Policy Rate of 27-27.5 percent has pushed effective lending rates well above 30 percent, making loans unaffordable even for working capital.
The retreat has slashed their financing costs by 52.8 percent, from N1.4 trillion to N662 billion. This is not because interest rates fell; they didn’t. Businesses simply stopped borrowing.
Finance expert David Adonri describes it bluntly: “Borrowers shun bank credit… lending rates have not come down materially. Banks’ income may fall below expectations.”
But the bigger concern is not banks’ income, it is the economy’s ability to invest and grow.
This is the question that unsettles economists, industry players, and SMEs alike.
If manufacturers pull back, SMEs remain excluded, and retail borrowing is suppressed; who receives the N75 trillion? What did it finance?
The answer reveals that Nigeria’s credit allocation remains opaque; however, historical patterns and recent financial data point in three directions. Even more concerning are recent claims that the modest loan growth recorded in 2024-2025 is not commensurate with the explosive expansion of banks’ balance sheets.
This suggests that the system is growing with deposits rising, assets swelling, FX revaluation inflating balance sheets, but actual lending to the productive economy is barely moving.
The credit growth being celebrated is therefore not only concentrated but also superficial and disconnected from balance sheet realities.
For decades, banks have preferred lending to large corporations and government-linked entities like:
– Oil & Gas
– Conglomerates and trading groups
– Government contractors
– Financial market operators
– Large borrowers with FX exposure
Even CBN’s earlier research shows that only 5-6 percent of total bank credit historically reaches SMEs.
Given the lack of detailed public data, it is reasonable to infer that the bulk of the N75 trillion still flows to:
– Large corporations
– Treasury operations
– Prime customers
– Big-ticket borrowers with government-linked contracts.