Credit to Nigeria’s private sector fell to N76.12 trillion in June 2025, marking the fourth time this year that lending to businesses and individuals has declined.
This is according to the latest data from the Central Bank of Nigeria (CBN).
The June figure represents a N1.6 trillion drop from N77.8 trillion recorded in May, and a more significant decline from the peak of N78.1 trillion in April.
This trend of declining credit began in February 2025 when total private sector credit fell from N77.3 trillion in January to N76.3 trillion.
The downward movement continued in March, slipping further to N75.9 trillion. Although April witnessed a temporary rebound to N78.1 trillion, the gains were short-lived as credit declined again in May and June.
In contrast, the year-on-year data shows an increase from N73.2 trillion in June 2024 to N76.12 trillion in June 2025 — an annual growth of N3 trillion.
However, the repeated monthly declines in 2025 raise concerns over potential liquidity constraints, reduced lending appetite by banks, or waning credit demand from the private sector amid tight economic conditions.
While the CBN did not release the detailed sectoral credit breakdown for June 2025, earlier figures suggest that the bulk of credit allocation continues to flow into the manufacturing, general commerce, and oil and gas sectors.
In the apex bank’s Economic Report for January 2025, CBN stated, “In terms of sectoral distribution, the services sector maintained the largest share at 54.87 per cent, followed by the industry sector at 40.02 per cent, while the agriculture sector accounted for 5.11 per cent. Notably, the share of the agriculture sector was higher than the 4.82 per cent recorded a month earlier.”
Analysts attribute the tepid credit expansion to various constraints, including interest rates and lending criteria.
The CEO of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, SMEs are increasingly reluctant to borrow “due to the high cost of funds”. He noted further, “Banks tightening lending criteria is not giving room for credit creation.”
He stated further, “Nigeria’s credit-to-GDP ratio is one of the lowest in Africa.”
The decline in credit to the private sector coincides with the CBN’s hawkish monetary stance and its stringent attempt to curb inflation and stabilize the naira.
According to Kitan Aloba, analyst at Ren Money, the benchmark MPR rate, currently at 27.5%, “may have made borrowing more expensive, thus affecting the private sector’s appetite for credit.”
Slower growth in private sector credit could weigh on investment, job creation, and overall GDP growth, especially in a country where the private sector accounts for a large share of economic activity.
While the federal government has introduced some intervention schemes, including the Nigerian Consumer Credit Corporation, their impact appears limited in the face of broader monetary tightening.
While the federal government has introduced some intervention schemes, including the Nigerian Consumer Credit Corporation, their impact appears limited in the face of broader monetary tightening.