Nigeria’s personal sector credit score declined marginally to N77.83 trillion in Might 2025, down from N77.91 trillion in April, because the Central Bank of Nigeria (CBN) sustained its tight financial stance to fight headline inflation and stabilize the naira.
This 0.10% month-on-month decline, although seemingly marginal, continues the pattern of weakened credit score urge for food amongst companies, at the same time as broad cash provide (M3) expanded aggressively.
Based on information from the CBN’s newest Cash and Credit score Statistics, whole M3 stood at N119.01 trillion in Might, indicating a sturdy 7.11% year-to-date enhance from N111.11 trillion in January 2025.
The crossway between credit score and liquidity
Regardless of the credit score slowdown, broad cash provide (M3) climbed to N119.01 trillion in Might 2025, a 7.11% enhance from N111.11 trillion in January and a year-on-year progress of 19.92%.
In distinction, credit score to the personal sector rose by simply 0.58% YTD and 4.73% year-on-year, reinforcing the widening hole between system liquidity and credit score allocation.
The divergence between credit score and liquidity underscores a deepening credit score constraint in the true financial system: banks are liquid, however credit score deployment stays stifled because of heightened danger assessments and elevated lending charges.
The stagnation in credit score progress mirrors the impression of the CBN’s aggressive financial tightening. Underneath Governor Yemi Cardoso, the apex bank carried out six consecutive Financial Coverage Price (MPR) hikes in 2024, elevating borrowing prices to curb inflation and assist the naira.
Whereas these strikes have been efficient in containing inflationary expectations, additionally they made credit score costly, notably for companies working on tight margins. Many have delayed capital expenditure, and banks have tightened up danger publicity, resulting in muted credit score growth regardless of elevated liquidity.
Fluctuations in Credit score Tendencies
Current information factors to an more and more fragile lending panorama:
- Credit score jumped from N62.54 trillion in December 2023 to N76.48 trillion in January 2024, as banks ramped up lending forward of the coverage shift.
- Nonetheless, following the MPR hikes, credit score declined to N77.38 trillion in January 2025 and has since remained comparatively flat.
- The newest drop of N77.92 billion between April and Might 2025 displays how persistent coverage tightening continues to weigh on lending momentum.
Sectoral breakdown of credit score
The CBN’s sectoral credit score allocation report for January 2025 reveals a well-recognized sample: the companies sector stays the most important recipient of credit score, accounting for N32.15 trillion or 54.87% of whole sectoral lending.
- Finance and insurance coverage sectors led the cost inside companies, claiming N7.54 trillion or 12.87% of the overall.
- In the meantime, manufacturing credit score slipped for the third consecutive month to N8.31 trillion, down from N10.02 trillion in January 2024, capturing solely 14.18% of sectoral credit score.
- Agricultural lending edged as much as N2.99 trillion (5.11%), from 4.82% in December, reflecting marginal positive aspects from intervention funding.
- Common commerce witnessed the steepest proportional decline, dropping to N3.48 trillion (5.94%) in January 2025 from N4.62 trillion (7.99%) in January 2024.
The January 2025 credit score allocation snapshot reveals a monetary system more and more skewed towards service-based sectors, particularly finance and insurance coverage, whereas the true financial system—notably manufacturing and commerce—continues to grapple with constrained entry to capital.
Credit score lags behind financial progress
Nigeria’s financial system grew by 3.84% year-on-year in This fall 2024, outpacing the three.46% progress charge within the prior quarter and delivering 3.4% actual GDP progress for 2024, up from 2.74% in 2023.
But, But, this financial efficiency hasn’t translated into sturdy credit score progress.
As of 2024, credit score to the personal sector accounted for simply 27.81% of GDP, a pointy decline from 33.26% in 2023. This widening credit score hole suggests that companies are rising however are more and more doing so with out bank financing.
Comparatively, Sub-Saharan Africa recorded a credit-to-GDP ratio of 27.73% in 2023, in line with World Bank information, a big 8.19% enhance, indicating improved entry to credit score throughout the area.
What you must know
In Might 2025, personal sector credit score declined by N77.92 billion, marking the second consecutive month of contraction.
Yr-to-date, credit score has grown by solely N451.15 billion, considerably trailing behind the N7.89 trillion surge in cash provide.
The companies sector continues to dominate credit score allocation, whereas manufacturing and basic commerce sectors have seen additional declines. In the meantime, the credit-to-GDP ratio has dropped to 27.81%, underscoring the persistent weak point in monetary intermediation inside Nigeria’s personal sector.
Nigeria’s personal sector continues to face constrained entry to formal credit score regardless of rising liquidity and stable GDP efficiency. T
he present credit score panorama indicators a monetary system misaligned with the productive financial system, the place cash provide is rising, however credit score, the gas for enterprise progress and employment, stays restricted.
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