Credit to private sector hits N76.27 trillion in March 2025 – CBN says

As of March 2025, credit extended to Nigeria's private sector totaled N76.27 trillion, marking a slight increase of 0.03% from February's N76.25 trillion, according to recent figures from the Central Bank of Nigeria (CBN).

However, this amount still falls short of the N77.38 trillion reported in January 2025, reflecting a broader trend of credit contraction against a backdrop of challenging economic conditions. The decline of N1.11 trillion from January to March 2025 underscores financial institutions' cautious approach amidst changing macroeconomic conditions. This includes the CBN's tightening monetary policy, rising interest rates, and persistent inflationary pressures. The CBN's Money and Credit Statistics indicate that the sluggish credit growth within the private sector may be attributed to concerns over high levels of non-performing loans (NPLs), diminished consumer demand, and a difficult business climate, prompting banks to become more risk-averse. Sector Analysis and Consequences: While the CBN has yet to disclose a detailed breakdown of sector-specific credit for March, previous reports suggest that the majority of credit is directed towards the manufacturing, general commerce, and oil and gas sectors. According to the CBN's Economic Report for January 2025, the distribution of credit shows that the services sector commanded the largest share at 54.87%, followed by industry at 40.02%, and agriculture at 5.11%. Notably, agriculture's share saw an increase from 4.82% the previous month. Economic analysts link the sluggish credit growth to constraints on both the demand and supply sides. Businesses are hesitant to borrow due to the high cost of funds, while banks are tightening lending standards in response to perceived credit risks and a scarcity of long-term funding. The decrease in private sector credit from January to March 2025 aligns with the CBN's hawkish monetary policy aimed at curbing inflation and stabilizing the naira. Analysts note that the current benchmark Monetary Policy Rate (MPR) of 27.5% may increase borrowing costs, thereby dampening the private sector's inclination to seek credit. Implications for the Economy: The slower pace of growth in private sector credit could hinder investment, job creation, and overall GDP growth in a nation where the private sector plays a crucial role in economic activity.

Despite the federal government introducing intervention initiatives, such as the newly established Nigerian Consumer Credit Corporation, their effects seem limited amid the prevailing monetary tightening. Financial sector stakeholders are advocating for targeted reforms to enhance credit accessibility for productive sectors and micro, small, and medium enterprises (MSMEs). Recommendations include implementing credit guarantees, regulatory incentives, and enhanced risk-sharing frameworks.