Kayode Tokede

As the Central Bank of Nigeria (CBN) maintains a tight monetary policy, Nigerian banks credit to the private sector dropped by 14 per cent to N81.04 trillion as of May 2026 from N93.74 trillion when it opened January 2026.

According to the Central Bank of Nigeria (CBN)’s “money & credit statistics” credit to the private sector reached the highest peak of N94.6 trillion in February 2026. The apex bank excluded March 2026 in its data.

Analysts attributed the decline to rising credit risk and concern about non-performing loans, economic uncertainty, and attractive government securities.

Private sector credit includes loans, trade credits and other account receivables and supports provided by banks to the private sector within a period. The CPS is a global measure of the banking sector’s balance sheet resilience and contribution to the national economic agenda.

Experts said banks are in position to continue to create more loans, citing aggressive growth strategies by banks and enabling a regulatory environment over the years.

They agreed that increasing private sector credit implies a major boost for the economy as there is a link between credit to the private sector and economic growth. Several studies have continuously found that increased lending by banks directly leads to increase in Gross Domestic Products (GDP).

Analysts at Cordros Capital said the trend in credit to the private sector may continue in the period ahead.

“We believe the re-enforcement of the CBN’s limit on Deposit Money Bank’s loans-to-deposits macro-prudential ratio will continue to drive the willingness of commercial banks to create risky assets over the short to medium term,” Cordros Capital stated.

The latest statistics by the CBN also revealed that credit to the government moved to N40.38 trillion as of May 2026, about 6.6per cent increase over N37.87 trillion reported in January 2026.

Finance Expert, and Vice President, Highcap Securities Limited, Mr. David Adnori hinted that excess liquidity contributed to growth in credit to the government, stressing that banks are always looking for risk free government instruments to invest.

Some analysts believe the apex bank’s intensified monetary policy tightening measures could tether the magnitude of growth going forward.

Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the credit outlook remains cautious, calling for expansive distribution of credits across all tiers of companies and sectors.

According to him, there are major concerns in terms of distribution of credits across sectors and companies with small businesses, which contribute more to job creation and economic inclusion, not likely to benefit much.

He noted that banks tend to be wary of credit risk concerns associated with lending to small businesses and certain sectors, adding that efforts should be made to drive inclusive and stable credit access to all sectors including growth and employment elastic sectors such as agriculture, manufacturing, real estate, mining and construction among others.