Decrease in Private Sector Credit Reaches N76.12 Trillion in June - Marks the Fourth Reduction in 2025
Nigeria's Private Sector Credit Declines for Fourth Consecutive Month
In a notable development, the total private sector credit in Nigeria has taken a significant dip, falling to N76.12 trillion in June 2025. This marks the fourth consecutive monthly decline, raising concerns over potential liquidity constraints, reduced lending appetite by banks, or waning credit demand from the private sector amid tight economic conditions.
The services sector maintains the largest share of total private sector credit at 54.87%, followed closely by the industry sector with a 40.02% share. However, it is the agriculture sector that has seen a notable increase, accounting for 5.11% of total private sector credit, higher than the 4.82% recorded a month earlier.
This decline in credit to the private sector coincides with the Central Bank of Nigeria's (CBN) hawkish monetary stance and its efforts to curb inflation and stabilize the naira. The benchmark MPR rate, currently at 27.5%, may have made borrowing more expensive, affecting the private sector's appetite for credit.
The repeated monthly declines in 2025 have been attributed to various constraints, including high interest rates and strict lending criteria. Banks tightening lending criteria is not conducive to credit creation, according to Dr. Muda Yusuf, the CEO of Centre for the Promotion of Private Enterprise (CPPE). He also noted that small and medium-sized enterprises (SMEs) are reluctant to borrow due to the high cost of funds.
Despite the monthly declines, the year-on-year data shows an increase from N73.2 trillion in June 2024 to N76.12 trillion in June 2025. This increase, however, seems to be a result of a temporary rebound in April, as credit declined again in May and June.
The trend of declining credit began in February 2025. The federal government's intervention schemes, including the Nigerian Consumer Credit Corporation, appear to have had limited impact in the face of broader monetary tightening. Earlier figures suggest that the bulk of credit allocation continues to flow into the manufacturing, general commerce, and oil and gas sectors.
It is worth noting that Nigeria's credit-to-GDP ratio is one of the lowest in Africa. The CBN did not publish a detailed sectoral credit allocation report in June 2025, differing from earlier months in 2024 and 2025. No specific publicly available explanation for this omission has been documented in the provided sources.
As the economy continues to grapple with these challenges, the CBN and the federal government will need to carefully consider their monetary and fiscal policies to support credit creation and stimulate economic growth.
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