Credit and Loans to Nigeria’s Private Sector Declines by 0.32%

According to the Central Bank of Nigeria’s (CBN) Money and Credit Statistics, the Credit to Private Sector (CPS) in Nigeria experienced a decline of 0.32%, falling to ₦77.83 trillion in May 2025, down from ₦78.08 trillion in April.

This decrease in credit can be associated with a month-on-month reduction of 0.24% in the money supply (M2), which decreased from ₦119.28 trillion to ₦118.99 trillion in May 2025. The slowdown in credit growth can also be linked to the increases in the Monetary Policy Rate (MPR) implemented by the CBN in 2024.

While these measures have been effective in controlling inflation and supporting the naira, they have also led to higher borrowing costs, which in turn has reduced the willingness of businesses to seek credit. Given the vital importance of private sector growth for economic development, it is imperative for policymakers to improve access to credit by offering business-friendly rates, promoting financial literacy programs, investing in digital banking infrastructure, and increasing the number of informal business entities that are banked.

Additionally, complementary strategies such as grants, tax reliefs, and targeted incentives are crucial to assist Nigerian firms and foster sustainable economic growth. Considering that increasing illiquidity, coupled with limited access to credit, poses a significant threat to the overall economy, it is essential to effectively coordinate macroeconomic policies to ensure a consistent supply of credit to businesses at reduced costs.