Nigeria's private sector received N75.83tn in bank loans during August 2025, marking the smallest amount recorded this year, as per the latest money and credit data from the Central Bank of Nigeria.
The image shows a 0.4 percent decrease from N76.14tn in June 2025, highlighting a continuous reduction in loan growth.
The August 2025 figure increased by 1.5 per cent compared to the N74.73tn noted in August 2024, indicating a slight rise when measured against the previous year.
Net domestic credit was N98.97tn in August 2025, a decrease from N99.86tn in June and significantly less than the N105.88tn seen in August 2024, indicating a widespread reduction in credit throughout the economy.
Monthly data indicates that lending to the private sector was notably robust at the beginning of 2025, with N77.38tn recorded in January. This decreased to N76.26tn in February and N75.98tn in March, then increased to N78.08tn in April, which was the highest point of the year. Starting from May, the figures began to decline: credit dropped to N77.83tn, fell further to N76.14tn in June, and ultimately decreased to N75.83tn in August, indicating a distinct downward trend.
Government borrowing has also been less intense. Government credit stood at N23.13tn in August 2025, a slight decrease from N23.73tn in June and much lower than the N31.15tn noted in August 2024, indicating a notable reduction in bank lending to the public sector.
The reduction in private sector credit reflects more stringent monetary conditions. Throughout most of 2025, the CBN kept the Monetary Policy Rate at 27.5 per cent in an effort to control inflation and stabilize the naira. The elevated borrowing costs discouraged new lending, leading businesses and individuals to reduce their debt levels.
Only in the first half of the year, loans from the private sector decreased by almost N1.9tn, a pattern associated with elevated interest rates and limited availability of funds within the banking sector.
In September 2025, the Monetary Policy Committee made its initial interest rate reduction since 2020, lowering the policy rate to 27 percent. This move came after indicators showed a slowdown in inflation, which was recorded at 20.12 percent in August, along with the necessity to boost economic growth. Additionally, the committee decreased the Cash Reserve Ratio for commercial banks from 50 to 45 percent, while increasing the reserve requirement for public sector deposits to 75 percent.
Ongoing credit tightening has sparked worries regarding business financing amid a period where inflation, foreign currency fluctuations, and sluggish consumer spending are already placing strain on the economy.
Nigeria's action is aligned with a broader regional pattern. African central banks are starting to loosen their monetary policies as inflation decreases. Recently, Ghana reduced its policy rate by 350 basis points to 21.5 percent, while Kenya cut its benchmark rate to 9.5 percent in mid-August.
Nigeria's MPR continues to be among the highest on the continent, indicating ongoing inflationary challenges. Nevertheless, experts view the minor relaxation as a change in approach, moving from crisis management to a more measured form of economic stimulation.
Although the rate reduction was welcomed, representatives from the Organised Private Sector stated that the decrease is still small and not enough to alleviate the credit constraints faced by manufacturers and small and medium enterprises.
The head of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir, referred to the reduction as "positive but insufficient."
"Almost every time the MPC convenes, we expect a decrease in interest rates. This is positive, but it hasn't brought us close to our goals. Manufacturers require loans at a rate of no more than five percent for this to aid in production," he stated.
Ajayi-Kadir emphasized that no financial institution would offer loans at a rate lower than the MPR, keeping the cost of borrowing still too high.
"It indicates a shift in approach by the CBN, although manufacturers are still waiting for a period when interest rates will drop considerably," he added.
The Center for Advancing Private Enterprise shared comparable opinions. Dr. Muda Yusuf, its Director, praised the MPC's choice but highlighted the importance of supporting financial reforms.
He referred to the action as "a positive and timely step," noting that the lower MPR along with a decreased CRR would increase banks' ability to generate credit and lower interest rates.
"This will aid in business growth, boost production, and generate employment," Yusuf stated.
Nevertheless, he cautioned that monetary relaxation by itself is not enough: "Fiscal officials need to focus on infrastructure to lower production expenses, enhance the regulatory system, and maintain fiscal discipline to guarantee economic stability and investor trust."
Provided by SyndiGate Media Inc. (Syndigate.info).
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