Credit to Nigeria’s private sector rose by 4.7% year-on-year in May, according to the latest data from the Central Bank of Nigeria (CBN), reflecting cautious lending amid high borrowing costs.
The report showed that credit to the private sector (CPS) increased to N77.83 trillion in May 2025, up from N74.31 trillion in the same period last year. However, analysts noted that the growth was modest and insufficient for the private sector to drive meaningful economic expansion, as elevated borrowing costs continue to weigh on businesses.
Monetary policy tightening by the CBN has pushed benchmark interest rates close to 28%, prompting many companies to delay or scale back expansion plans due to high financing costs.
Analysts at Cordros Capital observed that credit growth has slowed significantly compared to the previous year, reflecting the stabilisation of the naira—which has reduced the impact of currency depreciation on banks’ foreign-denominated assets—and the CBN’s tight monetary stance.
Meanwhile, credit to the government fell by 11.6% year-on-year to N25.07 trillion in May, down from N28.38 trillion in May 2024, indicating reduced domestic borrowing for deficit financing.
Overall, broad money supply (M3) expanded by 19.9% year-on-year to N119 trillion, driven by increases in both narrow and quasi money supply. Narrow money, which includes the most liquid forms of cash available for transactions, grew by 20.9%, while quasi money, comprising liquid assets easily convertible to cash, rose by 19.8%.
On a month-on-month basis, CPS dipped slightly by 0.3% in May to N77.82 trillion after a 2.1% increase in April, reflecting a moderation in lending momentum.
Analysts expect private sector credit growth to remain subdued in the near term, constrained by tight monetary policy and high interest rates. However, they noted that a potential shift toward monetary easing in the second half of 2025 could support a gradual recovery in lending to the private sector over the medium term.
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