March 05, (THEWILL) — Credit to Nigeria’s private sector declined slightly to N75.24 trillion in January 2026, reflecting a slowdown in lending activities at the start of the year, according to the latest Money and Credit Statistics released by the Central Bank of Nigeria (CBN).
Data from the apex bank showed that credit to the private sector fell by about 0.8 percent from N75.83 trillion recorded in December 2025, indicating a modest contraction in loans extended to businesses and households by deposit money banks.
The decline suggests that lending conditions remained tight at the beginning of the year, as financial institutions continued to operate under a relatively restrictive monetary environment aimed at curbing inflation and stabilising the economy.
Further breakdown of the report revealed that net domestic credit which measures total credit to both the government and the private sector also declined during the period.
Net credit to the government eased slightly to about N34.18 trillion in January, compared with N34.22 trillion in December 2025.
The combined movement in government and private sector borrowing resulted in net domestic credit falling to around N109.4 trillion in January 2026, down from N110.06 trillion recorded in December 2025.
Analysts attribute the marginal drop in private sector credit largely to tight liquidity conditions and high borrowing costs, which have made banks more cautious in extending loans while also discouraging businesses from taking on additional debt.
Financial market data also indicates that the CBN intensified liquidity sterilisation during the period, mopping up significant funds from the banking system.
This action contributed to reduced bank reserves and a mild contraction in money supply at the start of the year.
However, there are expectations that lending conditions could gradually improve in the coming months following the Monetary Policy Committee’s decision to reduce the Monetary Policy Rate (MPR) from 27 percent to 26.5 percent, a move interpreted by analysts as an early sign of policy easing.
Economists note that sustained growth in private sector credit is critical for Nigeria’s economic expansion, as access to financing supports business investment, job creation, and productivity across key sectors such as manufacturing, commerce, and services.
If liquidity conditions continue to improve and borrowing costs moderate, banks may increase lending to the private sector later in the year, potentially boosting economic activity.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
