Credit to private sector drops to N75.2trn in January

Credit to the private sector (CPS) declined to N75.2 trillion in January 2026, reflecting a slowdown in lending activities at the start of the year by the deposit money banks (DMBs), according to the latest Money and Credit Statistics released by the Central Bank of Nigeria (CBN). The figure represents a drop compared to December […]

Credit to the private sector (CPS) declined to N75.2 trillion in January 2026, reflecting a slowdown in lending activities at the start of the year by the deposit money banks (DMBs), according to the latest Money and Credit Statistics released by the Central Bank of Nigeria (CBN).

The figure represents a drop compared to December 2025, indicating tighter financial conditions and cautious lending by deposit money banks amid prevailing macroeconomic uncertainties.

Credit to the private sector captures loans and advances extended by banks to businesses and households, and it is widely regarded as a key driver of economic growth, investment and job creation.

 

Mixed signals in monetary aggregates

The contraction in private sector credit comes against the backdrop of a slight moderation in overall liquidity. Broad money supply (M3) fell to N123.36 trillion in January from N124.4 trillion in December, signalling a marginal tightening in monetary conditions.

The CBN data further showed that net domestic assets increased during the period, driven largely by credit to government, while net foreign assets declined, reflecting pressures on external reserves and foreign currency holdings.

Analysts say the dip in private sector credit could be linked to elevated interest rates, risk aversion among lenders, and weak consumer demand, which may have dampened appetite for new borrowing.

The January credit offering showed 0.79 per cent drop compared to N75.8 trillion extended to the private sector in December 2025.

Daily Trust reports that the marginal contraction was coming after four months of consistent rise in credit extended to the private sector.

Since the last quarter of 2025 when the figure stood at N72.5 trillion for September, there has been a steady rise in the data.

The figure rose to N74.4 trillion in October; N74.6 trillion in November and N75.8 trillion in December.

 

Implications for the economy

Analysts say a slowdown in credit to the private sector may weigh on business expansion, manufacturing output and overall economic activity if sustained.

However, on a year-on-year basis, credit levels remain above their January 2025 position, suggesting that lending growth has moderated rather than reversed sharply.

Market watchers will be closely monitoring subsequent data releases to determine whether the January decline signals the beginning of a broader credit squeeze or merely a seasonal adjustment at the start of the fiscal year.

However, expectations are high with the cautious adjustment of the Monetary Policy Rate (MPR) by the apex bank during the February Monetary Policy Committee meeting held last week.

The CBN had cut the rates by 50 basis points from 27 per cent to 26.5 per cent.

Daily Trust reports that the CBN governor, Olayemi Cardoso while briefing the media on the outcome of the 304th MPC meeting stated that decision to cut rates was premised on the consecutive drop in inflation rates as well as improvement in food supply.

Experts however believe that while the cut was a welcome development, such should be sustained to enable businesses to approach financial institutions for more credit which would ultimately lead to business expansion.

Director General, Lagos Chamber of Commerce & Industry, Dr. Chinyere Almona while reacting to the recent MPC decisions described the rate cut as a bridge “from reform to results.”

 

 

 

He said, “We want to see more credit to the private sector for productive activities, more investment in critical infrastructure (with the expected higher allocations from FAAC due to the recent Executive Order on direct revenue remittance by the NNPC), government commitment to a continued transparency in the FOREX market, and strong support to building our local refining capacity in both the oil and gas and solid minerals sectors.

 

 

 

“With firm coordination between monetary and fiscal authorities, the Nigerian economy will make good progress towards achieving a GDP growth rate above 5% in the short term.”