Banks credit to private sector rises to N77.9trn in April

Nigerian banks credit to the private sector maintained its upward trajectory in April 2025, rising to N77.90 trillion, according to the latest data released by the Central Bank of Nigeria (CBN).

This represents a 6.8 percent year-on-year increase from N72.91 trillion recorded in April 2024. Month-on-month, it reflects a 2.15 percent rise from N76.26 trillion in March 2025.

The upward trend in lending underscores a gradual return to credit expansion across the economy. A report by FBNQuest noted that private sector credit extension (PSCE) had resumed its growth pattern in March 2025, following a temporary slowdown in February. PSCE grew by approximately 9 percent year-on-year to N76.3 trillion, highlighting the resilience of the country’s credit sector despite tight monetary conditions.

However, Nigeria’s credit penetration still lags behind both regional and global benchmarks. FBNQuest estimates that the PSCE-to-GDP ratio as of March stood at 28.3 percent, well below the sub-Saharan African average of 37.9 percent and significantly under the global average of 147.9 percent, as reported by the World Bank.

Read also: Bank customers to pay for USSD services with airtime after NCC directive

The CBN’s tight monetary policy has played a central role in shaping current lending patterns. According to the February communiqué of the Monetary Policy Committee (MPC), the Cash Reserve Requirement (CRR) held by the CBN rose to N26.6 trillion in January 2025, compared to N13.5 trillion in January 2023. This increase reflects the apex bank’s continued efforts to mop up excess liquidity and rein in inflation.

Despite these constraints, the steady growth in private sector credit signals improved business confidence, with more firms willing to borrow for expansion and operational needs. This positive trend coincides with rising liquidity in the broader economy.

Nigeria’s broad money supply (M3) surged to a record N119.10 trillion in April 2025, up 22.8 percent from N96.97 trillion in April 2024. Month-on-month, the supply expanded by 4.3 percent from N114.22 trillion in March.

M3 encompasses a wide range of financial assets, including cash, demand deposits, savings accounts, and large time deposits. The increase in money supply suggests that despite the CBN’s aggressive tightening stance, liquidity remains ample in the financial system.

Meanwhile, credit to the government sector declined on a monthly basis. It fell by 8.9 percent in April to N23.55 trillion, from N25.85 trillion in March. Nevertheless, on a year-on-year basis, government credit still grew by 17.9 percent, compared to N19.97 trillion in April 2024.

Currency outside the banking system also declined significantly. Year-on-year, it dropped by 26.94 percent to N4.57 trillion in April 2025, from N6.25 trillion in April 2024. On a monthly basis, it edged down by 0.4 percent from N4.59 trillion in March. The decline reflects the continued push toward a cashless economy and the impact of previous currency redesign policies that led to greater recirculation of cash into the banking system.

At its second policy meeting of the year, the CBN opted to maintain the Monetary Policy Rate (MPR) at 27.5 percent, marking the second consecutive decision to hold the rate steady. The MPC also retained the asymmetric corridor around the MPR at +500/-100 basis points, the CRR for Deposit Money Banks at 50 percent, for Merchant Banks at 16 percent, and the Liquidity Ratio at 30 percent.

Read also: Why banks credit to private sector surged by 65.94% in one year

Olayemi Cardoso, governor of the CBN explained that the decision was based on encouraging macroeconomic indicators. He noted progress in narrowing the exchange rate gap between the Nigerian Foreign Exchange Market (NFEM) and Bureau De Change (BDC) segments, a positive balance of payments, and reduced domestic fuel prices as signs of improving stability.

Nonetheless, the MPC acknowledged persistent inflationary pressures driven by elevated electricity tariffs, continued foreign exchange demand pressures, and structural weaknesses. Governor Cardoso pointed to recent federal policies aimed at boosting domestic production as essential steps toward reducing import dependence and exchange rate volatility.

Recent data from the National Bureau of Statistics (NBS) showed a marginal decline in headline inflation to 23.7 percent in April from 24.2 percent in March. The MPC welcomed the development but stressed the importance of continued fiscal and monetary reforms to sustain the downward trend and strengthen investor confidence in Nigeria’s economy.