Private Sector Credit Hits N81.04 Trillion Despite High Interest Rates

Credit to Nigeria’s private sector rose to ₦81.04 trillion in May 2026, showing that lending activity remained alive despite high borrowing costs and tight monetary policy. 

The figure increased from ₦80.59 trillion in April, while net domestic credit rose to ₦121.42 trillion from ₦120.18 trillion within the same period.

What the Latest Credit Data Shows

The increase may look small, but it matters because Nigerian businesses are operating in a difficult credit environment. Interest rates remain high, inflation is still a concern, and banks continue to manage risk carefully. Even so, the private sector still recorded a modest rise in credit.

On a year-on-year basis, private sector credit grew by 3.9 percent from ₦77.97 trillion in May 2025. Net domestic credit also rose by 20.3 percent compared with ₦100.96 trillion in the same period last year.

This shows that lending has not stopped, but access to affordable finance remains a major challenge for many firms.

Why Businesses Still Struggle to Access Loans

For many Nigerian businesses, the problem is not just whether banks are lending. The bigger issue is the cost of borrowing and the conditions attached to loans. High interest rates can discourage businesses from taking loans for expansion, equipment, stock or working capital.

Small and medium-sized businesses are often the most affected. Many lack the collateral, financial records or credit history banks require. As a result, they depend on informal financing, supplier credit or personal savings, which limits growth.

The CBN’s Policy Challenge

The Central Bank of Nigeria is trying to manage a difficult situation. On one hand, it wants to control inflation and stabilise the naira. On the other hand, the economy needs credit to grow. At its May 2026 meeting, the CBN retained the Monetary Policy Rate at 26.50 percent and kept other policy parameters unchanged.

This means monetary policy is still focused on caution. However, tight policy can make loans more expensive, especially for manufacturers, traders, agribusinesses and service providers that need regular financing.

Why This Matters for Economic Growth

Private sector credit is important because businesses create jobs, produce goods, provide services and pay taxes. If firms cannot access affordable loans, growth becomes slower. Nigeria’s credit-to-GDP level remains weak when compared with many other economies. According to the African Development Bank, credit to Nigeria’s private sector is equal to only 9.4 percent of GDP.

That figure shows how much room still exists for deeper financial intermediation. Nigeria needs a stronger credit system that can support long-term investment, not just short-term trading or government securities.

What Should Happen Next

The latest rise in private sector credit is a positive signal, but it is not enough on its own. Nigeria needs reforms that reduce lending risk, strengthen credit information systems, improve access to collateral, and help banks lend more to productive sectors.

If credit growth continues but remains expensive, many businesses will still struggle. The real win will come when credit becomes more accessible, longer-term and better targeted at sectors that can create jobs and increase output.

FAQs

What is private sector credit?

Private sector credit is the amount of loans and financial support banks provide to businesses and households outside the government sector.

Why is private sector credit important?

It helps businesses expand, produce more, hire workers and support economic growth.

Why are Nigerian businesses still struggling despite credit growth?

Many businesses still face high interest rates, strict collateral requirements and limited access to long-term funding.