Banks' Loans to Private Sector Decline in 2025, N1.59 Trillion Less Than January 2024

• Nigerian banks' loans to the private sector have shown a decline of about N1.58 trillion in January 2025
• Analysts explain why they expect that the figure will continue an upward trend in the subsequent months
• Meanwhile, stakeholders have also shared what they observed about the kind of businesses that access the loans

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

Nigerian banks' credits to the private sector has reduced by N1.59 trillion, from N76.4 trillion in January 2024 to N74.9 trillion in January 2025.

This is according to data gleaned from the Central Bank of Nigeria (CBN) “Money & Credit Statistics” report.

This decline also represents a 2.1% drop in the figure, year on year, and some analysts say it may have been influenced by the late passing of Nigeria’s 2025 budget.

Credit to Private sector had reached a peak in 2024, growing 23% from January 2023, due to CBN policies mandating banks to lend to the real sector.

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This figure is inclusive of trade credits, different loan types, as well as other account receivables, which the private sector received from the banks.

Experts consider it an indicator of the health of the banking sector’s balance sheet as well as its contribution to economic growth in the country.

Banks will give more private-sector loans

Experts at Cordros Capital opine that CBN reinforcing the limit on Deposit Money Banks’ loan-to-deposit ratio can improve the availability of credit facilities to the private sector, This Day reports.

Increased access to credit would boost businesses, improve investor confidence, and enhance the nation’s GDP.

Recall that the CBN's core reason for the recapitalisation exercise was to create stronger banks that could propel Nigeria's growth to a $1 trillion economy.

The CBN Governor, Dr. Olayemi Cardoso, projected that bank recapitalization would provide banks with deeper pockets to buffer against economic challenges and support massive growth across industries.

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Recall that banks' credit to individuals has also dropped from N4.25 trillion in September 2024, to N3.5 trillion in October 2024, as shown in the last CBN report.

Banks need to increase Credit to the right sectors

For Dr Muda Yusuf, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), the concern is more about the credit distribution across different sectors, and business sizes, to create more impact.

Yusuf said, in an interview, that the small businesses that actively create jobs in the economy hardly benefit from these credit facilities due to the conservative risks banks are willing to take with certain sectors.

He called for more credit to be extended to sectors that create more jobs across the value chain, like real estate, agriculture, mining, manufacturing and construction among others.

Credit to Private sector rises to N76 trillion

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In related news, the 2024 CBN Economic Report has revealed that Credit to Private Sector amounted to N76 trillion in 2024.

This marked an impressive 27% growth from 2023, while government borrowings from Nigerian banks also increased by more than 50% in the same period.

Experts predicted that private sector loans will continue to go up in the short term but may slow down over time due to MPC policies.

Source: Legit.ng