Private Sector Credit Hits ₦77.9trn in April as Nigerian Banks Defy Tight Monetary Policy
Credit from Nigerian banks to the private sector rose to ₦77.9 trillion in April 2025, continuing a steady upward trajectory amid cautious optimism in the economy. This marks a 6.8% increase compared to April 2024 and a 2.15% rise from the ₦76.26 trillion recorded in March 2025. According to the Central Bank of Nigeria (CBN), the figures reflect a gradual but resilient credit expansion trend, signaling recovery momentum despite macroeconomic constraints.
FBNQuest analysts noted that private sector credit had resumed growth in March after a brief February slowdown. Yet, Nigeria’s credit-to-GDP ratio remains significantly below regional and global averages—standing at just 28.3% in March 2025, compared to 37.9% across sub-Saharan Africa and 147.9% globally, as per World Bank data. This suggests that while credit is expanding, the penetration level remains low in a broader economic context.
The CBN’s stringent monetary policies, particularly the elevated Cash Reserve Requirement (CRR), continue to exert pressure on lending activities. The CRR climbed to ₦26.6 trillion in January 2025 from ₦13.5 trillion in January 2023. Despite these constraints, broad money supply (M3) rose sharply to a historic ₦119.1 trillion in April, up 22.8% year-on-year, reflecting underlying liquidity in the financial system.
In contrast, credit to the government sector declined by 8.9% month-on-month in April to ₦23.55 trillion, though it still saw a 17.9% year-on-year increase. Currency outside the banking system also dropped significantly by 26.94% annually, indicating ongoing transitions toward a cashless economy and the impact of previous currency redesign initiatives that funneled more cash into the banking sector.
At its latest policy meeting, the CBN maintained its Monetary Policy Rate at 27.5% for the second consecutive time, citing improved macroeconomic indicators. CBN Governor Olayemi Cardoso emphasized narrowing FX rate gaps and falling fuel prices as positive signs. However, the Monetary Policy Committee warned that inflationary risks persist due to structural challenges, FX pressures, and high energy costs, urging continued policy reforms to sustain investor confidence and economic stability.
Source: Business day