Nigeria’s consumer credit recorded its first annual decline in six years, falling to ₦3.78 trillion in 2025 from ₦4.72 trillion in the previous year, according to the Central Bank of Nigeria (CBN). The 19.89% drop, revealed in the apex bank’s 2025 Annual Report and Statement of Accounts, highlights the growing impact of Nigeria’s high interest rate environment on household borrowing. It also marks the first contraction in consumer credit since December 2019, signaling a significant shift in lending activity across the country.
According to the CBN, the decline was driven largely by a sharp reduction in personal loans, which fell to ₦1.85 trillion during the year. However, the report revealed a different trend in retail lending, which surged by 63.77% to ₦1.94 trillion. For the first time in several years, retail loans accounted for 51.16% of total consumer credit, overtaking personal loans, which made up the remaining 48.84%. The change reflects evolving borrowing patterns as consumers and financial institutions adjust to tighter economic conditions.
The report also showed that consumer credit represented a smaller share of total private sector lending in 2025. Its contribution declined to 6.60%, down from 7.98% in 2024, reinforcing the broader slowdown in consumer financing. The CBN attributed this trend to the prevailing high interest rates, which have increased borrowing costs and prompted banks to adopt more cautious lending strategies. Despite the overall decline, the growing share of retail lending suggests that demand for consumer-focused financing remains resilient in specific segments of the economy.
Beyond consumer lending, the CBN noted changes in the structure of bank credit. Short-term loans continued to dominate banks’ loan portfolios, accounting for 51.60% of total credit, although this represented a decline from the previous year. Meanwhile, long-term credit gained momentum, rising to 34.94%, indicating a gradual shift toward longer repayment periods. The apex bank explained that banks continue to favor short-term lending because it aligns more closely with the predominantly short-term nature of customer deposits, even as the maturity profile of deposits continues to evolve.
The report comes as Nigeria’s banking sector navigates a challenging monetary environment. Despite the decline in consumer credit during 2025, lending to the private sector has continued to recover in 2026. Recent figures show private sector credit rose to ₦83.26 trillion in June 2026, up from ₦81.04 trillion in May and ₦76.13 trillion a year earlier, even after the CBN maintained the Monetary Policy Rate at 26.50%. While businesses continue to access more financing, the latest consumer credit data suggests households remain under pressure, with borrowing activity increasingly shaped by elevated interest rates and changing lending priorities.
source: nairametrics
