Outstanding consumer credit in Nigeria declined by N780 billion in February 2026 as high borrowing costs continued to discourage households from taking loans despite improving macroeconomic conditions.
The latest Central Bank of Nigeria (CBN) Economic Report showed that consumer credit fell from N3.81 trillion in January to N3.03 trillion in February, reflecting lower demand for both personal and retail loans.
Despite the decline in household borrowing, credit to the broader economy continued to expand during the review period.
According to the CBN, total credit to the economy rose by 0.82 per cent to N57.88 trillion at the end of February, up from N57.41 trillion recorded in January.
The apex bank attributed the increase to gradual improvements in monetary conditions and stronger lending to productive sectors of the economy.
Credit growth was recorded across agriculture, industry and services.
The agriculture sector posted the highest growth of 2.70 per cent, followed by the industry sector with 1.05 per cent, while the services sector expanded by 0.46 per cent.
The services sector remained the largest recipient of bank credit, accounting for 56.78 per cent of total lending.
Industry accounted for 36.64 per cent, while agriculture represented 6.58 per cent of total credit.
The CBN noted that monetary conditions eased during February following the relaxation of monetary policy amid slowing inflation.
The report also revealed that broad money supply (M3) declined for the second consecutive month.
However, lending rates remained relatively high, limiting consumer appetite for borrowing despite the easing monetary environment.
Liquidity within the banking system improved significantly during the month.
Average banking system liquidity increased by 23.69 per cent to N3.08 trillion, compared with N2.49 trillion recorded in January.
The CBN attributed the improvement to fiscal injections as well as maturing Nigerian Treasury Bills and Federal Government bonds.
The report also indicated that economic activity strengthened during the review period.
Nigeria’s composite Purchasing Managers’ Index (PMI) rose to 56.40 in February from 55.70 in January, signalling stronger expansion across the agriculture, industry and services sectors.
According to the apex bank, the improvement reflected stronger business confidence and rising consumer sentiment.
Inflationary pressures also eased during the month.
Headline inflation slowed slightly to 15.06 per cent in February from 15.10 per cent in January.
However, month-on-month inflation increased to 2.01 per cent after contracting by 2.88 per cent in January, largely due to higher energy costs and increased food demand during the Ramadan period.
The CBN said the banking sector remained stable throughout February, with key prudential indicators staying within regulatory limits.
It added that stronger investor confidence, improved corporate earnings, rising foreign reserves and increased capital inflows continued to support economic activity.
Meanwhile, CBN Governor Olayemi Cardoso disclosed after the 305th Monetary Policy Committee (MPC) meeting that lending to small and medium-sized enterprises (SMEs) had begun to improve.
According to him, new SME credit increased to about N199 billion in April 2026 from N153 billion in March.
He said the general business category accounted for 94.73 per cent of new credit facilities, while general commerce represented 2.46 per cent.
Cardoso noted that expanding SME financing requires collaboration among the CBN, the Ministry of Industry, Trade and Investment, the Bank of Industry and other fiscal authorities.
He explained that the apex bank would continue to play a catalytic role by improving the overall lending environment.
At the MPC meeting, the committee retained the benchmark Monetary Policy Rate (MPR) at 26.5 per cent, citing persistent inflationary risks, external uncertainties and the need to maintain exchange rate stability.
The decision followed Nigeria’s headline inflation rising for the second consecutive month to 15.69 per cent in April 2026 from 15.38 per cent in March, according to data released by the National Bureau of Statistics.
Food inflation also climbed to 16.06 per cent in April from 14.31 per cent in March, driven by higher transportation costs, logistics expenses and seasonal demand.
Core inflation, however, moderated to 15.86 per cent from 16.21 per cent.
Reacting to the MPC’s decision, the President of the Association of Small Business Owners of Nigeria, Dr. Femi Egbesola, urged the committee to reduce interest rates at its next meeting.
He said lower borrowing costs would improve access to finance for SMEs and make credit more affordable for businesses.
According to Egbesola, maintaining the current interest rate could further increase the financial burden on businesses and households already grappling with rising inflation and higher energy costs.
