Nigeria’s bank credit falls 12.8% to N98.97 trn in August – CBN

Nigeria’s Net Domestic Credit (NDC) fell by 12.8 percent year-on-year (YoY) to ₦98.97 trillion in August 2025, according to the Central Bank of Nigeria’s (CBN) latest Money and Credit report, signalling the impact of the apex bank’s monetary policy easing stance amid moderating inflation.

The NDC represents the total value of credit extended by deposit money banks to both the public and private sectors, and the decline reflects a cautious lending environment following months of tight liquidity and high interest rates.

Private Sector Credit Dominates, But Growth Slows

A sectoral breakdown of the data showed that bank credit to the private sector stood at ₦75.84 trillion, while government credit was ₦23.13 trillion, bringing total NDC to ₦98.97 trillion in August 2025.

In comparison, in August 2024, the corresponding figures stood at ₦74.07 trillion and ₦39.39 trillion respectively, with total NDC at ₦113.46 trillion.

Month-on-month trends showed notable fluctuations throughout 2025. The NDC rose to ₦103.37 trillion in February, before plunging by 34% to ₦68.18 trillion in March, and rebounding 49.6% to ₦102.00 trillion in April. It later moderated to ₦97.79 trillion in June, before inching up 1.2% in August, the CBN data indicated.

Analysts Applaud CBN’s Policy Shift but Urge Fiscal Support

Reacting to the data, Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), described the recent Monetary Policy Committee (MPC) rate cuts as “a welcome and timely intervention.”

He said the lower Monetary Policy Rate (MPR), coupled with a reduction in the Cash Reserve Ratio (CRR), could boost liquidity in the banking system and improve lending conditions.

“This will support business expansion, stimulate output growth, and create jobs,” Yusuf said.Business management software

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However, he cautioned that monetary easing alone will not drive sustainable recovery without complementary fiscal reforms.

“Fiscal authorities must prioritise infrastructure to reduce production costs, strengthen the regulatory framework, and sustain fiscal consolidation to ensure macroeconomic stability and investor confidence,” he added.

Analysts Flag Risks to Business FundingBusiness management software

Echoing similar sentiments, David Adonri, Executive Vice Chairman of HighCap Securities Limited, warned that the persistent contraction in credit could stifle private sector growth.

“The ongoing contraction in bank credit raises concerns about business funding at a time when inflation, forex volatility, and weak consumer demand are already squeezing the economy,” Adonri said.

He added that Nigeria’s easing cycle aligns with a wider continental trend, as several African economies adjust to moderating inflation.Business management software

“Ghana recently cut its policy rate by 350 basis points to 21.5%, while Kenya lowered its benchmark rate to 9.5% in August. Nigeria’s MPR, however, remains among the highest in Africa, reflecting persistent inflationary pressures,” he noted.

Outlook: Balancing Growth and Stability

Economists say the CBN’s latest credit data underscores the delicate balance between stimulating credit growth and maintaining price stability.

While easing policy could unlock liquidity for businesses, weak credit transmission and fiscal rigidities continue to limit the effectiveness of monetary reforms.

With inflation cooling and the CBN signalling a gradual shift toward growth support, stakeholders expect greater coordination between monetary and fiscal policy to revive private investment and sustain Nigeria’s fragile economic rebound.