…as monetary tightening, energy costs stifle credit expansion
Recent data from the Central Bank of Nigeria reveals that private sector credit extension stood at N75.6 trillion as of late February 2026, representing a marginal monthly increase of 0.5% but a year-on-year contraction of 0.8%.
This slowdown across the banking ecosystem where deposit money banks facilitate 69% of total volume highlights the impact of the apex bank’s restrictive interest rate environment.
While the Monetary Policy Committee recently implemented a modest 50-basis-point reduction to bring the policy rate to 26.50%, the cautious approach to easing continues to dampen credit appetite in favor of maintaining currency stability.
The disparity in credit allocation is further evidenced by a 32% annual surge in lending to the government, which reached N35.8 trillion, significantly outperforming private sector aggregates.
Adding to the domestic complexity, global energy supply disruptions stemming from Middle East tensions are keeping oil prices high and exerting upward pressure on local consumer costs.
These persistent inflationary risks may force the Central Bank to maintain a hawkish stance longer than anticipated, potentially prolonging the credit squeeze on the real economy and slowing broader industrial recovery.