Private sector credit hits N77.9trn amid liquidity surge, resilient growth

By Seun Ibiyemi 

Credit to Nigeria’s private sector continued its steady ascent in April 2025, reaching N77.90 trillion, according to fresh data released by the Central Bank of Nigeria (CBN). 

This marks a 6.8 per cent year-on-year increase from N72.91 trillion in April 2024 and a 2.15 per cent rise from N76.26 trillion in March 2025.

The continued growth in private sector credit reflects a gradual return to credit expansion across the economy. 

Analysts at FBNQuest noted that private sector credit extension (PSCE) resumed its upward trend in March after a brief dip in February, growing by approximately 9 per cent year-on-year to N76.3 trillion, demonstrating the credit sector’s resilience despite ongoing monetary tightening.

However, Nigeria still lags behind international benchmarks in credit penetration. 

FBNQuest estimates that PSCE stood at just 28.3 per cent of GDP in March, compared to a sub-Saharan African average of 37.9 per cent and a global average of 147.9 per cent, according to World Bank data.

The CBN’s stringent monetary policy has played a significant role in shaping the current lending landscape. 

In January 2025, the Cash Reserve Requirement (CRR) climbed to N26.6 trillion, nearly double the N13.5 trillion recorded in January 2023, as the apex bank continues efforts to absorb excess liquidity and curb inflation.

Despite these constraints, rising credit to the private sector signals improved business confidence, with more firms willing to borrow for expansion and operations. This aligns with a surge in liquidity across the financial system.

Nigeria’s broad money supply (M3) hit a historic high of N119.10 trillion in April 2025, reflecting a 22.8 per cent year-on-year jump from N96.97 trillion and a 4.3 per cent monthly increase from N114.22 trillion in March. 

M3 includes cash, savings, demand deposits, and other time deposits, indicating robust liquidity even amid policy tightening.

Conversely, credit to the government sector declined by 8.9 per cent in April to N23.55 trillion from N25.85 trillion in March. Still, it recorded a 17.9 per cent annual growth from N19.97 trillion in April 2024.

Currency outside the banking system continued to fall, dropping 26.94 per cent year-on-year to N4.57 trillion in April 2025, down from N6.25 trillion in the same month last year. 

Month-on-month, it dipped slightly by 0.4 per cent. This decline reflects ongoing efforts to promote a cashless economy and the lingering effects of currency redesign policies that have encouraged more deposits.

At its second Monetary Policy Committee (MPC) meeting of the year, the CBN held the Monetary Policy Rate (MPR) steady at 27.5 per cent, maintaining the asymmetric corridor at +500/-100 basis points. 

The CRR for Deposit Money Banks remained at 50 per cent, for Merchant Banks at 16 per cent, and the Liquidity Ratio at 30 per cent.

CBN Governor, Olayemi Cardoso said the decision was based on improving macroeconomic conditions, including narrowing exchange rate gaps between official and parallel markets, a positive balance of payments, and declining domestic fuel prices.

Nonetheless, inflation remains a concern. The MPC cited continued pressures from high electricity tariffs, foreign exchange demand, and structural constraints. Still, the Committee welcomed a marginal decline in headline inflation to 23.7 per cent in April from 24.2 per cent in March, as reported by the National Bureau of Statistics (NBS). 

The CBN emphasised the need for sustained fiscal and monetary reforms to maintain the downward inflation trend and bolster investor confidence.