Nigeria’s Bank Credit Falls 12.8% to ₦98.97 Trillion as CBN’s Easing Policy Takes Effect

Nigeria’s net domestic credit (NDC) has dropped by 12.8% year-on-year to ₦98.97 trillion in August 2025, according to the latest money and credit report released by the Central Bank of Nigeria (CBN).

The figure reflects a decline in total credit issued by banks to both the private and public sectors — a development analysts say signals the effect of monetary policy easing and a slowdown in inflationary pressures.

Data from the report shows that credit to the government stood at ₦23.13 trillion, while lending to the private sector amounted to ₦75.84 trillion, bringing total net domestic credit to ₦98.97 trillion. This represents a fall from ₦113.46 trillion recorded in the same period of 2024.

Throughout the year, credit flow showed uneven movement. The NDC stood at ₦102.41 trillion in January and rose slightly by 0.9% to ₦103.37 trillion in February before plunging 34% to ₦68.18 trillion in March.

In April, the figure rebounded by 49.6% to ₦102 trillion, then slipped again by 1.03% in May and 3.13% in June, to settle at ₦97.79 trillion. While data for July was unavailable, August saw a mild rebound of 1.2%.

Dr. Muda Yusuf, Chief Executive of the Centre for the Promotion of Private Enterprise (CPPE), described the CBN’s recent decision to reduce the Monetary Policy Rate (MPR) as “a welcome and timely intervention.”

He noted that a lower MPR, coupled with a reduced Cash Reserve Ratio (CRR), could “expand banks’ capacity to create credit and ease lending rates,” potentially stimulating output growth and job creation.

However, Yusuf cautioned that monetary policy alone would not be enough to sustain growth. “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 said.

Supporting this view, David Adonri, Executive Vice Chairman of HighCap Securities Limited, expressed concern about the contraction in credit at a time when businesses are struggling with inflation, forex instability, and weak consumer demand. “The persistent contraction in credit raises concerns about business funding,” he said.

Economists believe a balance between monetary easing and fiscal reforms will be key to ensuring stability in Nigeria’s financial system as the country continues to navigate post-reform economic realities.