Outstanding consumer credit in Nigeria contracted sharply in February 2026, falling by N780 billion to N3.03 trillion from N3.81 trillion the previous month, as elevated borrowing costs continued to dampen household appetite for loans despite an otherwise improving macroeconomic backdrop.
According to the Central Bank of Nigeria’s February 2026 Economic Report, the decline was driven primarily by reductions in personal and retail lending. Credit to the broader economy, by contrast, kept expanding, rising 0.82 percent to N57.88 trillion from N57.41 trillion in January. The CBN described the growth as broad-based, with agriculture posting the strongest increase at 2.70 percent, followed by industry at 1.05 percent and services at 0.46 percent. Services remained the largest recipient of credit overall, accounting for 56.78 percent of the total, ahead of industry at 36.64 percent and agriculture at 6.58 percent.
The squeeze on consumer borrowing came despite signs of looser monetary conditions, including a second consecutive monthly decline in money supply following a relaxation of the policy rate amid cooling inflation. Lending rates, however, remained high enough to discourage household borrowing. Liquidity across the banking system improved markedly during the month, climbing 23.69 percent to N3.08 trillion from N2.49 trillion in January, helped by fiscal injections and maturing treasury bills and government bonds.
Wider economic indicators pointed to continued strengthening. The composite Purchasing Managers’ Index rose to 56.40 in February from 55.70 in January, reflecting faster expansion across industry, services, and agriculture, alongside improving business sentiment and consumer confidence. Headline inflation eased slightly to 15.06 percent from 15.10 percent, although month-on-month inflation rose to 2.01 percent, driven by higher energy costs and increased food demand during the Ramadan period.
Speaking after the CBN’s 305th Monetary Policy Committee meeting, Governor Olayemi Cardoso said lending to small and medium enterprises had begun to pick up, with new SME credit rising to roughly N199 billion in April from N153 billion in March. The MPC opted to retain the benchmark interest rate at 26.5 percent, citing rising external risks and renewed inflationary pressure, after headline inflation climbed to 15.69 percent in April from 15.38 percent in March.
The decision drew criticism from the Association of Small Business Owners of Nigeria. Its president, Dr Femi Egbesola, said members had hoped for a rate cut, arguing that lower rates would have improved access to affordable financing for SMEs and eased pressure on businesses and households already contending with rising costs.
