Outstanding consumer credit in Nigeria declined by N780 billion within one month, dropping to N3.03 trillion in February 2026, as elevated borrowing costs continued to discourage households from taking loans despite signs of improving macroeconomic conditions.
According to DIP CONNECT ONLINE NEWS, the development was revealed in the Central Bank of Nigeria (CBN) February 2026 Economic Report, which showed that consumer credit fell from N3.81 trillion in January to N3.03 trillion in February, following a decline in both personal and retail lending.
Despite the drop in household borrowing, the report indicated that credit to the broader economy continued to expand during the period.
The CBN stated that total credit to the economy increased by 0.82 per cent, rising from N57.41 trillion in January to N57.88 trillion at the end of February 2026, reflecting gradual improvements in monetary conditions.
According to the apex bank, the expansion in lending was largely driven by productive sectors of the economy.
The report showed that credit to the agriculture sector grew by 2.70 per cent, while industry recorded a 1.05 per cent increase and the services sector expanded by 0.46 per cent.
The services sector remained the largest recipient of bank credit, accounting for 56.78 per cent of total lending, followed by industry with 36.64 per cent, while agriculture accounted for 6.58 per cent.
The decline in consumer lending occurred despite signs that monetary conditions had begun to ease.
According to the CBN, monetary conditions improved in February following a relaxation of the monetary policy stance amid moderating inflation, while money supply (M3) declined for the second consecutive month.
However, the report noted that lending rates remained relatively high, limiting the willingness of households to obtain loans.
The banking sector also experienced stronger liquidity during the month.
The report disclosed that average liquidity in the banking system increased by 23.69 per cent, rising from N2.49 trillion in January to N3.08 trillion in February. The increase was attributed mainly to fiscal injections and the maturity of Nigerian Treasury Bills and Federal Government bonds.
The CBN further reported that economic activity strengthened during the review period, supported by improved business performance and growing investor confidence.
Business activity, measured by the Composite Purchasing Managers' Index (PMI), rose to 56.40 in February from 55.70 recorded in January, indicating stronger expansion across the industrial, services and agricultural sectors.
According to the report, the improvement reflected sustained growth in business activities and increasing consumer confidence.
The apex bank also noted that inflationary pressures continued to moderate during the month, attributing the trend to prevailing monetary policy measures and improved stability in the foreign exchange market.
Headline inflation eased slightly to 15.06 per cent in February from 15.10 per cent in January.
However, month-on-month inflation rose to 2.01 per cent, compared to a contraction of 2.88 per cent in January, largely due to higher energy costs and increased food demand during the Ramadan period.
The report also stated that Nigeria's banking sector remained stable throughout the review period, with prudential indicators remaining within regulatory limits.
It added that stronger investor confidence, improved corporate earnings, higher foreign reserves and increased capital inflows continued to support overall economic performance.
Meanwhile, at the conclusion of the 305th Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso disclosed that lending to small and medium-sized enterprises (SMEs) had begun to improve.
According to him, new credit extended to SMEs increased to about N199 billion in April 2026, up from N153 billion recorded in March, particularly within the retail segment of the market.
He explained that the general category accounted for 94.73 per cent of new credit facilities, while general commerce represented 2.46 per cent.
Cardoso also noted that improving access to SME financing was not solely the responsibility of the CBN, stressing that the Ministry of Industry, Trade and Investment, the Bank of Industry, and fiscal authorities all have important roles to play.
He said the apex bank would continue to serve as a catalyst by strengthening the lending environment.
The Monetary Policy Committee retained the benchmark interest rate at 26.5 per cent, citing persistent external risks, renewed inflationary pressures and the need to maintain exchange rate stability.
The decision followed data from the National Bureau of Statistics (NBS) showing that Nigeria's headline inflation increased for the second consecutive month to 15.69 per cent in April 2026, up from 15.38 per cent recorded in March.
Food inflation also climbed to 16.06 per cent in April from 14.31 per cent in March due to rising transportation and logistics costs, as well as seasonal factors.
Core inflation, however, eased to 15.86 per cent from 16.21 per cent.
Reacting to the MPC's decision, the President of the Association of Small Business Owners of Nigeria, Dr. Femi Egbesola, expressed disappointment, urging the committee to lower interest rates at its next meeting.
Egbesola said many business owners had anticipated a reduction in borrowing costs, arguing that lower interest rates would improve access to finance for SMEs and make credit more affordable.
He warned that maintaining the current rate would further increase the financial burden on businesses and households already grappling with high energy costs and inflation.
ADEOLA KUNLE
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