Private Sector Credit Edges Up Despite High Interest Rates, CBN Reports.

Fresh figures from the Central Bank of Nigeria reveal an important shift in Nigeria’s financial space. As of February 2026, Credit to the Private Sector has risen to N75.62 trillion. This marks a modest but meaningful recovery from the previous month and suggests that lending activity, which had slowed significantly, is beginning to regain some life.

Contents

A Closer Look at the N75.62 Trillion Mark 1. Understanding the Numbers Month on Month Movement Year on Year Comparison Bigger Picture of Domestic Credit 2. The Growing Concern Around Government Borrowing Increase in Government Borrowing What This Means for Businesses Why the Recent Growth Still Matters 3. Key Drivers Behind the Increase Stability in Interest Rates Strong Demand from Core Sectors Improved Liquidity Among Banks 4. Where the Money is Likely Going Oil and Gas Sector Manufacturing Sector Technology and Fintech 5. Challenges That Still Remain Inflation Pressure High Cost of Debt Servicing Final Thoughts

Below is a clearer and more natural breakdown of what this development means, what is driving it, and why it matters for the broader Nigerian economy.

A Closer Look at the N75.62 Trillion Mark

In an economic environment shaped by high interest rates and firm anti inflation policies, this increase stands out. Private sector credit moved from N75.24 trillion in January to N75.62 trillion in February. The difference of about N380 billion may appear small at first glance, especially within a domestic credit system valued at over N111 trillion, but it carries deeper significance.

It signals that banks are gradually regaining confidence to lend, and businesses are once again stepping forward to borrow despite tough conditions.

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1. Understanding the Numbers

To fully grasp the importance of this increase, it helps to look at both short term and long term trends.

Month on Month Movement

After a weak performance in January where credit declined by about 0.8 percent, February recorded a 0.5 percent increase. This suggests a cautious return to lending activity.

Banks are not fully aggressive yet, but they are no longer pulling back as strongly as before.

Year on Year Comparison

Despite the improvement, the current figure is still slightly below where it stood a year ago. In February 2025, private sector credit was N76.26 trillion.

This means businesses today are still operating with slightly less financial support than they had previously. The difference reflects the impact of tight monetary policies introduced to control inflation.

Bigger Picture of Domestic Credit

Total credit in the Nigerian economy reached N111.40 trillion in February 2026.

This shows that private sector borrowing is only one part of a much larger credit expansion happening across the system.

2. The Growing Concern Around Government Borrowing

One of the most important insights from the data is the gap between credit going to businesses and credit going to the government.

Increase in Government Borrowing

Credit to the Federal Government rose significantly from N34.19 trillion in January to N35.77 trillion in February.

What This Means for Businesses

When the government borrows heavily from local banks, it often limits the amount of money available for private companies.

Banks tend to prefer lending to the government because it is considered safer and more predictable, especially when interest rates are high.

This situation creates what economists describe as crowding out, where private businesses struggle to access funds because the government is taking a larger share.

Why the Recent Growth Still Matters

Even with this pressure, private sector credit still increased. This shows that Nigerian banks are finding ways to support businesses, particularly those with strong financial standing.

3. Key Drivers Behind the Increase

Several factors contributed to the rise in private sector credit in February.

Stability in Interest Rates

The Monetary Policy Rate has remained at 26.50 percent.

Although this level is high and makes borrowing expensive, the stability itself is important. It allows banks to better plan, price loans, and manage risk.

When rates stop rising rapidly, lenders feel more comfortable extending credit.

Strong Demand from Core Sectors

Businesses in sectors such as manufacturing, agriculture, and services have reached a point where delaying investment is no longer an option.

Even with lending rates averaging around 19.29 percent, companies are still borrowing to keep operations running and to meet growing demand.

Improved Liquidity Among Banks

Despite a high Cash Reserve Ratio of 45 percent, some major banks have managed their funds efficiently.

This has enabled them to provide loans, especially to large companies with proven track records and lower risk profiles.

4. Where the Money is Likely Going

Although detailed daily data is not publicly available, patterns from previous trends suggest that credit is flowing into key sectors of the economy.

Oil and Gas Sector

With global oil prices staying around 72 to 75 dollars per barrel, companies in this sector are borrowing to maintain and expand production.

Manufacturing Sector

Local manufacturers focusing on import substitution are receiving increased attention.

These are businesses producing goods locally to reduce dependence on foreign imports, especially given the high cost of foreign exchange.

Technology and Fintech

Nigeria’s digital economy continues to attract funding.

Tech companies and fintech firms are appealing to lenders because they can scale quickly and generate strong returns over time.

5. Challenges That Still Remain

While the rise in credit is encouraging, there are still major obstacles that could limit its impact.

Inflation Pressure

Nigeria’s inflation rate stood at 15.06 percent in February 2026.

This reduces the real value of borrowed money. In simple terms, businesses are paying back loans with money that is worth less over time.

High Cost of Debt Servicing

With interest rates still elevated, many companies are using loans just to service existing debts rather than investing in new projects.

This limits the ability of credit growth to translate into real economic expansion.

Final Thoughts

The increase in private sector credit to N75.62 trillion is a sign that the Nigerian economy is beginning to find its footing again.

It reflects a system that is slowly adjusting to a period of high interest rates and tighter financial conditions.

However, for this progress to truly benefit the economy, there must be a better balance between government borrowing and private sector access to funds.

Reducing reliance on domestic borrowing by the government would free up more resources for businesses, entrepreneurs, and innovators.

These are the key drivers of growth, job creation, and long term economic stability in Nigeria.