Nigeria Private Sector Credit Falls N537.6bn in September Despite the CBN's Biggest Rate Cut Since 2006
Nigeria's private sector credit fell N537.6bn to N83.93trn in September, even after the CBN's 350bp rate cut. What is holding back bank lending in Nigeria.
Nigerian banks lent less to businesses and households in September, even after the Central Bank of Nigeria (CBN) made its biggest rate cut in almost 20 years. Private sector credit fell by about N537.6 billion, or 0.64%, to N83.93 trillion in September 2026 from N84.47 trillion in August, according to CBN data analysed by Nairametrics' Olalekan Adigun.
The fall is small in percentage terms. It still matters, because the CBN cut its Monetary Policy Rate (MPR) by 350 basis points to 23% in September precisely to make borrowing cheaper. The first month of data after the cut shows the loan book shrinking, not growing.
Private sector credit: the numbers
The CBN figures, as reported by Nairametrics, show how lending has moved through 2026:
- December 2025: N75.83 trillion
- January 2026: N93.74 trillion
- February 2026: N94.61 trillion
- April 2026: N80.73 trillion
- July 2026: N83.60 trillion
- August 2026: N84.47 trillion
- September 2026: N83.93 trillion
Two things stand out. Credit is still about 15.7% higher than a year earlier, when it stood at N72.53 trillion. And the level is well below the peak of nearly N95 trillion in February. Nairametrics notes that the data alone do not show whether September's decline came from weaker loan demand, tighter lending, repayments or other factors.
A rate cut that has not reached borrowers yet
At its 307th meeting in September, the Monetary Policy Committee cut the MPR from 26.50% to 23%, the largest cut since December 2006, according to Nairametrics. It also adjusted the corridor around the rate to +50 and -300 basis points.
What it did not change is the cash reserve requirement (CRR). Commercial banks must still keep 45% of deposits with the CBN, merchant banks 16%, and 75% applies to non-Treasury Single Account public-sector deposits. A CRR that high locks up a large share of every naira deposited, which limits how much banks can lend whatever the policy rate.
Why lower rates do not mean more loans overnight
Nairametrics points out that a lower MPR reduces borrowing costs only as far as banks' funding costs, their view of risk and borrowers' ability to repay allow. Several forces are working against new lending:
- Government borrowing. Nigeria's 10-year bond yield rose to 17.05% in the week to 16 October, and the Debt Management Office sold heavy volumes at its 19 October auction. When the government pays that much, banks can earn safe returns without lending to firms.
- Liquidity parked at the CBN. Banks held more than N6 trillion at the CBN's deposit window this month, and the CBN offered N2 trillion of OMO bills on 22 October to soak up cash.
- Weak borrowers. Manufacturers and households have been cutting debt, as the sector data below show.
Lending to manufacturers and consumers was already falling
The September dip follows a weak year for some borrowers. The Manufacturers Association of Nigeria reported that bank credit to manufacturing fell by N1.92 trillion, from N8.53 trillion in December 2024 to N6.61 trillion in December 2025. The CBN reported that consumer credit dropped 19.89% to N3.78 trillion in 2025 from N4.72 trillion, its first annual decline since December 2019.
The Centre for the Promotion of Private Enterprise has urged the CBN against any further rate hikes, arguing that businesses need cheaper credit to recover.
Money is growing, but not as loans
The fall in credit contrasts with a sharp rise in money supply. Broad money (M3) rose by about N7.5 trillion in September to N146.6 trillion, as we reported in our analysis of Nigeria's money supply jump. Most of that growth sat in bank deposits, not cash. In other words, the system has more money, but banks are not yet turning it into loans to the private sector.
What investors should watch
- October credit data: one month is not a trend. A second fall would suggest the rate cut is not getting through.
- The CRR: any cut to the 45% requirement would free cash for lending faster than a further MPR cut.
- Bank earnings: nine-month results due over the coming weeks will show whether lenders are growing loan books or leaning on government securities.
- Bond yields: if yields on government paper stay near 17%, banks have little reason to take on business risk.
For businesses, the practical message is that the headline rate cut has not yet turned into cheaper, easier loans. For investors in Nigerian bank stocks, the gap between deposit growth and credit growth is the number to track in the next set of results.
Source: Central Bank of Nigeria data via Nairametrics, "Credit to private sector falls by N537.6 billion in September despite annual growth", Olalekan Adigun, 22 October 2026; Manufacturers Association of Nigeria; Nairametrics market reports, 20–22 October 2026.
