Banking Sector Credit to Economy Rises to N111.4 Trillion

Credit provided by Nigeria’s banking sector to the domestic economy increased to N111.39 trillion in February 2026, up from N109.42 trillion recorded in January, according to the Central Bank of Nigeria (CBN). This represents a 1.8 per cent month-on-month growth and the highest level since November 2024.

On a year-on-year basis, total domestic credit grew by 7.8 per cent from N103.36 trillion in February 2025. However, lending to the private sector saw a slight decline of 0.8 per cent, dropping from N76.25 trillion recorded in the same period last year.

The rise in credit comes on the heels of the banking sector recapitalisation exercise, which concluded in March 2026 with about N4.65 trillion raised by 33 banks to meet new regulatory thresholds. While the exercise has strengthened the financial system, experts say the real challenge is ensuring that the increased capital translates into meaningful economic growth.

Chief Executive of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, praised the CBN for conducting a smooth and confidence-boosting recapitalisation process. However, he expressed concern over the low level of credit to Small and Medium Enterprises (SMEs), which currently accounts for just one per cent of total lending—far below the five per cent average in sub-Saharan Africa. He stressed the need for banks to focus more on economic impact rather than just capital strength.

Meanwhile, cash held outside the banking system has been declining after reaching a peak of N5.4 trillion in December 2025, according to CBN data.

CBN Governor Yemi Cardoso, in a policy brief, noted that while Nigeria’s financial system appears stronger on paper, the true test lies in its ability to support sustainable economic growth. Analysts also described the recapitalisation as more than a regulatory requirement, saying it signals a broader transformation aimed at improving the banking sector’s ability to withstand shocks and compete globally.

A retired central banker, Dr Yunana Bature, highlighted that over a quarter of the newly raised capital came from international investors, a development he said reflects growing confidence in Nigeria’s financial system despite global economic uncertainties.