Nigeria’s consumer credit outstanding fell by N780 billion in February 2026, as elevated lending rates and tighter borrowing conditions weighed on household demand for loans. This occurred despite easing monetary conditions and stronger banking system liquidity.
Data from the Central Bank of Nigeria’s (CBN) February 2026 Economic Report showed that total consumer credit declined by 20.48% to N3.03 trillion at the end of February from N3.81 trillion in January, reversing part of the gains recorded earlier in the year.
The decline comes even as the apex bank began easing monetary conditions following a moderation in inflation, suggesting that households remained cautious about taking on new debt amid still-high borrowing costs.
Report Breakdown and Lending Trends
A breakdown of the CBN data showed that personal loans continued to account for the bulk of consumer credit, representing 64.58% of the total outstanding portfolio. This translates to approximately N1.96 trillion, while retail loans constituted the remaining 35.42%, or about N1.07 trillion.
The contraction was largely driven by a steep decline in retail lending, which fell by 41.85% during the month. Personal loans also edged lower by 0.40%.
According to the CBN, “Consumer credit outstanding to households declined by 20.48% to N3.03 trillion, from N3.81 trillion in the preceding month. The contraction was driven by reductions in both retail and personal loans by 41.85 and 0.40%, respectively.”
The sharp fall in household credit contrasts with the broader credit market, where aggregate credit to the economy continued to expand. The report showed that total credit increased by 0.82% to N57.88 trillion in February from N57.41 trillion in January, supported mainly by increased lending to the agriculture, industry, and services sectors.
Elevated Borrowing Costs and Liquidity
Despite the CBN’s shift towards a more accommodative monetary stance, borrowing costs remained high across the banking sector. The average maximum lending rate increased to 35.17% in February from 32.68% in January, making consumer loans significantly more expensive for households.
Although the average prime lending rate moderated slightly to 19.29% from 19.54%, the reduction was insufficient to offset the impact of elevated borrowing costs on most retail customers. On the savings side, the weighted average savings and term deposit rate declined to 8.12% from 8.52% in January, widening the spread between deposit and lending rates.
The report also showed that banking system liquidity improved considerably during the month. Average banking system liquidity rose by 23.69% to N3.08 trillion from N2.49 trillion in January, driven by fiscal injections as well as inflows from maturing Treasury bills and Federal Government bonds. Interbank rates consequently eased, reflecting improved liquidity conditions across the financial system.
Industry Concerns
The Centre for the Promotion of Private Enterprise (CPPE) recently raised concerns over persistent structural weaknesses in Nigeria’s credit system. The think tank warned that despite a successful bank recapitalisation exercise, lending remains skewed and largely disconnected from productive sectors, stressing that stronger bank balance sheets must now translate into meaningful support for the real economy.
Chairman of UBA Group, Tony Elumelu, recently advocated for more credit, commenting on why entrepreneurs often face stringent conditions when seeking loans from commercial banks. Elumelu attributed the challenge largely to tightening regulatory requirements, noting that commercial banks have limits on the level of risk they can assume, particularly when it comes to financing small and medium-sized enterprises (SMEs).
