Nigeria’s Consumer Credit Drops 20% to N3.78tn as High Interest Rates Bite
By Aboki Forex —
Nigeria’s consumer credit fell for the first time in six years, dropping 19.89% to N3.78tn in 2025 from N4.72tn a year earlier. The Central Bank of Nigeria blamed the decline on elevated interest rates that dampened household borrowing.
The contraction, disclosed in the CBN’s 2025 Annual Report and Statement of Accounts, ended a growth streak that had run since December 2019. The apex bank said the prevailing interest rate environment reshaped borrowing patterns across the banking industry.
Consumer Credit Contracts for First Time Since 2019
The CBN stated plainly: “Consumer credit outstanding moderated in response to the dynamic interest rate environment. Consumer credit outstanding fell 19.89% to N3,783.40bn in 2025 from N4,722.93bn in the preceding period. The fall was the first since December 2019.”
A breakdown of the figures showed the overall decline was largely driven by a reduction in personal loans, even as retail lending expanded strongly. The shift also changed the structure of consumer lending.
Retail Lending Surges, Personal Loans Slump
Retail loans climbed 63.77% to N1.94tn in 2025, accounting for 51.16% of total consumer credit. Personal loans fell to N1.85tn, representing the remaining 48.84% of the portfolio. For the first time, retail credit overtook personal loans as the largest share of outstanding consumer credit.
Consumer lending also shrank as a share of banks’ total credit to the private sector. It accounted for 6.60% of total private sector credit from other depository corporations in 2025, down from 7.98% a year earlier.
Banks Shift Loan Maturities
Beyond consumer lending, the report highlighted changes in the maturity profile of banks’ loan books. Short-term credit remained the dominant asset class at 51.60% of total credit, but its share fell 7.71 percentage points compared with 2024. Medium-term credit edged lower to 13.46%, slipping 0.11 percentage points. Long-term credit expanded sharply, rising 7.82 percentage points to 34.94%.
The CBN attributed the continued dominance of short-term lending to banks’ strategy of matching loan maturities with their short-term deposit base. However, the rise in long-term credit reflected a gradual adjustment in lending profiles during the year.
On the liability side, deposits with maturities of one year or less remained dominant. Short-term deposits accounted for 91% of total deposit liabilities in 2025, up from 90.09% in 2024. Medium-term deposits rose to 5.15%, while long-term deposits dropped sharply to 3.85% from 7.28%.
Private Sector Credit Still Growing
Despite tighter monetary conditions, credit to the private sector continued to expand. CBN data showed private sector credit rose to N83.2tn in June 2026 from N81.04tn in May, a nine per cent increase from N76.13tn in June 2025. This expansion came even as the Monetary Policy Committee held the benchmark rate at 26.50% to contain inflation.
For Nigerian households, the drop in consumer credit means tighter access to personal loans, though the surge in retail lending suggests banks are still funding specific purchases. With interest rates expected to stay high, borrowing costs will remain elevated, squeezing household budgets and spending power.