Nigeria’s Net Domestic Credit (NDC) dropped by 12.8 percent year-on-year to ₦98.97 trillion in August 2025, according to the latest Money and Credit Report from the Central Bank of Nigeria (CBN).
The NDC represents the total value of bank credit to both the private and public sectors. Analysts attribute the decline to monetary policy easing, reflecting a response to the steady drop in inflation.
A Vanguard analysis showed that in August 2025, bank credit to the government stood at ₦23.133 trillion, while credit to the private sector was ₦75.843 trillion — bringing total credit to ₦98.97 trillion. This contrasts with August 2024 figures, when credit to the government was ₦39.391 trillion and to the private sector ₦74.072 trillion, totaling ₦113.463 trillion.
On a monthly trend, the NDC was ₦102.406 trillion in January 2025, rose slightly by 0.9 percent to ₦103.369 trillion in February, but plunged 34 percent to ₦68.177 trillion in March. It rebounded by 49.6 percent in April to ₦102.002 trillion before slipping again — down 1.03 percent in May and 3.13 percent in June. Although July data was unavailable, August recorded a modest 1.2 percent uptick.
Commenting on the development, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), hailed the CBN’s Monetary Policy Committee (MPC) for lowering the Monetary Policy Rate (MPR), describing it as “a welcome and timely intervention.”
He explained that the combination of a reduced MPR and Cash Reserve Ratio (CRR) should “expand banks’ capacity to create credit and ease lending rates,” ultimately supporting business growth, output expansion, and job creation.
However, Yusuf cautioned that “monetary easing alone is insufficient,” urging fiscal authorities to complement it with infrastructure investments, stronger regulation, and fiscal discipline to stabilize the economy and boost investor confidence.
Similarly, David Adonri, Executive Vice Chairman of High Cap Securities Limited, warned that the persistent contraction in credit could worsen business financing challenges at a time when inflation, forex pressures, and weak consumer demand are already straining the economy.
Adonri noted that Nigeria’s policy direction mirrors a broader African trend, as several central banks on the continent ease rates amid cooling inflation. “Recently, Ghana slashed its policy rate by 350 basis points to 21.5 percent, while Kenya lowered its benchmark to 9.5 percent in mid-August,” he said. “Yet, Nigeria’s MPR remains one of the highest in Africa, reflecting ongoing inflationary pressures.”
Comments