Nigerian commercial banks have dramatically scaled back their lending operations, executing a massive N5.45 trillion credit cut across key sectors of the economy. According to data analyzed from the Central Bank of Nigeria (CBN), the sharp reduction in credit primarily hit the manufacturing, trade, general commerce, real estate, education, and information and communication technology (ICT) sectors. This downward trend highlights growing risk aversion within the financial industry as lenders navigate structural bottlenecks, prohibitive interest rates, and policy adjustments. Manufacturers and traders bore the brunt of this credit squeeze, experiencing a combined drop of over N2.1 trillion in available financing. Industry stakeholders, including the Manufacturers Association of Nigeria (MAN), warn that this intense contraction could severely suppress industrial capacity utilization, stall critical technological upgrades, and trigger widespread workforce downsizing. Analysts point out that despite expanding formal banking system liquidity and elevated quasi-money deposits, banks are increasingly choosing to redirect capital toward higher-yielding government securities and safer investment avenues rather than backing private-sector enterprises. This systemic retreat from productive sectors threatens to undermine national economic diversification goals, leaving economic growth projections highly uncertain. As borrowing costs soar past 30%, businesses continue to face major hurdles in accessing the affordable capital needed to sustain operations, modernize equipment, and stimulate employment in an inflation-stressed market.
