Deposit Money Banks (DMBs) reduced lending to several major sectors of the Nigerian economy by N5.45 trillion in 2025, reflecting a broad adjustment in credit portfolios following regulatory changes by the Central Bank of Nigeria (CBN).
Data released by the CBN showed that total credit extended to eight key sectors declined from N36.77 trillion in 2024 to N31.31 trillion in 2025, representing a year-on-year drop of 14.8 per cent.
The contraction came after the CBN phased out regulatory forbearance arrangements that had previously allowed banks to restructure certain non-performing loans without immediately recognizing them on their balance sheets. The policy change prompted many lenders to clean up their loan books and reduce exposure to high-risk sectors.
Industry data indicate that several banks had significant exposures covered under the regulatory forbearance framework before the policy was withdrawn.
Sectors most affected
The CBN figures showed that manufacturing recorded the largest decline in bank lending, with credit falling by N1.92 trillion to N6.61 trillion from N8.53 trillion recorded in the previous year.
General services also saw a significant reduction, as lending declined by N1.45 trillion to N4.35 trillion.
Other sectors that recorded lower credit allocations include:
- Oil and Gas (Industry), where lending declined to N10.59 trillion from N11.61 trillion.
- Oil and Gas (Services), which fell to N4.85 trillion from N5.53 trillion.
- Information and Communication Technology, where credit dropped to N1.76 trillion from N1.90 trillion.
- Construction, with lending easing to N2.29 trillion.
- Real Estate, where credit declined to N792.71 billion.
- Education, which recorded a slight reduction to N84.13 billion.
Analysts link decline to policy changes
Financial sector analysts attributed the decline largely to the withdrawal of regulatory forbearance, noting that banks were compelled to write off or restructure challenged assets, resulting in smaller loan portfolios.
They also noted that lenders are expected to adopt stricter credit assessment standards going forward as they strengthen risk management practices.
Analysts added that improved liquidity in the foreign exchange market may have also reduced demand for some categories of trade financing, particularly within the manufacturing sector.
Manufacturers raise concerns
The Manufacturers Association of Nigeria (MAN) described the decline in credit to manufacturers as a worrying development for the country’s industrial sector.
The association argued that beyond the banking sector’s portfolio adjustments, manufacturers continue to face structural constraints, including high borrowing costs, limited access to affordable financing and stringent lending conditions.
According to MAN, elevated lending rates have made long-term industrial investments increasingly difficult, while banks have shown greater preference for lower-risk investments over lending to the productive sector.
The association warned that reduced access to credit could slow industrial expansion, weaken production capacity, discourage investment and increase reliance on imported goods.
It urged the CBN and the Federal Government to implement measures aimed at improving access to affordable financing, including lowering borrowing costs, operationalizing intervention funds for manufacturers and expanding development finance initiatives.
Agriculture, finance record credit growth
Despite the overall decline in lending to several sectors, bank credit increased in a number of areas during the year.
Agriculture attracted N3.61 trillion in credit, up from N2.85 trillion in 2024.
Lending to the finance, insurance and capital market sector also rose to N9.24 trillion from N7.75 trillion.
The “Others” category recorded the strongest growth, with credit increasing substantially during the review period.
Additional gains were recorded in government-related lending, power and energy, as well as transportation and storage.
Outlook
Analysts expect lending activity to improve as banks conclude their balance sheet adjustments and progress with ongoing recapitalization programmes.
They believe that stronger capital positions could support increased lending to productive sectors in 2026, particularly if macroeconomic conditions remain stable and borrowing costs begin to ease.
