Nigerian banks reduced lending to several major sectors of the economy by ₦5.45 trillion in 2025, reflecting tighter credit conditions following the Central Bank of Nigeria’s (CBN) withdrawal of regulatory forbearance and the clean-up of banks’ loan portfolios.
According to the latest CBN data, total credit to eight major sectors—including oil and gas, manufacturing, ICT, construction, education, real estate and general services—fell from ₦36.77 trillion in 2024 to ₦31.31 trillion in 2025, representing a 14.8 percent decline.
The biggest drop was recorded in the manufacturing sector, where lending fell by ₦1.92 trillion, while general services saw credit shrink by ₦1.45 trillion.
Other sectors affected include oil and gas, ICT, real estate, construction and education, all of which recorded lower bank lending during the period.
Analysts attributed the decline largely to the CBN’s decision to end regulatory forbearance, which previously allowed banks to temporarily restructure troubled loans without breaching regulatory requirements.
According to Tunde Abioye, Head of Equity Research at Quest Merchant Bank, the policy forced banks to write off bad loans and tighten lending standards.
“The major reason for the decline in loans to certain sectors was the removal of regulatory forbearance on challenged loans by CBN,” he said.
Abioye added that banks are now expected to strengthen their risk management and apply stricter conditions before approving new loans.
Similarly, Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co, said the industry-wide loan clean-up also contributed to the contraction in lending.
Reacting to the development, the Manufacturers Association of Nigeria (MAN) described the sharp decline in manufacturing credit as worrying, warning that it could weaken Nigeria’s industrial growth.
MAN’s Director-General, Segun Ajayi-Kadir, said high lending rates, strict banking conditions, a high Cash Reserve Ratio (CRR) and delays in implementing key intervention funds have continued to limit access to finance for manufacturers.
The association warned that reduced credit could lead to lower factory output, job losses and increased dependence on imported goods.
Despite the overall decline in some sectors, banks increased lending to agriculture, finance, power, transportation and government, with total credit to these sectors rising by ₦11.42 trillion.
The “Others” category recorded the biggest increase, while agriculture and the finance sector also attracted significantly higher credit.
Industry experts, however, expressed optimism that lending could improve in 2026 as banks complete their portfolio clean-up and recapitalisation process.
