Consumer Credit Drops by ₦780bn as High Interest Rates Strain Household Borrowing

By George OPARA

Amid improved economic condition, outstanding loans held by everyday Nigerians such as personal cash loans and retail financing have dropped
In Nigeria by ₦780 billion to ₦3.03 trillion in February 2026 as
the Central Bank of Nigeria (CBN) maintained high benchmark interest rates.

Spear News Nigeria gathered that when borrowing costs rise, loans become more expensive, deterring households from taking on new debt.

Referencing the Central Bank of Nigeria’s February 2026 Economic Report, consumer credit dropped from ₦3.81 trillion in January, driven by declines in both personal and retail lending.

The contraction came even as credit to the broader economy continued to expand. Total credit rose by 0.82 percent to ₦57.88 trillion from ₦57.41 trillion in January, supported by increased lending to productive sectors of the economy.

The CBN disclosed that credit to agriculture grew by 2.7 percent, industry by 1.05 percent and services by 0.46 percent. The services sector remained the largest recipient of bank lending, accounting for 56.78 percent of total credit, followed by industry at 36.64 percent and agriculture at 6.58 percent.

The report explained that that monetary conditions eased during the month as inflation moderated, while banking system liquidity improved significantly. Average liquidity rose by 23.69 percent to ₦3.08 trillion, driven by fiscal injections and maturing government securities.

Also, business activity strengthened, with the composite Purchasing Managers’ Index increasing to 56.4 in February from 55.7 in January, reflecting expansion across the industry, services and agriculture sectors.

But amid these positive indicators, lending rates remained high, limiting consumer borrowing. The Monetary Policy Committee subsequently retained the benchmark interest rate at 26.5 percent, citing renewed inflationary pressures and external risks.

CBN Governor, Olayemi Cardoso, however, said lending to small and medium-sized enterprises had started to improve, with new SME credit rising to about ₦199 billion in April from ₦153 billion in March. He added that while the CBN would continue to improve the lending environment, expanding access to finance also requires coordinated support from fiscal authorities and development finance institutions.