Nigeria's consumer credit drops 20% to N3.8tn amid high interest rates

Nigeria's consumer credit landscape experienced a significant contraction in 2025, declining by 19.89 percent to N3.78 trillion from N4.72 trillion the previous year. This marks the first decrease in consumer credit since December 2019, according to the Central Bank of Nigeria's (CBN) 2025 Annual Report and Statement of Accounts.

The apex bank attributed this downturn primarily to the prevailing high interest rate environment, which discouraged household borrowing and reshaped borrowing patterns across the banking industry. The report detailed a notable shift in the structure of consumer lending, with retail credit surpassing personal loans to become the dominant component of outstanding consumer credit.

Retail loans saw a substantial increase of 63.77 percent, reaching N1.94 trillion and accounting for 51.16 percent of the total consumer credit. Conversely, personal loans decreased to N1.85 trillion, representing the remaining 48.84 percent of the portfolio. This shift indicates a change in how consumers are accessing credit, with a move towards retail financing.

The CBN report also highlighted changes in the maturity profile of banks' loan books. While short-term credit remained the largest asset class, its share decreased. Medium-term credit saw a slight reduction, whereas long-term credit expanded its share significantly, rising by 7.82 percentage points to 34.94 percent. This adjustment reflects banks' evolving lending strategies, partly influenced by their deposit base, which remains overwhelmingly short-term.

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Consumer credit outstanding moderated in response to the dynamic interest rate environment. Consumer credit outstanding fell 19.89 per cent to N3,783.40bn in 2025 from N4,722.93bn in the preceding period. The fall was the first since December 2019.