By Blaise Udunze

Nigeria’s financial system is flashing red, and not because of a scarcity of money. Ironically, the Central Bank of Nigeria (CBN) and the nation’s banking proudly tout a historic rise in private-sector credit, announcing figures hovering around N75 trillion throughout 2024-2025. On paper, this looks like a funding boom, a sign that businesses are borrowing, investing, expanding, and building. But on the ground, the country’s real sector tells a very different story.

Manufacturers that are the backbone of industrial output have withdrawn en masse from bank loans, their loan books collapsing by an alarming 20.3 percent within a single year. SMEs, which constitute over 90 percent of Nigeria’s businesses and nearly half of the national GDP, remain shut out of formal credit. Banks themselves are quietly battling rising non-performing loans (NPLs), with several institutions breaching the CBN’s 5 percent regulatory threshold. Meanwhile, the official “N75 trillion” credit figure hangs in the air like an illusion that appeared to be big, impressive, but dangerously misleading. This feature unpacks the contradiction. If credit is indeed booming, where did the money go? And why is the real economy shrinking away from bank financing at a time when it should be expanding?

The financial statements of Nigeria’s top manufacturers for the first nine months of 2025 show a coordinated withdrawal from bank credit. Their aggregate bank borrowings plunged from N2.526 trillion in 2024 to N2.014 trillion in 2025, a dramatic 20.3 percent drop. The details are striking:

–       BUA Foods fell from N1.559 trillion to N1.105 trillion;

–       Nestlé Nigeria from N653.7 billion to N521.01 billion;

–       Nigerian Breweries from N204.17 billion to N162.17 billion.

–       NASCON’s borrowings dropped 98percent, from N3.3 billion to N67 million.

–       Others: Dangote Cement, Dangote Sugar, Guinness, and International Breweries took no new loans.

These are not marginal firms but some of the most capital-intensive, employment-generating entities in the country. Their exodus from bank borrowing is a referendum on Nigeria’s brutal credit environment, where the Monetary Policy Rate of 27-27.5 percent has pushed effective lending rates well above 30 percent, making loans unaffordable even for working capital.

The retreat has slashed their financing costs by 52.8 percent, from N1.4 trillion to N662 billion. This is not because interest rates fell; they didn’t. Businesses simply stopped borrowing.

Finance expert David Adonri describes it bluntly: “Borrowers shun bank credit… lending rates have not come down materially. Banks’ income may fall below expectations.”

But the bigger concern is not banks’ income, it is the economy’s ability to invest and grow.

This is the question that unsettles economists, industry players, and SMEs alike.

If manufacturers pull back, SMEs remain excluded, and retail borrowing is suppressed; who receives the N75 trillion? What did it finance?

The answer reveals that Nigeria’s credit allocation remains opaque; however, historical patterns and recent financial data point in three directions. Even more concerning are recent claims that the modest loan growth recorded in 2024-2025 is not commensurate with the explosive expansion of banks’ balance sheets.

This suggests that the system is growing with deposits rising, assets swelling, FX revaluation inflating balance sheets, but actual lending to the productive economy is barely moving.

The credit growth being celebrated is therefore not only concentrated but also superficial and disconnected from balance sheet realities.

1.     Lending concentration in big corporate and government entities

For decades, banks have preferred lending to large corporations and government-linked entities like:

–       Oil & Gas

–       Conglomerates and trading groups

–       Government contractors

–       Financial market operators

–       Large borrowers with FX exposure

Even CBN’s earlier research shows that only 5-6 percent of total bank credit historically reaches SMEs.

Given the lack of detailed public data, it is reasonable to infer that the bulk of the N75 trillion still flows to:

–       Large corporations

–       Treasury operations

–       Prime customers

–       Big-ticket borrowers with government-linked contracts.

Experts warn that this reflects a financial system drifting away from the real economy, a trend Muda Yusuf describes as “worrisome and dangerous.”

2.     Banks are also parking funds in government securities.

Commercial banks prioritized lending to the government by investing in T-bills, FGN Bonds, and OMO instruments, where returns are high and risk-free. Over the past two years, Nigerian banks have channeled N20.4 trillion into treasury bills, bonds, and other fixed-income instruments, reaping risk-free returns rather than funding productive ventures. This “securities trap” is profitable for banks but disastrous for the economy.

A government-backed 19–22 percent yield is more attractive than lending to an SME at 27-35 percent with a high probability of default.

3.     FX revaluation effects and rollovers

Portions of the N75 trillion may not be new lending in the real sense but the result of regulatory reclassifications, rollovers, FX revaluation on foreign-currency loans, and large concentrated credit exposures. This creates the illusion of expanded credit without tangible productivity gains.

However, SMEs, which contribute 46.3 percent of GDP and employ millions, remain locked out of the credit system due to punitive interest rates, high collateral demands, lack of financial documentation, bureaucratic processes, and weak credit-scoring systems. Despite accounting for 97 percent of businesses and nearly 90 percent of informal jobs, SMEs receive only 5 percent of commercial bank lending. This is a structural failure. SMEs remain almost entirely disconnected from Nigeria’s celebrated “N75 trillion credit boom.”

Manufacturers’ 2025 results show turnover up 37.9 percent and profit swinging from a N116 billion loss to N2.5 trillion gain. But experts like Muda Yusuf and Clifford Egbomeade warn that these improvements are driven primarily by:

–       Inflationary pricing adjustments, not increased production.

–       Gains are also supported by exchange-rate stability.

–       Reduced debt burden, not operational efficiency.

Nigeria risks mistaking nominal growth for real productivity.

Meanwhile, rising non-performing loans fueled by high interest rates, inflation, weakened consumer demand, and FX volatility have pushed some banks above the CBN’s 5 percent NPL ceiling, further restricting their willingness to lend, especially to SMEs.

Even the private-sector credit trend contradicts the headline figure. Throughout 2025, credit levels have shown repeated declines:

–       February’s N77.3 trillion dropped to N76.3 trillion,

–       N75.9 trillion in March,

–       Followed by a temporary rebound to N78.1 trillion in April,

–       May-August declined to N75.8 trillion.

These repeated drops reflect weakened appetite for borrowing, tighter bank lending, liquidity pressures, and borrower distress. A true credit boom does not move in this direction.

The Human Cost of an Economy without Productivity

The consequences of weak productivity are not abstract. They show up in hunger, jobs, poverty, life expectancy, and living standards. Below is where Nigeria’s crisis becomes undeniable.

–       It is Not Just Rising, it is deepening

–       According to the World Bank, 139 million Nigerians now live in poverty. That is six in ten Nigerians. No country with this scale of poverty can claim real economic progress.

SBM Intelligence, in a scathing review of the government’s economic reforms, noted that this administration of government has failed to lift Nigerians’ living standards, despite the loud claims of macroeconomic stability.

Life Expectancy in Nigeria Is Now the Lowest in the World

The UN’s 2025 Global Health Report ranked Nigeria’s life expectancy at 54.9 years, the worst globally, far below the world average of 73.7 years. This decline is attributed to:

–       Insecurity

–       Poor healthcare access

–       Rising poverty

–       Nutritional deficiencies

–       Weak social welfare

A productive economy increases life expectancy; a collapsing one shortens it.

Hunger Is the Real Inflation Index

While official inflation reports show “stabilisation,” the lived reality says otherwise.

In the kitchens of Lagos, in the cries of hungry children, and in the struggles of market women, a harsher truth is spoken daily: Empty pots do not lie, and hunger, not percentages, is Nigeria’s real inflation index.

Debt Explosion Is Eroding Nigeria’s Future

Since President Bola Ahmed Tinubu took office in 2023:

–       Nigeria’s public debt surged from N33.3 trillion-N152.4 trillion. A staggering 348.6 percent increase in less than two years

Economies don’t collapse overnight; they deteriorate gradually. Nigeria is flashing every warning signal.

Unemployment Appears “Stable,” But Youth Joblessness Is Rising

The International Labour Organisation (ILO) reports that while Nigeria’s headline unemployment rate has fallen to 4.3 percent, youth unemployment has risen to 6.5 percent. A youthful population with no jobs is a time bomb for the economy.

Financial System Delinking from the Real Economy

Nigeria’s financial system appears to be delinking from the real economy. High interest rates make loans too expensive, manufacturers cut borrowing, SMEs are excluded, banks channel funds into T-bills, NPLs rise, banks tighten further, and private-sector growth slows. This feedback loop is dangerous.

Monetary authorities have prioritised stabilization, achieving a firmer naira, temporary FX calm, and reduced speculative pressure, but at the cost of choking credit, suppressing investment, weakening job creation, and widening the disconnect between banks and the productive economy. The recovery, as Egbomeade notes, is “fragile and easily reversible.”

To reverse the trend, Nigeria must rebuild the credit pipeline. To break the cycle, three urgent reforms are needed:

1.     The CBN should publish transparent, disaggregated credit data.

This must show credit allocation by firm size, region, sector, and performance.

2.     Expand targeted credit guarantees for SMEs and manufacturers.

Deposit money banks and the government must strengthen SME and manufacturing credit channels through expanded guarantees.

3.     Reduced collateral barriers and adopted alternative credit scoring, stronger BOI pipelines.

4.     Incentives for real-sector lending through tax breaks and prudential relief.

5.     Most importantly, interest rates must gradually fall to levels that support investment and production while maintaining FX stability. Credit cannot revive with 30-35 lending rates.

Nigeria’s N75 trillion private-sector credit figures may look impressive, but manufacturers have withdrawn, SMEs have little access, banks are risk-averse, NPLs are rising, the real sector is struggling, debt is exploding, Life expectancy is collapsing, hunger is spreading, productivity remains weak, and credit levels are trending downward. The real question is no longer how large the number is but who actually received it, what it financed, and what it produced. Until credit flows to production, industry, SMEs, and innovation, Nigeria will continue celebrating large numbers while the real economy gasps for oxygen. It is time to stop counting the trillions and start counting the impact.

Blaise, a journalist and PR professional, writes from Lagos, can be reached via: [email protected]