Nigeria credit market shows more loans but more heartaches as defaults rise. CBN
If you have been following the Nigerian financial space lately, you would notice a very interesting but tricky dance happening between our banks and borrowers. The Central Bank of Nigeria has just released its Credit Conditions Survey for the fourth quarter of 2025, and the report is a mixture of good and “not so good” news. On one hand, banks are opening their vaults more than before, making it easier for people and businesses to access credit. But on the other hand, the number of people failing to pay back those loans is climbing.
As an editor who has watched these trends for years, it feels like we are seeing a situation where the desire to grow the economy is clashing with the harsh reality of high living costs.
More money on the table as credit supply expands
According to the lenders who participated in the CBN survey, there was a noticeable increase in the availability of credit during the last three months of 2025. Whether you were looking for a secured loan with collateral or an unsecured one to quickly sort out a business emergency, the banks seemed more willing to say “yes” to applications. This growth was fueled by a slightly better economic outlook in certain sectors and an increased appetite for risk by some financial institutions.
It is encouraging to see that despite the tight monetary policy, the pipes of credit are still flowing, helping to keep our local businesses and households afloat in these challenging times.
The rising tide of loan defaults across the country
However, the “koko” of the matter is that this increased lending has come with a heavy price tag. The report highlights a worrying spike in default rates, especially for unsecured loans and corporate credit.
This means that many Nigerians who took loans to manage their personal lives or expand their shops are finding it very difficult to keep up with their repayment schedules. From small-scale enterprises to medium sized corporations, the story is largely the same: the struggle to pay back is becoming real. When default rates go up, it puts a lot of pressure on the banking system, and it is a signal that the financial health of the average borrower is under serious strain.
Why small businesses and households are struggling to pay
You do not need to be a professor of economics to understand why these defaults are rising. The “wahala” comes from a combination of high interest rates, the rising cost of energy, and the general inflation that has made everything in the market more expensive.
For a small business owner, after paying for diesel and sorting out the increased cost of raw materials, there is often very little left to service a bank loan. These persistent macroeconomic pressures are squeezing the life out of profit margins.
Lenders themselves have noted that the widening spreads on loans relative to the Monetary Policy Rate mean that borrowing is not just easier to find, but also quite expensive to maintain.
Strengthening risk management for a stable financial future
As we look ahead to the first quarter of 2026, the big question is how banks will balance their desire to lend with the need to protect their books. The CBN report is a wake up call for both the lenders and the borrowers. Financial institutions are now being urged to tighten their risk assessment frameworks to ensure they are not just throwing money into a sinking ship.
On the part of the borrowers, the era of “borrowing to survive” without a clear repayment plan must be handled with caution. To maintain a healthy Nigerian credit market, we require a stable environment where businesses can generate sufficient profits to repay their debts without undue stress.
This report on credit growth is relevant because it provides visual and expert analysis on how these mounting loan defaults are specifically impacting small businesses in Nigeria.
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