Nigerians Repay ₦1.33 Trillion Personal Loans Within One Year as Household Borrowing Drops – CBN

New data released by the Central Bank of Nigeria (CBN) shows that Nigerians repaid approximately ₦1.33 trillion in personal loans within a 12-month period, reflecting a sharp decline in household borrowing across the country.

According to figures contained in the CBN Economic Report for November 2025, outstanding personal loans dropped significantly from ₦3.32 trillion recorded in November 2024 to ₦1.99 trillion by November 2025. The figures indicate that many households reduced their dependence on borrowed funds during the period, largely due to tighter monetary conditions and higher borrowing costs.

The contraction in personal lending contributed to an overall decline in consumer credit within the banking sector. Total consumer credit outstanding fell from ₦4.42 trillion in November 2024 to ₦3.19 trillion in November 2025, highlighting a noticeable slowdown in household borrowing activity.

Further analysis of the report revealed that consumer credit declined by 13.32 percent to ₦3.19 trillion from ₦3.68 trillion recorded in the previous month. The central bank attributed the reduction to lower activity in both personal loans and retail lending across the financial system.

Despite the decline, personal loans still accounted for the largest share of consumer credit in Nigeria’s economy. The CBN report showed that personal loans represented 62.38 percent of total consumer credit, amounting to ₦1.99 trillion, while retail loans made up 37.62 percent valued at ₦1.20 trillion.

While personal loan balances experienced a steep decline, retail lending recorded a slight increase during the same period. Retail loans rose from ₦1.11 trillion in November 2024 to ₦1.20 trillion in November 2025, representing a year-on-year increase of roughly ₦90 billion.

However, the moderate growth in retail lending was not sufficient to offset the substantial drop in personal loans, resulting in the broader decline in consumer credit across the banking sector.

Financial analysts say the trend reflects changing credit conditions in Nigeria as households become more cautious about taking new loans amid elevated interest rates and stricter monetary policy measures implemented by the apex bank.

For most of 2025, the CBN maintained an aggressive stance aimed at controlling inflation by keeping borrowing costs high. The Monetary Policy Committee retained the Monetary Policy Rate at 27.5 percent for much of the year before implementing a modest reduction of 50 basis points to 27 percent in September 2025. The adjustment marked the first interest rate cut since 2020.

The committee later maintained the benchmark rate at 27 percent during its November 2025 meeting, signaling continued caution even as inflationary pressures began to ease. High interest rates typically discourage new borrowing while encouraging households and small businesses to focus on repaying existing debt obligations.

The report also suggested a gradual shift in the pattern of consumer borrowing. Although personal loans remained dominant, their share declined compared with previous periods as households reduced exposure to unsecured borrowing. Retail lending, which is commonly linked to short-term consumer purchases and smaller credit facilities, showed moderate growth.

Earlier in February 2026, the Monetary Policy Committee further reduced the benchmark interest rate to 26.5 percent after reviewing improvements in economic indicators such as declining inflation, exchange rate stability, and stronger external reserves.

CBN Governor Olayemi Cardoso announced the decision at the conclusion of the committee’s 304th meeting held in Abuja, where all eleven members were present. He explained that the committee approved a 50-basis-point reduction in the Monetary Policy Rate to 26.5 percent.

The MPC also retained other monetary policy parameters, including the Standing Facilities Corridor around the MPR at +50 and −450 basis points. The Cash Reserve Requirement was maintained at 45 percent for Deposit Money Banks, 16 percent for Merchant Banks, and 75 percent for non-TSA public sector deposits.

The latest decision represents the second rate cut under the current leadership of the apex bank following a similar reduction in September 2025 and the decision to maintain rates in November 2025.

Cardoso explained that the committee’s decision was based on a careful assessment of economic risks and improving macroeconomic indicators. He noted that the current disinflation trend is expected to continue, supported by the delayed impact of earlier monetary tightening, stable exchange rates, and improved food supply.

According to the governor, headline inflation eased slightly to 15.10 percent in January 2026 from 15.15 percent in December 2025, marking the eleventh consecutive month of year-on-year decline. Food inflation also dropped significantly to 8.89 percent from 10.84 percent, while core inflation moderated to 17.72 percent from 18.63 percent.

On a month-to-month basis, headline inflation declined to −2.88 percent in January compared with 0.54 percent in December, indicating easing price pressures in the economy.

Cardoso also highlighted improvements in Nigeria’s external sector. Gross external reserves increased to $50.45 billion as of February 16, 2026, the highest level recorded in over 13 years. The reserve level provides import cover of approximately 9.68 months for goods and services.

Looking ahead, the CBN expects the current momentum of declining inflation to continue in the near term, supported by exchange rate stability and improved agricultural output.

However, the central bank cautioned that increased government spending, particularly ahead of elections, could pose upward risks to inflation in the coming months.

The Monetary Policy Committee reaffirmed its commitment to data-driven economic policies aimed at maintaining price stability while protecting the strength and resilience of Nigeria’s financial system.