Cash outside banks rises to N4.87 trillion in August after three-month decline

In August 2026, credit to Nigeria's private sector surged for the third consecutive month, reaching a total of N84.55 trillion, according to the Central Bank of Nigeria (CBN). This represents a monthly increase of approximately N1.13 trillion, or 1.35%, from the previous month's figure of N83.43 trillion. Despite this growth, the CBN's data highlights the challenges faced by businesses, including high borrowing costs and uneven credit allocation across industries.

The latest data showed a steady rise in private sector credit from N81.04 trillion in May to N83.26 trillion in June, then to N83.43 trillion in July and finally to N84.55 trillion in August. However, the lack of a sectoral breakdown in the latest CBN database makes it challenging to pinpoint which industries contributed to the overall increase.

The broader economic context shows that the CBN's tight monetary policy stance may be contributing to the recent surge in private sector credit. For instance, the Manufacturers Association of Nigeria (MAN) reported a decline in bank credit to the manufacturing sector, dropping from N8.53 trillion in December 2024 to N6.61 trillion in December 2025.

Similarly, consumer lending has shown signs of weakness, with outstanding consumer credit declining by 19.89% to N3.78 trillion in 2025, marking the first annual decline since December 2019. These trends suggest that while aggregate private sector credit is rising, the benefits may not be evenly distributed across all sectors. The Centre for the Promotion of Private Enterprise (CPPE) has expressed concern that further interest rate increases could hinder economic recovery and place additional pressure on businesses and households.

The cost of borrowing significantly influences businesses' decisions regarding working capital, expansion, equipment purchases, and overall investment. Although higher credit balances indicate more financing being extended in total, the effects depend on the specific sectors receiving the loans, the terms of the lending, and whether borrowers can generate sufficient returns to meet their debt obligations.