Nigerians repay N1.33tn personal loans in a year as CBN data shows sharp decline in consumer credit amid high interest rates

Nigerians repaid about N1.33tn in personal loans within a year as outstanding household borrowing declined sharply between November 2024 and November 2025, according to new data released by the Central Bank of Nigeria.

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Figures contained in the apex bank’s Economic Report for November 2025 showed that personal loan balances dropped from N3.32tn in November 2024 to N1.99tn a year later.

The development reflects a significant reduction in consumer borrowing during the period and highlights tightening credit conditions across the financial system.

The contraction in personal lending contributed to a broader decline in consumer credit.

Total outstanding consumer credit fell from N4.42tn in November 2024 to N3.19tn in November 2025, indicating weaker borrowing activity among households.

According to the report, consumer credit outstanding declined by 13.32 per cent to N3.19tn from N3.68tn in the preceding month due to reduced activity in both retail and personal lending.

Despite the decline, personal loans remained the dominant component of consumer credit.

The central bank said personal loans accounted for 62.38 per cent of total consumer credit at N1.99tn, while retail loans represented 37.62 per cent valued at N1.20tn.

Retail lending, however, recorded modest growth during the same period. Retail loans rose from N1.11tn in November 2024 to N1.20tn in November 2025, representing an increase of about N90bn year-on-year.

The rise was not sufficient to offset the steep fall in personal borrowing, resulting in an overall decline in consumer credit.

Analysts say the development reflects changing financial behaviour among households as elevated interest rates and tight monetary policy discouraged new borrowing while encouraging repayment of existing loans.

Throughout most of 2025, the Central Bank of Nigeria maintained an aggressive anti-inflation stance by keeping borrowing costs high.

The Monetary Policy Committee held the Monetary Policy Rate at 27.5 per cent for much of the year before reducing it by 50 basis points to 27 per cent in September 2025, the first rate cut since 2020.

The committee retained the rate at 27 per cent in November 2025, signalling caution despite signs of easing inflation.

High interest rates typically discourage fresh borrowing while pushing households and small businesses to reduce outstanding debts.

More recently, the Monetary Policy Committee lowered the benchmark interest rate to 26.5 per cent in February 2026, citing sustained disinflation, exchange rate stability and stronger external reserves.

Announcing the decision after the committee’s 304th meeting in Abuja, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, said the rate cut followed a balanced assessment of economic risks and the improving inflation outlook.

Cardoso noted that headline inflation eased to 15.10 per cent in January 2026 from 15.15 per cent in December 2025, marking the eleventh consecutive month of year-on-year decline.

Food inflation fell significantly to 8.89 per cent from 10.84 per cent, while core inflation declined to 17.72 per cent from 18.63 per cent.

On a month-on-month basis, headline inflation dropped to negative 2.88 per cent in January from 0.54 per cent in December, signalling a continued softening of price pressures.

Cardoso also highlighted improvements in the external sector, revealing that Nigeria’s gross external reserves rose to $50.45bn as of 16 February 2026, the highest level in 13 years and equivalent to 9.68 months of import cover for goods and services.

Looking ahead, the central bank said the disinflation trend could continue in the near term, supported by exchange rate stability and improved food supply.

However, the governor warned that increased fiscal spending, including election-related expenditure, could pose upside risks to the inflation outlook.

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He reaffirmed the committee’s commitment to evidence-based policy aimed at ensuring price stability while safeguarding the resilience of Nigeria’s financial system.