CBN Revamps Policy to Kickstart Private-Sector Lending
Atume Terfa
In a strategic move to revive credit flow to Nigeria’s real economy, the Central Bank of Nigeria (CBN) has reshaped its policy framework to encourage commercial banks to lend more to businesses and households rather than hoard excess funds.
At its latest monetary-policy meeting, the apex bank maintained the Monetary Policy Rate (MPR) at 27%, signalling that while inflation control efforts are yielding results, more needs to be done to stimulate private-sector growth.
Instead of slashing the MPR, the CBN focused on altering incentives for banks. Returns on idle funds parked in the Standing Deposit Facility (SDF) were reduced, while borrowing costs from the Standing Lending Facility (SLF) were increased. The result: keeping money idle is now less profitable, nudging banks to direct their funds into productive loans and credit facilities.
The policy shift comes amid concerns over a slowdown in private-sector lending. Data as of August 2025 show credit to the private sector at ₦75.8 trillion, down from ₦78.1 trillion in April — a trend analysts warn could stifle investment, job creation, and broader economic growth.
Through these tweaks, the CBN hopes to unlock liquidity and channel it into productive sectors, stimulating business activity and boosting economic momentum. However, challenges remain: high borrowing costs, cautious banks, and uncertainties around loan repayment and forex stability could limit the immediate impact of the policy.
The success of this strategy will depend on whether commercial banks embrace the push toward riskier, yet economically vital, lending — a move that could define Nigeria’s economic trajectory in the months ahead.
