The African Development Bank (AfDB) has raised concerns over the low level of credit flowing to Nigeria’s private sector, revealing that banks lend only 9.4 per cent of the country’s Gross Domestic Product (GDP) to businesses.
In its African Economic Outlook 2026 report, the AfDB said Nigeria ranks among the weakest performers among major African economies in private sector lending, a development it warned could slow economic growth and job creation.
According to the report, countries such as Kenya, Egypt and Côte d’Ivoire provide significantly higher levels of credit to businesses, while emerging economies like Vietnam, Malaysia and Chile are far ahead.
The bank noted that Africa’s financial institutions generally channel more funds into short-term and low-risk investments rather than productive sectors capable of driving long-term economic development.
AfDB attributed the weak lending culture in Nigeria and many African countries to poor financial intermediation, low savings mobilisation, regulatory bottlenecks and weak collateral enforcement systems.
It also observed that banks increasingly prefer investing in government securities rather than extending loans to businesses, particularly small and medium-scale enterprises.
The report described Nigeria’s financial system as shallow, noting that limited access to long-term financing continues to hinder investment in critical sectors of the economy.
AfDB warned that weak credit availability could undermine private sector growth and make it more difficult for businesses to expand operations, create jobs and contribute meaningfully to economic development.
To reverse the trend, the bank called for deeper financial sector reforms, improved domestic resource mobilisation and greater use of innovative financing instruments such as public-private partnerships, green bonds and blended finance.
The report comes amid growing concerns that high interest rates and increased government borrowing are squeezing businesses out of the credit market as banks continue to favour safer government-backed investments.
