Data from Nigeria’s apex bank, Central Bank of Nigeria (CBN), shows that Credit to the Private Sector (CPS) grew by 4.7% year-on-year to NGN77.83 trillion in May 2025, up from NGN74.31 trillion in May 2024.
Confiance News gathered from a Cordros Research report on Friday.
However, it noted that this growth rate is notably slower than the previous year, driven by the naira’s recent stabilization and the CBN’s tight monetary policy, which have reduced the impact of currency depreciation on banks’ foreign-denominated assets. Conversely, credit to the government fell by 11.6% year-on-year to NGN25.07 trillion from NGN28.38 trillion, reflecting lower government borrowing from domestic banks for deficit financing.
The broad money supply (M3) increased by 19.9% year-on-year to NGN119.00 trillion, driven by growth in narrow money (+20.9% y/y) and quasi money (+19.8% y/y). On a monthly basis, CPS dipped slightly by 0.3% to NGN77.82 trillion in May from NGN78.08 trillion in April (+2.1% m/m).
Forecast:
Looking forward, CPS growth is likely to remain muted in the short term due to tight monetary conditions, but a potential shift to monetary easing in the second half of 2025 could support a gradual recovery in CPS growth over the medium term.
Stock Market Activity: According to the Nigerian Exchange (NGX) Domestic and Foreign Portfolio Report, total transactions on the local bourse jumped by 45.3% month-on-month to NGN700.50 billion in May 2025, compared to NGN482.04 billion in April.
Confiance News learnt that this surge was fueled by increased participation from both domestic investors (83.0% of total transactions) and foreign investors (17.0%). Domestic investor inflows rose by 38.8% m/m to NGN581.59 billion from NGN418.97 billion, driven by strong retail investor activity (+86.1% m/m) and a modest increase from institutional investors (+2.7% m/m).
Foreign investor inflows also rebounded significantly, climbing 88.5% m/m to NGN118.91 billion from NGN63.07 billion, supported by declining fixed income yields and improved market sentiment boosting demand for equities.
However, net flows fell by 54.0% m/m to NGN2.64 billion from NGN5.74 billion, with strong foreign inflows of NGN13.31 billion offset by domestic outflows of NGN10.67 billion.
Analysts’ forecast:
Analysts at Cordros Research forecast the in the near term, domestic investors are expected to continue driving transaction volumes, supported by anticipated declines in fixed income yields. The naira’s relative stability may further encourage foreign investor participation in the equities market, though global uncertainties could pose risks to sustained inflows.
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