Nigeria's Private Sector Credit at 9.4% of GDP, AfDB Reports

The African Development Bank (AfDB) has reported that Nigeria's private sector credit is only 9.4% of the country's gross domestic product (GDP), ranking it among the weakest performers among major African economies. In comparison, Kenya, Egypt, and Côte d'Ivoire have private sector credit provisions of 31.6%, 28.3%, and 21.4% respectively.

The report highlights that Nigeria's credit provision is below that of emerging lower-middle-income economies such as Vietnam (121.6%), Malaysia (121.5%), and Chile (111.8%). The AfDB attributes the weak credit environment to poor financial intermediaries and low domestic savings, with the continent's median deposit-to-GDP ratio standing below 32%.

The report also notes that regulatory weaknesses and high compliance costs discourage lending to the private sector. Additionally, the shallow financial system, with a stock market capitalization averaging just 11.8% of GDP, poses significant challenges in mobilizing large-scale financing to close infrastructure gaps and sustain social spending.