 has revealed that Nigerian banks lend only 9.4% of GDP to the private sector.){kind=link}
Low Bank Lending to Private Sector Stalls Africa’s Growth, AfDB Warns
The African Development Bank (AfDB) has revealed that Nigerian banks lend only 9.4% of GDP to the private sector, underscoring the limited role of financial institutions in driving business growth and economic development.
In its African Economic Outlook 2026, the AfDB ranked Nigeria among the weakest performers compared to peers such as Kenya (31.6%), Egypt (28.3%), and Côte d’Ivoire (21.4%), while emerging economies like Vietnam (121.6%) and Malaysia (121.5%) far outpace Africa.
The report noted: “Low intermediation implies that Africa’s financial institutions are unable to optimally support the development of the private sector and contribute meaningfully to economic growth and development.”
Africa’s average private sector credit stood at 34.6% of GDP (2020–2024), the lowest globally, with weak savings mobilisation and poor financial intermediation cited as key constraints. Gross domestic savings averaged 16.6% of GDP, far below the global average of 27.3%.
The AfDB blamed weak collateral enforcement, slow judicial processes, and stringent prudential requirements, which increase credit risks and discourage lending. Banks also prefer holding government securities, crowding out private sector financing.
In Nigeria, stock market capitalisation averaged just 11.8% of GDP (2020–2024), among Africa’s lowest, reflecting a shallow financial system unable to mobilise large-scale financing for infrastructure and social spending.
The AfDB urged reforms including green bonds, PPPs, blended finance, and debt-for-development swaps, alongside stronger collaboration with development finance institutions to expand access to long-term capital.
Economist Dr Muda Yusuf warned that rising government borrowing is crowding out businesses, as banks favour low-risk, high-yield securities over lending to SMEs, further weakening private sector-led growth.