MFB Loans Rise By 92% To N4.43trn As Credit Demand Grows

Nigeria’s microfinance banks (MFBs) recorded a sharp increase in lending activities in 2025, with total loans rising by 92.8 per cent to N4.43 trillion as growing demand for credit from small businesses and low-income earners continued to drive expansion in the sub-sector.

Latest data from the Central Bank of Nigeria (CBN) Statistical Bulletin showed that the industry’s loan portfolio climbed from N2.30 trillion in January 2025 to N4.43 trillion by December, underscoring the increasingly important role of microfinance institutions in providing access to finance amid challenging economic conditions.

The figures revealed a steady upward trend throughout the year. Loans increased from N2.36 trillion in February to N2.45 trillion in March, then rose further to N2.68 trillion in April and N2.95 trillion in May. By June, total loans had crossed the N3 trillion threshold, reaching N3.12 trillion.

The momentum continued in the second half of the year, with loans growing to N3.33 trillion in July and N3.49 trillion in both August and September. A significant jump occurred in October when the industry’s loan book expanded to N4.14 trillion, before increasing to N4.39 trillion in November and closing the year at N4.43 trillion.

Industry analysts attribute the growth to rising demand for credit from micro, small and medium enterprises (MSMEs), traders, artisans, and other underserved segments of the economy seeking alternative financing amid tight lending conditions in the conventional banking sector.

The strong loan growth was accompanied by a substantial increase in deposits, reflecting growing public confidence in microfinance institutions. According to the CBN data, deposits mobilised by MFBs surged by more than 133 per cent, rising from N2.15 trillion in January to N5.01 trillion in December 2025.

Deposits grew steadily from N2.28 trillion in February to N2.39 trillion in March and N2.47 trillion in April. The figure rose to N2.76 trillion in May and N2.79 trillion in June before accelerating in the second half of the year.

By July, deposits had climbed to N3.12 trillion and further increased to N3.29 trillion in August and September. A sharp rise was recorded in October when deposits crossed the N4 trillion mark at N4.04 trillion.

The upward trajectory continued through November and December, with deposits reaching N4.14 trillion and N5.01 trillion, respectively.

The performance highlights the growing significance of microfinance banks in deepening financial inclusion and bridging financing gaps for millions of Nigerians who remain underserved by traditional commercial banks.

The expansion in microfinance lending comes amid broader growth in credit across the economy. CBN data showed that credit to the private sector increased by 3.2 per cent year-on-year to N80.59 trillion in April 2026, up from N78.07 trillion in April 2025.

At the same time, credit to the government rose sharply by 65.4 per cent year-on-year to N39.60 trillion from N23.93 trillion during the same period, reflecting increased domestic borrowing to finance fiscal obligations.

Analysts at Cordros Research said the growth in credit reflects the impact of the CBN’s gradual monetary policy easing, although lending conditions remain relatively tight.

According to the firm, private sector credit growth is likely to remain constrained in the near term due to the Monetary Policy Committee’s cautious stance on interest rates.

“The MPC’s decision to maintain rates at current levels at its May meeting is expected to sustain tight financing conditions, limiting access to credit for businesses and weighing on private sector investment,” the analysts noted.

Despite these challenges, the strong growth in loans and deposits within the microfinance banking segment suggests that demand for credit at the grassroots level remains robust, positioning MFBs as an increasingly critical channel for supporting entrepreneurship, financial inclusion and economic activity across the country.