Nigeria’s private-sector credit has climbed to N83.43tn, but small and medium-sized businesses remain largely shut out of formal bank financing, highlighting a gap between the growth of financial-sector balance sheets and productive investment.
Bertine Kamphuis, Lead Private Sector Development Specialist at the World Bank’s Nigeria office, said fewer than one in 20 micro, small and medium-sized enterprises (MSMEs) can access bank credit, while about nine in 10 operate informally.
Kamphuis delivered the keynote address on behalf of Matthew Verghis, World Bank Division Director for Nigeria, at the Chartered Institute of Bankers of Nigeria’s 19th Banking and Finance Conference in Abuja.
She described the situation as a “missing middle” of businesses that are too large for microfinance but too small to meet conventional commercial bank lending requirements.
“This is where the jobs are. The core observation is that credit is bypassing the job creators,” Kamphuis said.
Nigeria’s N83.4tn Private Credit Is Not Reaching Productive Sectors
Central Bank of Nigeria data show private-sector credit rose from N80.59tn in April to N83.43tn in July 2026.
Despite the increase, domestic credit to the private sector stands at only about 13 per cent of GDP, among the lowest levels compared with similar economies, according to the World Bank.
Agriculture receives about six per cent of total credit, while MSMEs account for roughly one per cent.
Kamphuis said the challenge was not necessarily a shortage of capital, pointing to the size of Nigeria’s banking, pension and insurance assets and the fresh capital raised through the banking recapitalisation exercise.
“The balance sheets are strong, and the question is not the availability of capital. The question is the allocation,” she said.
Nigeria’s banking sector has about $160bn in assets, while the recent recapitalisation exercise generated about $3.4bn in fresh capital, according to the World Bank.
Banks Face Pressure To Redirect Capital
The allocation challenge is becoming more important as banks continue to find government securities attractive relative to lending to riskier private-sector businesses.
Kamphuis warned that banks would need to reconsider their reliance on government securities as macroeconomic conditions improve and yields potentially moderate.
“Banks can no longer rely solely on government securities for yield. You have to start redirecting that capital towards job-creating growth,” she said.
Nigeria’s pension funds, insurers and other institutional investors control significant pools of long-term capital, but limited investment structures and risk-sharing mechanisms continue to constrain their ability to finance SMEs and infrastructure.
The World Bank has advocated blended finance, guarantees, credit enhancement and risk-sharing facilities to reduce investment risks and mobilise more private and institutional capital.
“Scarce public capital must be used catalytically. Every public dollar should be structured to crowd in multiples of commercial and institutional capital,” Kamphuis said.
Nigeria’s infrastructure financing requirements further expose the scale of the capital-allocation problem.
The World Bank estimates, based on government analysis, that Nigeria requires about $100bn annually to close its infrastructure gap, with energy and transport accounting for almost 60 per cent of the estimated requirement.
Kamphuis said Nigeria therefore needs to develop a stronger pipeline of bankable projects capable of attracting pension funds, insurers and other institutional investors.
