Only 6% of Nigerians Access Formal Credit, Report Shows

By Kingsley Ani

Credit Direct’s Nigeria Credit Landscape Report 2025, published in June 2026, revealed that despite financial inclusion exceeding 64 percent of adults, only about six percent of Nigerians access credit through formal financial institutions. The report found private sector credit at 13.1 percent of Gross Domestic Product (GDP), below comparable African economies, while Microfinance Banks account for only 5.4 percent of total industry loans. Responding to the findings, Mutual Benefits Assurance Plc and Mutual Microfinance Bank argued for a broader financial inclusion model combining credit, savings and insurance protection.

DECISION HIGHLIGHT

The report highlights a structural disconnect between financial inclusion and financial intermediation, suggesting that account ownership has expanded faster than access to productive credit.

DECISION MEMO

The central message from the report is that Nigeria’s financial inclusion story remains incomplete. While millions have entered the formal financial system, access to capital remains limited for households, entrepreneurs and small businesses, restricting the ability of financial inclusion to translate into economic mobility.

The data exposes a deeper challenge within the financial system. Credit penetration at 13.1 percent of GDP indicates that financial institutions are still not transmitting sufficient capital into productive sectors despite improving macroeconomic activity and expanding business demand.

Femi Asenuga, Managing Director of Mutual Benefits Assurance Plc, argued that the policy conversation should move beyond lending alone. According to Asenuga, “The conversation around financial inclusion must go beyond opening bank accounts and accessing loans. True financial empowerment is achieved when individuals and businesses can access financing opportunities while also protecting their income, assets, families, and future aspirations from unforeseen risks.”

His position reflects a growing recognition that financial resilience depends on the interaction of credit, savings and risk protection rather than any single product category.

The report’s finding that Microfinance Banks account for only 5.4 percent of total loans further suggests that institutions expected to serve underserved segments remain relatively small compared with the scale of financing demand. This leaves many small businesses trapped between limited formal lending and expensive informal funding sources.

Asenuga reinforced this concern, noting that “Small businesses remain the backbone of Nigeria’s economy, yet many continue to face significant barriers in accessing affordable financing.” The implication is that expanding financial access now requires stronger credit transmission mechanisms rather than simply increasing financial system participation.

DATA BOX

• Financial inclusion rate: Over 64 percent of adults
• Formal credit access: About 6 percent of adults
• Private sector credit: 13.1 percent of Gross Domestic Product
• Microfinance Banks’ share of total loan book: 5.4 percent
• Mutual Microfinance Bank loan disbursement (31 December 2025): N1.372bn
• Mutual Microfinance Bank loan portfolio (Q1 2026): N1.558bn
• Key growth sectors identified:
  • Manufacturing
  • Services
  • Agriculture

WHO WINS / WHO LOSES

Who Wins

• Microfinance institutions positioned to scale lending
• Fintech and alternative credit providers
• Small businesses able to access formal financing
• Insurance providers offering financial protection products

Who Loses

• Credit-constrained micro, small and medium enterprises
• Informal sector borrowers facing higher financing costs
• Households lacking access to affordable formal credit
• Businesses dependent on short-term informal funding

POLICY SIGNALS

• Financial inclusion policy is shifting from access metrics to utilisation metrics.
• Credit deepening remains a major weakness within Nigeria’s financial architecture.
• Policymakers may face increasing pressure to expand credit access for productive sectors.
• Insurance and savings products are becoming part of broader financial inclusion discussions.

INVESTOR SIGNAL

Low credit penetration suggests significant untapped opportunities in retail lending, microfinance, embedded finance, credit infrastructure and insurance. Institutions capable of responsibly serving underserved borrowers could benefit from substantial market expansion if regulatory and risk frameworks improve.

RISK RADAR

• High lending risks may continue to constrain credit growth.
• Weak credit infrastructure could limit financial deepening.
• Rising economic activity may increase financing demand faster than supply.
• Overreliance on informal credit channels may persist.
• Financial inclusion gains could stall if access to productive capital remains limited