By Chinwendu Obienyi
The Central Bank of Nigeria (CBN) on Monday revealed that deposit money banks (DMBs) experienced a significant rise in loan defaults from Small and Medium Enterprises (SMEs), Micro, Small, and Medium Enterprises (MSMEs) among others in the fourth quarter (Q4) of 2024.
This is according to credit conditions survey report for Q4 2025 released by the Statistics and Economic Policy Directorate department of the apex bank.
The survey which was conducted in November 2024 and based on lenders’ responses, highlighted that defaults rose across all loan categories, including secured, unsecured, and corporate loans.
“Lenders observed higher default rates for all lending types in the review quarter. Secured, Unsecured and Corporate (small businesses, medium PNFCs, large PNFCs and OFCs)”, the survey report said.
The apex bank’s survey also revealed that the overall spreads on Secured and Unsecured lending rates to households relative to the Monetary Policy Rate (MPR) widened in the review quarter.
For corporate lending, all lending types spreads on loan in relative to MPR also widened for OFCs which narrowed in the current period.
According to the report the proportion of loan approval for secured and corporate lending types while the proportion of loans for the unsecured lending decrease within the review period. This increase was attributed to the country’s challenging economic conditions, high interest rates, and inflationary pressures.
Despite this, there was still a high demand for loans, especially in corporate lending. However, household secured loans declined during this period due to economic instability.
Despite this, there was still a high demand for loans, especially in corporate lending. However, household secured loans declined during this period due to economic instability.
Many analysts believe this policy worsened financial hardship rather than controlling inflation.
Additionally, manufacturers and business owners struggled to repay existing loans due to high interest rates, making them hesitant to take on new plans.