Bank lending in Nigeria's oil and gas sector surged to 30 percent of total credit in the first half of 2025, a new report reveals. Credit Direct's latest analysis on the nation's credit landscape shows the sector dominated borrowing among deposit money banks during the period.
Manufacturing came in second with 16 percent of loan disbursements, while financial institutions claimed 12 percent. Every other sector received less than 10 percent of the total credit pie.
Yet a troubling pattern emerges when you examine the numbers more closely. Oil and gas contributes less than 5 percent to Nigeria's overall economic output, according to Credit Direct's findings.
Services actually drove 53 percent of economic activity as of the third quarter of 2025. Agriculture followed with 31.21 percent, while industry accounted for 15.77 percent of the economy.
This means the non-oil sectors generated roughly 95 percent of the nation's economic output. Banks, however, steered most of their credit toward oil and gas.
Credit Direct identified why lenders made this choice. Oil sector importance to government revenue and foreign exchange earnings played a major role in their lending decisions.
Large corporate oil firms also offered something banks valued highly—strong cash flows and proven repayment histories. These borrowers appeared safer bets than smaller operators in agriculture or services.
But the concentration creates danger, the report cautioned. Oil price volatility and production disruptions could easily destabilize bank portfolios.
"A prolonged downturn in oil prices or output could weaken borrower cash flows," the report warned. Such stress would ripple across the entire banking system quickly.
Credit Direct called for urgent action to rebalance lending patterns. Banks must shift resources toward services, agriculture, trade and other non-oil sectors, the firm argued.
"Going forward, a deliberate rebalancing of credit toward the sectors driving real economic expansion is imperative," the report stated. Such a move would strengthen both the financial system and job creation prospects.
Diversifying loan portfolios beyond oil would unlock opportunities in productive sectors, Credit Direct noted. This approach supports broader economic growth while reducing systemic risk.
The full 2025 Nigeria Credit Landscape Report is available on Credit Direct's website. Credit Direct is a wholly owned subsidiary of First City Monument Bank (FCMB) Group Plc.
