Nigeria’s Information and Communication Technology sector has seen a contraction in bank credit, with total exposure falling to N1.84tn as of September 2025. Analysts contend that expanding financial access for the sector is essential to foster a competitive digital economy, writes ARINZE NWAFOR
Observers of Nigeria’s technology sector maintain a strong belief in its vast potential. However, the persistent challenge of securing affordable and accessible credit casts a long shadow over a nation celebrated for its skilled tech workforce and its aspiration to become a significant engine of growth within the global digital economy.
The availability of credit to the technology sector is critically important because it serves as a fundamental tool for scaling economic growth. An abundance of financing provides a powerful incentive for industry participants to innovate and expand.
Accordingly, an analysis by The PUNCH of the Central Bank of Nigeria’s Q3 2025 statistical bulletin reveals that credit extended by deposit money banks to the ICT sector declined to N1.84tn in September 2025. This represents the lowest level recorded during the first nine months of the year.
The data illustrates a fluctuating but generally declining pattern in financial exposure to a sector that is increasingly central to Nigeria’s ambition of building a globally competitive digital economy.
In January 2025, credit to the sector stood at N2.01tn. It rose marginally to N2.02tn in February and increased further to N2.07tn in March. This upward trajectory, however, reversed in April, with credit dropping significantly to N1.92tn. Although a slight recovery was observed in May and June, with figures of N1.95tn and N1.96tn respectively, these levels remained below the peak reached in the first quarter.
July recorded the highest credit allocation of the year at N2.15tn, reflecting a temporary boost in lending activity. This was followed by a decline to N1.95tn in August and a sharper drop to N1.84tn in September, the lowest point in the period under review.
A year-on-year comparison further underscores the volatility in credit flows. In January 2024, credit to the ICT sector was significantly higher at N2.47tn, before declining steadily throughout the year to N1.69tn by September 2024. While the figures for early 2025 suggested a potential recovery, the sharp drop in September points to persistent structural challenges in sustaining credit growth.
Month-by-month, the data demonstrates a direct correlation between credit availability and business activity levels within the sector. Periods of higher credit exposure, such as those seen in March and July 2025, coincided with stronger operational capacity for ICT firms.
Conversely, the dips observed, particularly in April and September, signal tightening financial conditions that can constrain expansion, innovation, and service delivery.
Despite Nigeria’s growing reputation as a leading African tech hub, the latest figures imply that bank lending remains inconsistent and insufficient to meet the sector’s long-term growth requirements.
Funding gap threatens digital economy aspirations
In separate interviews with The PUNCH, analysts and stakeholders expressed the view that the N1.84tn credit level is far below what is required to sustain growth in a sector that demands heavy capital investment and continuous innovation.
A tech expert and Chief Executive Officer of Egoras, Harry Ugoji, stated that the current level of funding is grossly inadequate for a country of Nigeria’s size and digital ambitions. He said, “The answer is definitely no. In my suggestion, the funds can actually be increased to N5tn or N6tn if possible. It should be available to everybody and free of any discrimination.”
He attributed the closure of many tech startups to limited access to affordable financing, noting that most surviving firms rely heavily on foreign venture capital.
“Why most tech companies are actually shutting down is due to financing. Most of this financing comes from venture capitalists, mostly from the United States of America and other foreign credit providers. The truth is that those funds cost a lot,” Ugoji added.
Heavy reliance on foreign capital
Despite global economic headwinds, Nigeria’s tech ecosystem has continued to attract foreign investment. According to a report by Nairometrics, startups raised over $100m in disclosed funding in the first quarter of 2025 alone.
Fintech firms dominated this landscape, with companies such as LemFi, Raenest, and Moniepoint accounting for more than 70 per cent of the total capital raised during this period.
This trend highlights both the attractiveness of Nigeria’s digital economy and its vulnerability to external funding shocks.
Ugoji warned that this reliance on foreign capital exposes the sector to high financing costs and external economic pressures.
“North America costs a lot,” he remarked. “They do not really care about the Nigerian economy or the growth of the economy. I usually say that the government ought to be putting in more funds. In my suggestion, credit should actually be increased to N5tn to N6tn, and it should be available to everybody and free of any discrimination”
He added that beyond increasing funding, the government must establish proper governance structures to ensure effective utilisation.
“Before we talk about increasing the investment, we need to set up a body that will ensure that the money is actually used properly,” Ugoji said.
High cost of credit stifles growth
Beyond mere access to funds, stakeholders identified the high cost of borrowing as a major barrier to growth in the ICT sector.
The Director of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said that interest rates above 20 per cent make it nearly impossible for businesses to thrive.
“The ICT sector’s credit issues are not limited to only having access to credit; it is also the cost of credit. If your cost of credit is above 20 per cent, how many businesses can anyone do?” Yusuf queried.
He stressed that reducing lending rates is critical to unlocking more investment in the sector. “We want to see a situation where the cost of credit comes down to maybe 10 per cent or 12 per cent, possibly even single digits. That way, we see more credit flow to digital economies.”
The CPPE chief noted that high borrowing costs discourage both lenders and borrowers, limiting the flow of funds into a sector that should naturally attract significant investment.
Domestic investors must fill the funding gap
With foreign investors gradually pulling back due to global uncertainties, experts argued that Nigeria must rely more on domestic capital to sustain its digital economy.
Yusuf noted that similar transitions have occurred in other sectors of the economy. “Even when they leave, domestic investors will step in. We have very smart, indigenous entrepreneurs in this country,” he said.
However, he emphasised that creating an enabling environment is essential to attract local investors. He explained, “What we just need to do is to encourage them a lot more by ensuring that we have better credit conditions, by ensuring that we have policies that can be enablers for them to be able to fill those gaps.”
Infrastructure deficit limits credit utilisation
Experts also identified poor infrastructure as a critical factor limiting both the demand for and the effective utilisation of credit in the ICT sector.
The Chief Executive Officer of Monibac, Makua Eyisi, said unreliable electricity and inadequate connectivity remain major obstacles.
“We lack electricity; that is the major infrastructure, so that it is easy for us to connect people all over Nigeria,” Eyisi said.
He explained that even when financing is available, poor infrastructure reduces the viability of tech investments. “The money banks are willing to give, but are the companies willing to take it? Because the cost of capital is high.”
He added that Nigeria’s high Monetary Policy Rate, which at the time of this report stands at 26.5 per cent, further discourages borrowing. “When it comes to this level, it becomes high. The cost of capital becomes high. So, it is just difficult,” Eyisi noted.
Government efforts on digital infrastructure
The Federal Government has taken steps to address infrastructure challenges, particularly in broadband expansion.
On February 25, the Minister of Communications, Innovation and Digital Economy, Dr Bosun Tijani, announced significant funding for Project BRIDGE, aimed at expanding fibre connectivity across Nigeria.
The initiative secured $100m from the European Bank for Reconstruction and Development, in addition to funding support from the World Bank Group and the European Union.
The project seeks to deploy 90,000 kilometres of fibre infrastructure nationwide; a move expected to improve connectivity and stimulate digital economic activities.
However, stakeholders maintain that infrastructure investment alone is insufficient without complementary financial reforms.
Call for targeted intervention funds
Eyisi urged the Central Bank of Nigeria to introduce sector-specific funding schemes at concessional rates to support ICT firms. “The CBN can come up with special funds granted to these people at special rates. It can help the companies do better,” he said.
He also called for tax incentives to encourage reinvestment and expansion within the sector. “Some of these companies you can give a tax rebate, and they will use that money, plough it back into the system and achieve more,” Eyisi added.
Human capital and regulation challenges
Beyond funding and infrastructure, experts highlighted the need for improved human capital development and regulatory reforms.
Eyisi stressed that Nigeria must invest in education and skills relevant to the digital economy. “We should increase our human capital, produce talent and start competing globally,” he said.
He also pointed to regulatory bottlenecks and multiple taxation as additional constraints on growth. “Regulation is always an issue, too. Multiple taxes, federal government, state government,” Eyisi noted.
Egoras’ CEO, Ugoji, referenced past government initiatives under former President Goodluck Jonathan as a model for effective intervention.
“President Goodluck’s administration did not just give us money. They brought a team that also fully governed this company,” he said.
He argued that future funding programmes must combine financial support with strong governance structures to ensure meaningful impact.
