In 1948 the Paton Inquiry into Nigerian banking, set up by the colonial government after the collapse of dozens of indigenous banks, recorded a number that has barely moved in three-quarters of a century: less than 2% of all credit extended by banks in Nigeria reached African borrowers. The expatriate banks — First Bank's predecessor BBWA, Barclays DCO, the British and French Bank — did not lend to Africans as a matter of head-office policy. Loans to 'natives' required London approval, which was a procedural euphemism for no. The indigenous banks that rose to fill the gap (National Bank 1933, Agbonmagbe 1945, ACB 1947) lent generously, often to politicians and relatives, and most of them failed.
Seventy-seven years later the structure has barely changed, only the explanations have. As of December 2023 the Central Bank of Nigeria's own data put private-sector credit at roughly 13% of GDP — the lowest in any major African economy and a fraction of South Africa (88%), Kenya (32%) or Egypt (26%). Of that 13%, more than 70% goes to oil-and-gas, manufacturing-for-export, telecoms and the federal government's own treasury bills. Consumer credit — the mortgages, car loans, credit cards and personal overdrafts that built every middle class in the world — is functionally absent. Nigeria has roughly 40,000 active mortgages for a population of 230 million; the United States, with 1.4× the population, has 50 million. The country's largest bank by assets, Zenith, had a 2023 retail loan book of ₦890bn — less than the loan book of a single mid-size US credit union.
Why the vacuum persists. Three structural reasons, none of them new. First, the colonial CRMS (Credit Risk Management System) was designed to track corporate exposures, not individuals; Nigeria's national credit-bureau infrastructure (CRC, CreditRegistry, FirstCentral) only became functional after 2010 and still covers a fraction of working-age adults. Second, the legal recovery system is broken — the average commercial-loan recovery suit takes 4–7 years and recovers 30–40 cents on the naira, so banks price every loan as if half will default, which prices most borrowers out. Third, the federal government is the most attractive borrower in the country: a 364-day Treasury Bill paying 18–25% risk-free crowds out every private credit decision a bank manager could make. Lending to a salaried Nigerian at 25% is riskier and less profitable than buying the same yield from the Debt Management Office.
The cost of the vacuum. No mortgages means no formal housing market — 85% of urban Nigerians rent and 'one-year-in-advance' rent is universal because the landlord cannot get a mortgage either. No car loans means a used-car economy that imports 400,000 'tokunbo' vehicles a year. No SME credit means the informal sector — 65% of GDP, per the National Bureau of Statistics — is permanently capital-starved and cannot scale past the founder's personal savings. The 2005 Soludo recapitalisation was supposed to fix this by creating banks large enough to lend long; instead the recapitalised banks bought Treasury Bills. The 2024 Cardoso recapitalisation faces the same incentive. Until the federal government stops being the highest-yielding, lowest-risk borrower in its own economy, the Paton number — 2% — is the floor, not the ceiling.