Non-performing loans are not accidents: How poor loan monitoring and weak enforcement are strangulating Nigeria’s productive economy

    Prisca Ndu | Insights | Dec 05, 2025    
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Nigeria's banking sector is bleeding. Despite several attempts by the Federal Government to reduce the rise of Non-Performing Loans (NPLs), part of which was the creation and enactment of the Asset Management Corporation of Nigeria, AMCON Act, into law in 2010, NPLs have continued to rise astronomically. By 2025, bad loans are still rising in great proportions, with Central Bank of Nigeria data pointing to growing repayment failures among small enterprises, major firms, and individual borrowers. Public debate quickly turned to inflation, currency pressure, and external disruptions as the usual explanations. But let's cut through the noise. These NPLs are not random hits from the economy. They are the direct result of poor monitoring of loans and weak enforcement systems that allow borrowers to game the system and evade repayment. When defaulters face no real consequences, they treat loans like free money. Honest businesses pay the price through sky-high interest rates and credit droughts. This is not a finance crisis; it is an enforcement crisis strangling productivity. Today, we'll unpack why, with hard data from recent journals and CBN reports, and show how fixing enforcement could unleash Nigeria's growth engine.

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