Nigerian govt credit surges N15.2trn as private lending slips

Credit to the Nigerian government surged by N15.24 trillion in 12 months to N39.40 trillion in September 2026, even as lending to the private sector contracted during the month, highlighting the growing influence of public-sector financing on domestic credit and liquidity conditions.

Latest Central Bank of Nigeria (CBN) Money and Credit Statistics show that net credit to government rose by 63.09 per cent year-on-year from N24.16 trillion in September 2025, including a monthly jump of N6.36 trillion, or 19.26 per cent, from N33.04 trillion in August.

In contrast, credit to the private sector fell by N537.61 billion, or 0.64 per cent, to N83.93 trillion from N84.47 trillion in August, despite remaining 15.73 per cent above the N72.53 trillion recorded a year earlier.

The divergent movements come as businesses continue to contend with high financing costs and the need for working capital to sustain production, fund inventory and expand operations.

The September figures show that net domestic credit increased by 4.96 per cent month-on-month to N123.34 trillion from N117.51 trillion, with government credit accounting for the bulk of the annual expansion.

Over the 12 months, net domestic credit grew by N26.65 trillion from N96.69 trillion. Government credit contributed N15.24 trillion, accounting for approximately 57.2 per cent of the increase, while private-sector credit contributed about N11.41 trillion.

The figures underline the growing importance of government financing in the expansion of domestic credit, although they do not establish that public borrowing directly caused the monthly decline in private-sector lending.

Broad money supply, measured by M3, also expanded to N146.60 trillion in September from N139.09 trillion in August, representing monthly growth of about 5.4 per cent. The increase points to a substantial expansion in monetary balances even as private-sector credit weakened during the month.

The pattern raises questions about how effectively rising liquidity is translating into financing for productive economic activity. Government securities can offer banks and other investors attractive returns, often with lower credit risk than commercial lending, while businesses require financing to invest in machinery, infrastructure, inventory and production capacity.

For manufacturers and small businesses, access to affordable credit is critical to expanding output, creating jobs and managing operating costs. If public-sector financing absorbs a growing share of available funds, private borrowers may face more difficult financing conditions, although the CBN figures alone do not confirm that this is happening.

The latest data also follow a period of significant volatility in government credit. After falling for three consecutive months through August, the measure rebounded sharply in September, reversing part of the earlier decline.

The figures should not, however, be interpreted as the amount of new debt raised by the Federal Government during September. Net credit to government is a monetary statistic reflecting the government’s net position with the financial system, not simply gross borrowing at debt auctions.

For policymakers, the challenge is to ensure that expanding liquidity and domestic credit support economic growth without intensifying inflationary pressures or leaving productive businesses struggling to secure financing.

With government credit rising sharply and private-sector lending retreating marginally in September, the balance between public financing needs and business investment remains a critical indicator of whether monetary expansion will translate into stronger production, employment and sustainable economic growth.