Banks’ Lending to Government Surges by ₦15.66 Trillion as Private Sector Credit Weakens
Credit from Nigerian banks to the Federal Government rose sharply by ₦15.66 trillion within one year, highlighting a growing shift in lending patterns toward public sector borrowing despite slower growth in private sector credit.
Data from the Central Bank of Nigeria’s money and credit statistics showed that government borrowing from the banking system increased from ₦23.93 trillion in April 2025 to ₦39.60 trillion in April 2026, a 65.44% year-on-year jump.
The figures indicate that government borrowing accounted for the bulk of the expansion in domestic credit over the period, raising concerns about the crowding-out effect on private sector lending.
Overall, net domestic credit rose from ₦102.00 trillion in April 2025 to ₦120.18 trillion in April 2026, an increase of ₦18.18 trillion or 17.83%. Out of this growth, ₦15.66 trillion came from increased lending to the government, while credit to the private sector rose modestly by ₦2.52 trillion, from ₦78.07 trillion to ₦80.59 trillion.
This means about 86% of the growth in domestic credit over the one-year period was driven by government borrowing.
Although month-on-month comparison is limited due to missing March 2026 data, available figures show that credit to the government rose slightly from ₦39.36 trillion in February 2026 to ₦39.60 trillion in April 2026, a marginal increase of ₦239.92 billion.
In contrast, private sector credit declined significantly within the same period, dropping from ₦94.61 trillion in February to ₦80.59 trillion in April 2026 — a fall of ₦14.02 trillion or 14.82%.
Compared with December 2025, government credit also increased by ₦5.38 trillion within the first four months of 2026, underscoring a steady rise in public sector borrowing demand.
The share of government borrowing in total domestic credit also expanded, rising from 23.46% in April 2025 to 32.95% in April 2026.
Analysts say the trend reflects a tightening lending environment for businesses, as banks appear to be allocating a larger portion of available credit to government instruments.
Meanwhile, broader monetary indicators showed that Nigeria’s money supply (M3) rose to ₦124.99 trillion in April 2026, up from ₦123.12 trillion in February, driven mainly by increases in net domestic assets.
The Central Bank recently cut the Monetary Policy Rate to 26.5%, aiming to support economic activity, but lending conditions have remained mixed, with private sector credit still under pressure.
Overall, the data points to a cautious credit environment, where government borrowing continues to dominate bank lending while private sector access to credit remains relatively constrained.
