By Boluwatife Oshadiya | June 1, 2026
Key Points
- Banks’ credit to the Nigerian government rose by N15.66 trillion between April 2025 and April 2026
- Government borrowing accounted for about 86% of total growth in domestic credit during the period
- Private sector credit growth remained weak despite the CBN’s monetary policy easing
Main Story
Nigerian banks increased their lending to the Federal Government by N15.66 trillion over the past year, highlighting the growing role of public sector borrowing in the country’s credit market despite subdued lending to businesses and households.
According to the latest money and credit statistics released by the Central Bank of Nigeria (CBN), credit to government climbed from N23.93 trillion in April 2025 to N39.60 trillion in April 2026, representing a 65.4% year-on-year increase.
The increase accounted for the bulk of growth in domestic credit during the period. Net domestic credit rose from N102 trillion to N120.18 trillion, an increase of N18.18 trillion. Of this amount, government borrowing contributed N15.66 trillion, while credit to the private sector increased by only N2.52 trillion.
The figures indicate that nearly nine out of every 10 naira added to domestic credit over the past year went to government borrowing.
The data also show a shift in the composition of domestic lending. Government credit represented 32.95% of net domestic credit in April 2026, up from 23.46% a year earlier.
The development comes months after the CBN reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5% following its 304th Monetary Policy Committee meeting in Abuja. Despite the easing, private sector lending remained under pressure, falling from N94.61 trillion in February 2026 to N80.59 trillion in April.
“The Committee considered recent improvements in inflation indicators and resolved to support economic activity while maintaining price stability,” the CBN said in its post-MPC communiqué.
What’s Being Said
“The continued increase in government borrowing from the banking system raises concerns about crowding out private sector credit, particularly at a time when businesses require financing to expand production and investment,” said economist and financial analyst Muda Yusuf.
“Banks naturally gravitate towards lower-risk assets when economic uncertainty remains elevated, and government securities continue to provide attractive returns,” said investment analyst Johnson Chukwu.
What’s Next
- Investors and businesses will closely monitor the CBN’s next Monetary Policy Committee meeting for signals on future interest rate direction
- Analysts expect continued scrutiny of government borrowing levels and their impact on private sector access to credit
- Upcoming monetary and fiscal policy measures could influence lending patterns during the second half of 2026
Bottom Line
The Bottom Line: The latest credit data suggest that government borrowing continues to dominate Nigeria’s domestic credit landscape. Unless private sector lending recovers meaningfully, concerns about investment growth and economic expansion may persist despite recent monetary policy easing.
