The Federal Government’s domestic borrowing surged by N17.4 trillion over the past year, according to the latest monetary and credit statistics released by the Central Bank of Nigeria (CBN).
The data showed that total credit to the government rose from N22.99 trillion in May 2025 to N40.38 trillion in May 2026, representing a year-on-year increase of N17.39 trillion or 75.6 per cent.
The figures underscore the government’s growing reliance on domestic borrowing to finance fiscal operations despite the country’s tight monetary environment and high interest rate regime.
The CBN report also indicated that government borrowing continued to rise on a monthly basis. Credit to the public sector increased by N779.7 billion from N39.60 trillion recorded in April 2026 to N40.38 trillion in May.
The latest trend suggests that banks and other financial institutions remain heavily invested in government debt instruments, including Treasury Bills and Federal Government bonds, which are widely regarded as low-risk and attractive investment options.
Analysts say the development reflects the government’s increasing dependence on domestic debt markets as it seeks alternative financing sources and reduces its reliance on direct funding from the apex bank.
Meanwhile, growth in private sector credit remained relatively subdued during the review period. Lending to businesses and households rose marginally from N80.59 trillion in April to N81.04 trillion in May, indicating a cautious approach by lenders amid prevailing economic uncertainties.
Although private sector credit remains significantly higher than government borrowing in absolute terms, standing at about twice the level of public sector credit, economists have raised concerns about the sustained pace of government borrowing.
According to financial experts, the increasing concentration of bank funds in government securities could limit the availability of credit to productive sectors of the economy, a phenomenon commonly described as “crowding out.”
They warn that continued preference for government debt instruments may constrain access to affordable financing for businesses, particularly manufacturers and small enterprises, with potential implications for investment, job creation and economic growth.
The apex bank did not provide a sectoral breakdown of private sector lending in its latest report.
However, the figures highlight an ongoing shift in banking sector lending patterns, with financial institutions continuing to channel substantial resources toward financing government obligations.