Credit extended to the Nigerian government surged 63.09% year-on-year to N39.40 trillion in September 2026, while lending to private businesses declined, according to the Central Bank of Nigeria's Money and Credit Statistics. The gap reflects a shift in how credit is being distributed across the economy, with government financing needs increasingly dominating the system.
Government credit expanded sharply in the month itself, rising by N6.36 trillion from N33.04 trillion in August to N39.40 trillion in September, a monthly jump of 19.26%. This reversed three consecutive months of decline from June through August, when government credit had fallen from N36.98 trillion in June to N33.04 trillion by August. Over the full year, government credit increased by N15.24 trillion compared with N24.16 trillion in September 2025, the CBN data showed.
The expansion in government credit drove much of the growth in net domestic credit, which rose 4.96% month-on-month to N123.34 trillion from N117.51 trillion. By contrast, private-sector credit declined 0.64% to N83.93 trillion in September from N84.47 trillion in August, though it remained 15.7% higher than September 2025. This divergence signals that businesses faced a tightening of credit availability even as overall liquidity in the financial system expanded.
The shift raises concerns for the economy's productive capacity. Access to affordable credit matters for businesses seeking to expand production, purchase inventory, invest in equipment and meet working-capital requirements, yet government demand for financing continues to expand. The CBN's credit measure should not be read as the total amount of new debt raised by the Federal Government in a single month, as it reflects changes in the central bank's balance sheet across several components, including domestic and foreign assets.
For businesses and investors, the tightening of private-sector credit amid elevated borrowing costs signals that capital available for productive investment is becoming scarcer, even as government financing grows. Policymakers face the challenge of ensuring that liquidity growth supports productive economic activity rather than simply financing fiscal deficits. As Nigeria pursues fiscal consolidation and economic growth, the balance between government borrowing and private-sector credit will remain a critical indicator of the economy's long-term investment prospects.