Fresh data released by the Central Bank of Nigeria (CBN) has shown a sharp increase in credit extended to the Federal Government over the 12 months ending in May 2026, underscoring a strong appetite for public sector borrowing despite the country’s tight monetary environment.
According to the apex bank’s latest monetary and credit statistics released on Wednesday, total credit to the government rose to N40.38tn in May 2026 from N22.99tn recorded in the corresponding period of 2025. The increase of N17.39tn, approximately N17.4tn, represents a 75.6 per cent year-on-year rise in lending exposure to the public sector.
The figures also indicate that the government’s borrowing pace remained strong on a monthly basis. Credit to the public sector increased by N779.70bn in May from N39.60tn recorded in April 2026, reflecting continued demand for domestic financing.
Banking industry data further showed that commercial and merchant banks continue to direct substantial liquidity toward government securities. Rather than extending a larger share of funds to the broader economy, lenders have maintained a preference for low-risk instruments such as Federal Government bonds and treasury bills, which help finance ongoing fiscal activities.
Analysts say the steady increase in public sector credit reflects a broader fiscal strategy aimed at raising funds through domestic debt issuance rather than relying on direct financing from the CBN.
CBN Reports Widening Gap Between Public, Private Credit
Meanwhile, credit growth in the private sector remained relatively modest during the review period. Lending to businesses and households edged up to N81.04tn in May 2026 from N80.59tn in April, highlighting a cautious lending environment and slower expansion of credit to the real economy.
Despite the slower pace of growth, private sector credit continued to account for the larger share of total lending, standing at roughly 2.01 times the level of public sector credit in May.
Economic analysts and financial experts noted that the latest data points to a sustained shift toward government borrowing, largely driven by the need to finance fiscal deficits. While liquidity levels within the banking system remain strong, experts have warned that a continued preference for high-yield government debt could crowd out productive private-sector activities.
They argue that limited access to affordable credit could constrain expansion plans for local businesses and manufacturers, potentially affecting broader economic growth prospects over time.
The CBN has yet to provide a detailed sectoral breakdown of private sector credit allocation for the period under review.
Nonetheless, the overall trend suggests that banks are increasingly adjusting their risk exposure in favour of government-backed obligations, reinforcing the public sector’s growing share of available domestic credit.
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