By Daily Review Online
The Central Bank of Nigeria (CBN) has reported a sharp increase in lending to the Federal Government, with total credit rising by N17.4tn over the 12 months ending May 2026.
According to the apex bank’s latest monetary and credit statistics, government credit stood at N40.38tn in May 2026, compared with N22.99tn in May 2025. The increase of N17.39tn represents a 75.6 per cent year-on-year surge.
The data also showed that government borrowing continued to rise on a monthly basis, increasing by N779.7bn from N39.60tn in April 2026 to N40.38tn in May.
The development comes despite the country’s tight monetary conditions and suggests that the government has continued to rely heavily on domestic debt issuance to finance its fiscal operations.
Banking sector figures indicate that commercial and merchant banks have increasingly channelled liquidity into government securities such as treasury bills and Federal Government bonds, which are considered lower-risk investments.
In contrast, credit to the private sector expanded only modestly. Lending to businesses and households rose from N80.59tn in April 2026 to N81.04tn in May, reflecting a cautious lending environment and slower credit growth in the real economy.
Although private sector credit remains significantly higher than public sector credit, economists say the widening preference for government debt could eventually crowd out productive private investment.
Analysts warn that if banks continue to prioritise high-yield government securities over lending to businesses, manufacturers and other productive sectors may face increasing difficulty accessing affordable credit, potentially slowing economic growth.
The CBN has yet to release a detailed sector-by-sector breakdown of private sector lending for the period under review.