Credit to the Nigerian government increased by N17.39 trillion in the year to May 2026, reflecting continued growth in public-sector borrowing despite the Central Bank of Nigeria’s relatively tight monetary policy stance.

Data from the Central Bank of Nigeria showed that credit to government rose to N40.38 trillion in May 2026, from N22.99 trillion in the corresponding month of 2025.

The figure also represented an increase from N39.60 trillion recorded in April 2026.

The rise in government credit came as banks continued to increase their exposure to public-sector instruments, while private-sector credit recorded a comparatively modest monthly increase.

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What the data is saying

A further analysis of the CBN monetary statistics showed that the N17.39 trillion year-on-year increase represented a 75.6% rise in credit to government between May 2025 and May 2026.

  • On a month-on-month basis, credit to government rose by N779.70 billion from N39.60 trillion in April 2026, representing a 2.0% increase.
  • Credit to Nigeria’s private sector increased to N81.04 trillion in May 2026 from N80.59 trillion in April 2026, representing an increase of N456.21 billion or 0.57%.
  • Private-sector credit remained more than twice the level of government credit, standing at about 2.01 times government credit in May 2026. However, its 0.57% monthly growth rate was lower than the 2.0% increase recorded for government credit.

The figures indicate sustained growth in banking-sector lending to the government, alongside a more gradual expansion in credit to businesses and households.

More insights

The increase in government credit reflects lenders’ continued participation in financing public-sector borrowing requirements through loans, advances and investments in government securities.

  • Nairametrics had earlier reported that banks’ credit to the Nigerian government increased by N15.66 trillion in one year as lenders expanded their exposure to public-sector borrowing.
  • The latest May data shows that the year-on-year increase has widened further to N17.39 trillion.
  • Private-sector credit increased by about N3.07 trillion from N77.97 trillion in May 2025 to N81.04 trillion in May 2026.
  • The difference between the growth in government and private-sector credit highlights the stronger pace of expansion in lending to the public sector over the period.

The CBN has yet to provide a sectoral breakdown showing how private-sector credit was allocated across industries in May 2026.

Experts raise concerns over crowding-out risks

Financial economist at Kwik Securities Ltd Mallam Muftau Yusuf, said the figures reflect the attractiveness of government securities to banks amid a high-interest-rate environment.

According to him, financial institutions often prefer lending to government because it offers lower risk and predictable returns compared to lending to businesses operating in a challenging economic environment.

  • “When government borrowing rises significantly, there is always the concern that it could reduce the amount of credit available to the productive sectors of the economy. Banks naturally gravitate toward assets that offer high returns with minimal risk,” he said.

Yusuf noted that while government borrowing is sometimes necessary to finance infrastructure and fiscal obligations, excessive dependence on domestic borrowing could constrain investment by manufacturers, small businesses and other private-sector operators.

Similarly, another Abuja-based economist Dr Ben Oladunjoye said high yields on government securities often incentivize banks to increase their holdings of treasury instruments rather than extend long-term credit to businesses.

  • “When yields on government securities remain attractive, banks have less incentive to take on the higher risks associated with private-sector lending. The result is that government borrowing can grow faster than credit to the real economy,” he explained.

What you should know

The CBN retained the Monetary Policy Rate at 26.5% at its May 2026 Monetary Policy Committee meeting, maintaining its focus on inflation control and macroeconomic stability.

  • At its 304th meeting, the MPC reduced the MPR by 50 basis points to 26.5% from 27%.
  • The CBN subsequently retained the rate at 26.5% at its May 2026 meeting.
  • Higher interest rates can raise borrowing costs for businesses and households, potentially limiting demand for private-sector loans.

Banks may also continue to favour government securities because of their relatively lower risk profile.

The continued rise in credit to government will remain important for assessing the balance between public borrowing needs, banking-sector liquidity and financing available to the private sector.