Follow Us on Google Discover
Nigeria’s largest listed companies continue to rely heavily on bank loans and other direct borrowings despite the rapid growth of commercial papers and other debt securities as alternative sources of corporate funding.
A Nairametrics review of 19 of the largest companies in the NGX 30 shows that they had combined debt of N6.25 trillion as of June 2026, with about N4.64 trillion, or 74.2%, coming from bank loans and other direct borrowing facilities.
Only N1.61 trillion, representing 25.8%, was raised through bonds, commercial papers and other debt securities.
The companies cut across some of Nigeria’s biggest sectors, including consumer goods, industrials, oil and gas, power, telecommunications, agriculture and hospitality.
Also Read
They include Dangote Cement, BUA Cement, MTN Nigeria, Seplat Energy, Aradel Holdings, BUA Foods, Nestlé Nigeria, Nigerian Breweries, Presco and Geregu Power, providing a snapshot of how some of corporate Nigeria’s largest businesses are financing their operations and expansion.
The continued reliance on banks comes despite increased activity in Nigeria’s corporate debt market and at a time when bank lending rates remain above 30% for many borrowers.
What the data is saying
The overall debt position of the companies improved significantly during the first half of 2026.
Combined gross debt fell by N1.50 trillion, or 19.3%, to N6.25 trillion from N7.75 trillion in December 2025.
Cash balances also increased to N5.02 trillion from N4.53 trillion, helping to reduce net debt, borrowings after accounting for cash to N1.23 trillion from N3.22 trillion.
This suggests that, collectively, the companies entered the second half of 2026 with stronger liquidity and lower leverage.
However, the structure of their borrowing remains heavily tilted towards banks and other direct lenders.
For every N100 owed by the companies, about N74 came from direct loans, compared with only N26 raised through bonds, commercial papers and other debt securities.
This funding structure is notable because companies have increasingly turned to the debt capital market in recent years.
Nairametrics Research reported that Nigerian companies raised about N1.61 trillion through commercial papers in 2025, up 40% from N1.15 trillion in 2024.
The momentum continued into 2026, with about 24 companies issuing commercial papers by May.
Outstanding corporate bonds also reached about N2.30 trillion by June, while outstanding commercial papers stood at N465.34 billion, according to FMDQ data.
Where the debt is concentrated
Oil and gas accounts for the largest share of the debt, with Aradel Holdings and Seplat Energy owing a combined N2.92 trillion, or about 47% of the N6.25 trillion total.
Borrowing in the sector largely reflects its capital-intensive nature, including acquisitions, field development, and infrastructure.
The two companies, however, illustrate the different funding options available to large corporates. Almost all of Aradel’s N1.81 trillion debt came from bank and other direct loans, while about 81% of Seplat’s N1.11 trillion was raised through debt securities.
Industrial companies are also significant borrowers because of the funding required for plants, energy infrastructure and expansion.
BUA Cement had N663.21 billion in debt, with about 93.5% coming from bank and other loans. Dangote Cement had N612.46 billion in debt but was more diversified, with about 44.9% raised through bonds, commercial papers and other securities.
For consumer goods companies, borrowing often reflects working-capital and input-financing requirements, including inventories, raw materials, and imported inputs.
Dangote Sugar’s management has highlighted the company’s dependence on imported raw materials, spare parts and critical chemicals, while its letters of credit have been used to finance hard-currency working-capital requirements.
Nigerian Breweries has similarly identified working-capital management as an important part of its financing and cash-generation strategy.
Dangote Sugar and Nestlé Nigeria had debts of N584.15 billion and N445.01 billion, respectively, making financing costs particularly important to their profitability.
Other sectors have different funding requirements. Telecoms require substantial investment in network infrastructure, spectrum and technology, while power and hospitality companies borrow for infrastructure and expansion.
MTN Nigeria stands out for its use of the debt capital market, with bonds accounting for about 92% of its N342.59 billion conventional borrowings as of June 2026.
Why bank borrowing still matters
The continued dependence on banks is significant because borrowing costs remain elevated.
Nigeria’s Monetary Policy Rate stood at 26.5% during the period, while actual lending rates to businesses were considerably higher.
Nairametrics’ review of bank lending rates showed maximum lending rates above 30% at several banks, with some exceeding 40%.
CBN data earlier cited by Nairametrics showed an average maximum lending rate of about 34.5% in May.
Commercial papers generally offer lower rates. Disclosed CP rates averaged around 22.5% in the first five months of 2026, while the average commercial paper discount rate had declined to about 19.2% by June.
The difference helps explain the growing interest in commercial papers and bonds among large companies seeking to diversify their funding and reduce borrowing costs.
However, debt securities cannot always replace bank financing.
Commercial papers are typically short-term, while large acquisitions, industrial projects and infrastructure investments may require longer and more flexible funding.
Banks can also provide revolving facilities, overdrafts, project loans and acquisition financing that can be structured around the specific cash-flow requirements of a business.
Access to cheaper capital-market funding also depends on credit quality, ratings and investors’ appetite, meaning the strongest companies are generally better positioned to raise money at attractive rates.
What you should know
The N6.25 trillion debt figure does not necessarily suggest that Nigeria’s largest companies are becoming more indebted.
Their combined debt fell by almost one-fifth in the first half of 2026, while higher cash balances reduced net debt by nearly N2 trillion.
The more significant issue is the cost and structure of the debt that remains.
Despite the rapid growth of Nigeria’s commercial paper and corporate bond markets, almost three-quarters of the debt held by the companies reviewed remains tied to bank loans and other direct borrowing facilities.
That leaves companies exposed to high borrowing costs, particularly those that regularly refinance working-capital facilities or carry floating-rate loans.
For large Nigerian companies, the financing question is therefore increasingly shifting from simply how much they borrow to where they borrow from, what the money is being used for and how they can reduce the cost of funding their businesses.
