Credit to government declines for third consecutive month, falls to N32.7 trillion in August

Credit to the government declined for the third consecutive month, falling to N32.7 trillion in August 2026.

This is according to the latest data from the Central Bank of Nigeria (CBN).

The decline came as credit to the private sector increased to N84.55 trillion, although it remained below the N94.61 trillion recorded in February 2026.

The CBN data did not explain whether the decline in government credit reflects lower borrowing, debt repayments, valuation changes or other factors.

Government credit’s decline trajectory

Credit to the government declined from N40.03 trillion in June to N33.92 trillion in July and N32.70 trillion in August, extending its downward movement for a third consecutive month.

• Despite the recent decline, government credit remained above the N22.95 trillion recorded in August 2025.
• The August figure was approximately N7.34 trillion lower than the June level.
• However, it remained above the N24.16 trillion recorded in September 2025.

Economists assess credit rebalancing

Financial economist Akeen Yusuf said the movement could indicate a gradual rebalancing of credit allocation, although it should not automatically be interpreted as a sustained reduction in government borrowing.

He noted that banks have historically been attracted to government securities because of their relatively lower risk and predictable returns, particularly when yields remain elevated.

• “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,” Yusuf said.

According to him, a sustained decline in government credit could create additional room for private-sector lending if accompanied by stronger demand for loans from businesses.

Abuja-based economist Dr Olu Olajemgbesi similarly highlighted the relationship between government borrowing and private-sector lending, noting that attractive yields on government securities can reduce banks’ incentives to lend 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 said.

Olajemgbesi described the increase in private-sector credit to N84.55 trillion in August as encouraging, suggesting that some pressure on bank balance sheets may be easing. However, he cautioned that the improvement remains gradual, with private-sector credit still below February’s N94.61 trillion.

What you should know

Credit to the private sector increased to N84.55 trillion in August 2026, from N83.43 trillion in July and N83.26 trillion in June, according to the CBN data.

• The increase followed a gradual rise from N80.59 trillion in April to N81.04 trillion in May.
• Private-sector credit reached N94.61 trillion in February 2026, the highest figure among the months supplied.
• It stood at N75.83 trillion in December 2025, before rising to N83.43 trillion in July 2026.

Net domestic credit declined from N123.29 trillion in June to N117.35 trillion in July and N117.25 trillion in August.

Other assets net fell from N9.93 trillion in July to N9.14 trillion in August.