Federal government borrowing limits business access to loans
The Federal Government’s domestic borrowing from financial market operators surged in 2025, outpacing private sector access to credit. Data from the Central Bank of Nigeria shows that government borrowing widened the gap between public and private sector credit, with businesses struggling to secure funds amid high interest rates. Experts like Segun Kadir Ajayi and Muda Yusuf warn that this trend is crowding out the private sector and threatening economic growth. The imbalance in credit allocation has raised concerns about the sustainability of Nigeria’s financial system.
TLDR
- Credit to the Federal Government rose by N9.19tn in 2025, while private sector credit declined by N1.54tn over the same period.
- Government borrowing increased from N25.03tn in January 2025 to N34.22tn by December, with a sharp rise of N7.87tn in December alone.
- Private sector credit dropped from N77.38tn in January to N75.83tn in December 2025, reflecting tight liquidity and high borrowing costs.
- Segun Kadir Ajayi and Muda Yusuf highlight that banks prefer lending to government due to lower risk and attractive rates, limiting funds for businesses.
- Experts urge policy interventions, including lower interest rates and reduced government borrowing, to restore balance and support economic growth.
