The Federal Government’s domestic borrowings from financial market operators rose sharply in 2025 despite high interest rates, widening the gap between public and private sector access to credit, according to data obtained from the Central Bank of Nigeria on Thursday.
An analysis of money and credit statistics showed that credit to the Federal Government outpaced private sector borrowings by N9.19tn, representing a 695.6 per cent swing in 2025, reflecting heightened fiscal pressures and increased reliance on local funding sources.
In contrast, net credit to the private sector declined by N1.543tn in 2025, highlighting the challenges faced by businesses amid tight monetary conditions and elevated interest rates.
This divergence underscored a growing imbalance in the allocation of financial system resources, with the public sector absorbing a larger share of available liquidity.
The trend points to a classic crowding-out effect, as rising government demand for funds limits banks’ capacity to extend credit to the productive sector, while many organised businesses increasingly prioritise settling existing debts rather than taking on new borrowing.
