Stock of credit to the government stood at N34.19 trillion in January, a 36.6 per cent increase from N25.03 trillion at the end of January 2025, according to money and credit data obtained from the Central Bank of Nigeria (CBN).
While credit to the government has risen sharply, that of the private sector has stalled over the past two years, hovering around N76 trillion. In the past year, it dipped from N77.38 trillion to N75.24 trillion or nearly three per cent.
Though the decline was moderate, the growth of credit to the public sector during the tapering suggested the rising risk premium of the private sector and rising preference for risk-free lending among creditors.
Overall, net domestic credit expanded by almost seven per cent, from N102.41 trillion in January 2025 to N109.43 trillion, suggesting a healthy performance considering the restrictive credit market. The growth was driven by rising credit to the government at the expense of the private sector employers.
Credit availability to the private sector increases their ability to scale, diversify and create jobs. But when the operators are starved, economic growth is stifled, which affects their capacity to create new jobs.
The divergence of credit growth to the government and private sector came during a heightened monetary tightening that kept the anchor interest rate at around 27 per cent and the transaction corridor around 30 per cent.
