Nigerian Businesses Struggle as Government's Domestic Borrowing Surges, Draining Credit from Private Sector

The Central Bank of Nigeria's data reveals a significant rise in the Federal Government's domestic borrowing to N9.19 trillion in 2025, representing a 695.6% increase. In contrast, private sector credit declined by N1.543 trillion during the same period, highlighting the challenges businesses are encountering amid tight monetary conditions and high-interest rates.

The government's heightened fiscal pressures have led to a greater reliance on local funding sources, causing a crowding-out effect on private sector credit. This phenomenon has raised borrowing costs for businesses, slowing down investments and economic activities.

The credit to the public sector increased significantly to N34.22 trillion by the end of 2025, while private sector credit contracted by N1.54 trillion. The trend indicates a growing imbalance in the allocation of financial resources, with the public sector absorbing a larger share of available liquidity.

This situation underscores the need for a balanced approach to credit allocation to support sustainable economic growth and job creation.