The Federal Government’s domestic borrowing from financial market operators rose sharply in 2025 despite persistently high interest rates, widening the gap between public and private sector access to credit.
This is according to money and credit statistics obtained from the Central Bank of Nigeria (CBN) on Thursday.
An analysis of the data showed that credit to the Federal Government significantly outpaced private sector borrowing by ₦9.19 trillion in 2025, representing a 695.6 per cent swing within the year. The sharp increase reflects mounting fiscal pressures and the government’s growing reliance on domestic funding sources.
In contrast, net credit to the private sector declined by ₦1.543 trillion in 2025, underscoring the difficulties businesses continue to face under tight monetary conditions and elevated borrowing costs.
The divergence highlights a growing imbalance in the allocation of financial system resources, with the public sector absorbing a disproportionately larger share of available liquidity.
Economists note that the trend points to a classic crowding-out effect, where increased government borrowing constrains banks’ ability to extend credit to the productive private sector.
As a result, many organised businesses are reportedly prioritising the repayment of existing obligations rather than taking on new loans, further dampening private sector investment and growth prospects.
The development raises concerns about the long-term implications for economic expansion, job creation, and private sector-led growth, especially as monetary policy remains tight.
