SAT OCT 24 2026-theGBJournal| Credit to Nigeria’s private sector declined in September, even as lending to the government surged, underscoring the uneven transmission of tight monetary conditions and the growing role of public-sector borrowing in the domestic financial system.
Data from the Central Bank of Nigeria (CBN) showed that credit to the private sector (CPS) fell by 0.6 per cent month-on-month to N83.93 trillion, from N84.47 trillion in August.
The contraction suggests that the effects of restrictive monetary policy may still be weighing on credit demand and lending activity, as elevated interest rates raise financing costs for businesses and households.
The decline in monthly credit outstanding comes against a backdrop of sustained monetary tightening aimed at containing inflationary pressures.
While high interest rates are intended to moderate demand and support price stability, they also increase the cost of working capital, investment financing and consumer borrowing, potentially constraining the pace at which private-sector credit expands.
On a year-on-year basis, private-sector credit rose by 15.7 per cent to N83.93 trillion in September, compared with N72.53tn in the corresponding period of 2025.
The annual increase indicates that credit outstanding remained substantially above its year-earlier level, despite the month-on-month pullback.
The more striking movement was in credit to the government, which rose by 19.3 per cent month-on-month to N39.40 trillion in September, from N33.04 trillion a month earlier.
The increase points to a significant expansion in government borrowing from the domestic financial system, although the CBN figures alone do not establish how much of the rise was attributable to new borrowing rather than changes in the measurement or composition of outstanding credit.
Nevertheless, the divergence between public- and private-sector credit highlights a central tension in Nigeria’s monetary environment: while tight financial conditions are intended to restrain credit expansion, the government’s financing requirements continue to generate substantial demand for domestic funds.
The September figures also suggest that developments in credit cannot be assessed in isolation from broader monetary conditions.
Broad money supply, a measure of liquidity across the financial system, expanded considerably during the month, pointing to an increase in the stock of money even as private-sector credit edged lower.
Broad money supply (M3) rose by 5.4 per cent month-on-month to N146.60 trillion in September, from N139.09tn in August. The N7.51 trillion increase indicates a substantial expansion in measured monetary liquidity over the period.
The growth was accompanied by increases in both quasi-money and narrow money.
Quasi-money, which broadly captures relatively liquid deposits such as savings and time deposits, rose by 1.0 per cent month-on-month to N96.95 trillion. Narrow money increased by 2.2 per cent to N44.05 trillion.
Currency in circulation also edged higher, rising by 1.5 per cent to N5.52 trillion in September from N5.44 trillion in August.
The increase suggests a modest rise in currency held outside the banking system, although the figures do not establish whether the movement reflected stronger transactional demand for cash or other factors affecting currency holdings.
Taken together, the data present a mixed picture of Nigeria’s monetary conditions.
Aggregate money supply expanded, government credit accelerated and cash in circulation increased, while monthly private-sector credit contracted.
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