Private Sector Credit Hits Record N94.6tn – CBN

Nigeria’s banking system is expanding at a breakneck pace that defies traditional economic logic. Credit to the private sector reached a record N94.61tn in February. Simultaneously, government borrowing climbed to N39.36tn. Usually, heavy state borrowing crowds out private companies. Today, both are feasting on bank balance sheets at the same time. This dual surge suggests a massive expansion in the country’s monetary base.

The jump in private lending marks a sharp departure from last year. For much of 2025, credit remained stuck near N75tn as high interest rates and tight liquidity choked off growth. September 2025 saw lending hit a yearly low of N72.53tn. The sudden leap to over N94tn in early 2026 indicates a structural shift. Firms are likely borrowing more just to keep pace with rising costs for energy and imports.

Government appetite for cash shows no sign of slowing down. Net claims on the sovereign rose by nearly N1.5tn in a single month. This trend began with a sharp spike in late 2024 to cover year-end fiscal gaps. It has now settled into a permanent upward climb. The state has added N12.25tn to its debt profile since February last year. Banks seem more than happy to fund the treasury even as they ramp up commercial loans.

This credit boom comes despite a backdrop of aggressive central bank policy. Lending rates remain high, yet the volume of credit grew by N18.35tn in twelve months. Most of this growth is driven by necessity rather than expansion. Nigerian corporates face immense pressure from a weak currency and expensive diesel. They are taking on more debt simply to maintain their current levels of production.

The stability of this credit cycle depends entirely on the health of the banking sector. A year ago, risk aversion and tight liquidity kept a lid on lending. Now, the taps are open for both the taxman and the entrepreneur. If inflation continues to outrun these nominal gains, the real value of this credit will vanish. For now, the system is awash with new money.

The Central Bank of Nigeria appears to be presiding over a synchronised balance sheet expansion. The data shows that system-wide credit is accelerating across every sector. This creates a facade of growth that may hide deeper vulnerabilities. If the government fails to rein in its fiscal needs, it will eventually test the limits of bank liquidity. For the moment, everyone is borrowing, and the banks are lending.