Private Sector Credit Rises N3.51tr As Government Borrowing Drops N7.68trn

Credit allocation in Nigeria’s banking system is shifting towards the private sector, with businesses and households receiving N3.51 trillion in additional credit since May, even as government borrowing from the banking system declined by N7.68 trillion over the same period.

The latest money and credit statistics released by the Central Bank of Nigeria (CBN) showed that private sector credit rose for the third consecutive month to N84.55 trillion in August, while credit to government fell for the third straight month to N32.70 trillion.

Private sector credit increased by N1.13 trillion, or 1.35 per cent, in August from N83.43 trillion in July. The increase followed a N171.8 billion rise in July, when credit to the sector grew from N83.26 trillion in June.

Since May, private sector credit has expanded by N3.51 trillion, representing a 4.33 per cent increase from N81.04 trillion.

The sustained recovery follows a sharp contraction earlier in the year, with private sector credit falling from a peak of N94.61 trillion in February to N80.59 trillion in April.

Although lending to the private sector has recovered by almost N4 trillion from the April low, the August figure remains N10.06 trillion below the February peak.

On a year-on-year basis, however, private sector credit recorded stronger growth, rising by N8.67 trillion, or 11.43 per cent, from N75.88 trillion in August 2025.

In contrast, government credit has continued to decline, falling by N7.68 trillion, or 19.02 per cent, since May.

Government credit stood at N40.38 trillion in May before edging down to N40.03 trillion in June. It subsequently dropped sharply to N33.92 trillion in July and N32.70 trillion in August.

The August figure represents a monthly decline of N1.22 trillion, or 3.60 per cent.

Despite the recent decline, government credit remained substantially higher than its level a year earlier. At N32.70 trillion in August, it was N9.75 trillion, or 42.47 per cent, above the N22.95 trillion recorded in August 2025.

The divergent movement in lending to the private sector and government has widened the gap between the two categories of credit.

Credit to the private sector exceeded government credit by N51.85 trillion in August, compared with a N40.66 trillion gap in May.

Meanwhile, currency in circulation recorded a modest recovery in August after declining for two consecutive months.

Currency in circulation rose by N53.6 billion, or one per cent, to N5.44 trillion in August from N5.38 trillion in July.

It had declined from N5.69 trillion in May to N5.52 trillion in June and N5.38 trillion in July.

Despite the August recovery, currency in circulation remained N294.8 billion, or 5.1 per cent, below the N5.73 trillion recorded in January.

However, on a year-on-year basis, currency in circulation increased by N514 billion, or 10.44 per cent, from N4.92 trillion in August 2025.

Currency outside banks also rose in August, increasing by N70.9 billion, or 1.48 per cent, to N4.87 trillion from N4.80 trillion in July.

The figure remained below the N5.19 trillion recorded in May and N5.25 trillion in January, but was N424 billion, or 9.53 per cent, higher than the N4.45 trillion recorded in August 2025.