Banks’ Credit To Private Sector Falls In September Amid Rising Govt Borrowing

The Nigerian banking industry’s credit to the private sector declined in September 2025 after maintaining stability for most of the year, as lending to the government rose, data from the Central Bank of Nigeria (CBN) have shown.

According to the CBN’s money and credit statistics, credit to the private sector dropped to N72.53 trillion in September 2025 from N75.88 trillion in August. This marks one of the sharpest monthly contractions of the year, reflecting the growing crowding-out effect of government borrowing in the financial system.

During the same period, credit to the government increased to N24.16 trillion in September from N22.95 trillion in August, indicating a renewed appetite for public sector borrowing as fiscal pressures mount. The figure has fluctuated throughout the year, reaching a peak of N27.11 trillion in February before moderating in mid-year months.

Meanwhile, currency outside the banking system also continued its upward trajectory, rising slightly to N4.465 trillion in September from N4.45 trillion in August. This reflects persistent cash hoarding by individuals and businesses despite electronic payment alternatives, and comes ahead of the end of year festivities.

In contrast, currency in circulation, which includes cash held by banks and the public, rose modestly to N4.95 trillion in September from N4.92 trillion in August, representing a marginal increase of N29 billion or 0.6 per cent.

So far in 2025, the data shows a consistent trend of increased government borrowing and mild contraction in private sector credit. Credit to the private sector stood at N77.38 trillion in January, showing a cumulative decline of about 6.3 per cent by September, while lending to the government has grown by over N2.1 trillion within the same period.

The rising government demand for funds highlights the federal authorities’ continued dependence on domestic financing to meet fiscal obligations, a development that analysts warn could dampen credit growth and investment in the real sector.

As of September, the combined total of private sector and government credit stood at N96.09 trillion, underlining the persistent fiscal-monetary tension shaping Nigeria’s 2025 financial landscape.