CBN Shifts Credit To Businesses As Govt Borrowing Drops By N350bn

…Private Sector Lending Rises By N2.22tn To N83.26tn In June

…Government Credit Falls To N40.03tn As Net Domestic Credit Hits N123.29tn

…Business Credit Up N7.13tn Year-On-Year Despite 26.5% Interest Rate

Credit allocation in Nigeria tilted further towards businesses in June 2026 as lending to the private sector rose sharply while credit to the government declined, according to the latest monetary data released by the Central Bank of Nigeria (CBN).

The data showed that credit to the private sector increased by N2.22tn within one month, rising from N81.04tn in May to N83.26tn in June, signalling continued support for businesses despite the apex bank’s tight monetary policy stance aimed at curbing inflation.

On a year-on-year basis, private sector credit expanded by N7.13tn, representing a nine per cent increase from the N76.13tn recorded in June 2025.

The development comes at a time when the CBN has maintained the Monetary Policy Rate (MPR) at 26.5 per cent, one of the highest benchmark interest rates in Nigeria’s history, in a bid to sustain the downward trend in inflation and preserve macroeconomic stability.

The latest figures suggest that although borrowing costs remain elevated, banks continued to extend credit to businesses and households, indicating resilience in economic activities and sustained demand for financing from the productive sector.

In contrast, credit extended to the government declined during the review period. The CBN data showed that government borrowing fell from N40.38tn in May to N40.03tn in June, a reduction of about N350bn.

The decline in government credit, alongside the increase in lending to the private sector, points to a gradual rebalancing of domestic credit towards productive economic activities.

Overall, net domestic credit rose from N121.42tn in May to N123.29tn in June, representing an increase of N1.87tn.

The increase was driven largely by stronger lending to businesses, which more than offset the decline in government borrowing.

The CBN data also showed that reserve money, otherwise known as base money, increased marginally from N39.45tn in May to N39.52tn in June, reflecting an increase of N66.54bn.

However, “other assets, net” declined from N12.63tn to N10.76tn during the period, indicating changes in the composition of the apex bank’s balance sheet.

The figures underscore the delicate balancing act being undertaken by the monetary authorities as they seek to tame inflation without choking credit to the real economy.

Since embarking on an aggressive monetary tightening cycle, the CBN has repeatedly stressed that its objective is to restore price stability while ensuring that productive sectors continue to access financing needed to sustain economic growth.

Although higher interest rates typically discourage borrowing, the latest data suggest that financial institutions continued to increase lending to the private sector, reflecting improved confidence among lenders and sustained credit demand by businesses.

Analysts say the growth in private sector credit could support investment, production and employment if the additional lending is channelled into productive sectors such as manufacturing, agriculture, telecommunications and services.

However, the CBN did not provide a sectoral breakdown of the loans, making it difficult to determine which industries accounted for the increase in credit.

Economic experts have consistently argued that the quality of credit allocation is as important as the volume of lending, noting that financing must reach productive sectors capable of stimulating industrial output, creating jobs and boosting exports.

The latest credit figures were also released alongside new data showing continued expansion in the country’s money supply.

According to the CBN, broad money supply rose to N133.25tn in June from N129.21tn in May, driven mainly by growth in net domestic assets even as net foreign assets recorded a slight decline.

The simultaneous increase in money supply and private sector credit suggests that liquidity conditions remained supportive of economic activity despite the central bank’s restrictive monetary stance.

Analysts believe the trend reflects the CBN’s efforts to strike a balance between maintaining price stability and ensuring that businesses continue to have access to credit needed to drive investment and economic expansion.

With inflation gradually easing and domestic credit continuing to expand, attention will now shift to whether the current pace of lending can translate into stronger output growth in the second half of the year without reigniting inflationary pressures.

THE WHISTLER had reported last December that the Lagos Chamber of Commerce and Industry (LCCI) had urged the Central Bank of Nigeria (CBN) to begin a gradual easing of interest rates and expand credit to the private sector in 2026, warning that economic stability achieved in 2025 must now translate into inclusive growth for businesses and households.

Reviewing economic developments in 2025 and outlining priorities for 2026, the Chamber had said Nigeria had made important progress through difficult but necessary reforms, including fuel subsidy removal, foreign exchange liberalisation and tight monetary policy.