The Central Bank of Nigeria's latest data reveals a significant shift in bank credit allocation, with net credit to the public sector declining by over N7 trillion in two months. In June, credit to the government stood at N40.03 trillion, dropping to N33.92 trillion in July and further to N32.70 trillion in August. This represents a decline of N7.33 trillion from June, marking the third consecutive month of decreased government credit.
Conversely, credit to the private sector has continued to rise, increasing from N83.26 trillion in June to N83.43 trillion in July and N84.55 trillion in August. This growth indicates a rising gap between private-sector credit and government credit, with private-sector credit now more than twice the level of credit to the government. Despite this increase, private-sector credit has not reached its peak, which was recorded in February at N94.61 trillion.
The August figure for private-sector credit, N84.55 trillion, is N8.67 trillion or 11.4% higher than the N75.88 trillion recorded in August 2025. The Central Bank of Nigeria's data does not specify whether the decline in government credit is due to lower borrowing, debt repayments, or valuation changes, making it difficult to determine the exact reason for this shift.
The broader credit position in Nigeria shows a decline in net domestic credit, which fell from N123.29 trillion in June to N117.35 trillion in July and N117.25 trillion in August. Additionally, other assets, net, declined from N9.93 trillion in July to N9.14 trillion in August. The movement in credit allocation reflects businesses' continued dependence on bank financing for working capital and investment.
The increase in private-sector credit follows a steady rise from N80.59 trillion in April to N81.04 trillion in May, N83.26 trillion in June, and N83.43 trillion in July. However, the Central Bank of Nigeria's data does not provide a sector-by-sector breakdown of the August increase, making it unclear which industries or categories of borrowers accounted for the rise.
In related news, Nigeria's broad money supply, measured by M3, rose to N139.38 trillion in August from N138.78 trillion in July, representing a monthly increase of N601.6 billion or 0.4%. On a year-on-year basis, M3 was 16.4% higher than the N119.69 trillion recorded in August 2025. The increase was driven by a rise in net domestic assets.
Currency outside banks also increased in August, reversing three consecutive months of decline. It rose by N70.9 billion or 1.48% from N4.80 trillion in July to N4.87 trillion. Despite the rebound, cash outside banks remained below the N5.25 trillion recorded in January. On a year-on-year basis, however, currency outside banks increased by about N419 billion or 9.4% from N4.45 trillion in August 2025.
Key points
- - Government borrowing has declined by over N7 trillion in two months. - Private-sector credit has continued to rise, exceeding twice the level of credit to the government. - Nigeria's broad money supply, measured by M3, increased by 0.4% in August.
