Federal Government's Domestic Borrowing Surges by 90% Amid Economic Strain

The federal government of Nigeria has reported a staggering 90.5% increase in domestic borrowing, reaching N24.7 trillion during the first eight months of 2026. This figure represents a significant jump from N12.98 trillion in the same timeframe of the previous year, raising alarms about the potential repercussions on the nation's economy and its businesses.

Data from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN) reveal that while government borrowing has surged, credit to the private sector has lagged considerably, growing only 9.6% year-on-year. This disparity, where government credit expanded more than four times faster than private sector credit, has sparked concerns among economists and business leaders about the sustainability of this borrowing trend.

Despite the government's substantial revenue increases, reported by agencies such as the Nigerian Revenue Service and the Nigerian Customs Service, many critics argue that the rise in borrowings may be attributed to mismanaged fiscal policies and unaccounted expenditures. The removal of petrol subsidies and the floating of the naira have purportedly contributed to government revenue, yet the persistent cash-flow crises and extra-budgetary spending continue to force the government to seek funding through domestic avenues.

“The surge in government borrowing is alarming, particularly as it comes at the expense of private sector growth, which is crucial for overall economic stability,” stated an economic analyst.

The latest CBN data further illustrates this trend, showing that credit to the government increased by 43% year-on-year, amounting to N33.92 trillion in July 2026, compared to N23.69 trillion in July 2025. As the government grapples with its fiscal challenges, stakeholders are left to wonder how this borrowing spree will impact Nigeria's business environment and economic health moving forward.