By Balikis Ajoyo
The Federal Government’s borrowing from domestic investors rose by 90.5 per cent year-on-year to N24.7 trillion in the first eight months of 2026, compared with N12.98 trillion recorded during the corresponding period of 2025.
The surge, driven largely by increased issuance of Federal Government bonds and Nigerian Treasury Bills, has raised concerns among economic experts over the growing pressure of government borrowing on private-sector access to credit.
Data from the Debt Management Office and the Central Bank of Nigeria also showed that credit to the government grew significantly faster than credit to the private sector during the period.
CBN data indicated that credit to the government increased by 43 per cent year on year to N33.92 trillion in July 2026, from N23.69 trillion in July 2025.
In contrast, credit to the private sector rose by only 9.6 per cent to N83.43 trillion from N76.13 trillion.
This means credit to the government expanded about four-and-a-half times faster than credit to the private sector.
A breakdown of the domestic borrowing showed that funds raised through FGN bonds increased by 145 per cent to N7.78 trillion in the first eight months of 2026, from N3.18 trillion in the same period of 2025.
Borrowing through Treasury Bills also rose by 78.6 per cent to N16.92 trillion, compared with N9.47 trillion previously, while FGN Savings Bonds increased by 22 per cent to N40.56 billion from N33.18 billion.
The development comes despite increased government revenue from sources including the Nigerian Revenue Service, Nigerian Customs Service and the Nigerian National Petroleum Company Limited.
The government has also benefited from savings arising from the removal of petrol subsidy, as well as increased naira revenues following the floating of the exchange rate.
However, economists attributed the increased borrowing to the government’s growing financing needs, rising expenditure, debt-service obligations and a significant fiscal deficit.
Under the 2026 budget, the Federal Government plans to spend N68.32 trillion against projected revenue of N36.87 trillion, leaving a fiscal deficit of N31.45 trillion.
About N29.2 trillion of the deficit is expected to be financed through domestic and external borrowing.
The N24.7 trillion already borrowed domestically represents about 84.7 per cent of the government’s N29.2 trillion borrowing target, leaving approximately N4.5 trillion to be raised during the remaining four months of the year.
Chief Executive Officer of MDU Capital Limited, Ayodeji Ebo, said the increase reflected larger financing requirements arising from high debt-service costs, recurrent expenditure, infrastructure, security needs and the persistent fiscal deficit.
Ebo, however, cautioned that some Treasury Bill issuances represented the refinancing or rollover of maturing obligations and should therefore not be interpreted entirely as fresh borrowing.
Chief Economist at United Capital Plc, Ayodele Akinwunmi, linked the increase partly to infrastructure spending and the need to finance fiscal deficits.
He argued that the impact of the borrowing should also be assessed against the infrastructure being financed, noting that Nigeria still faces a substantial infrastructure financing gap.
Meanwhile, experts warned that increased domestic borrowing could crowd out businesses and households from available credit.
Ebo said banks and institutional investors could increasingly favour government securities because of their relatively attractive and low-risk returns, leaving less capital available for private-sector lending.
According to him, this could increase borrowing costs for businesses and households, potentially slowing investment, consumption and job creation.
Co-Founder of Comecio Partners, Nnamdi Nwizu, also said the surge had produced mixed effects.
While pension funds, banks, money-market funds and other investors could benefit from higher yields on government securities, he noted that businesses could face higher borrowing costs as financial institutions opt for government securities over private-sector lending.
Nwizu further raised concerns over the government’s rising interest burden, saying more than N3 trillion was spent on interest payments in the first quarter alone.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said the size of the 2026 budget was a major factor behind the increased borrowing.
He noted that exchange-rate movements had also increased the cost of capital projects, while the naira value of external debt and the cost of servicing domestic obligations had risen.
Yusuf warned that rising debt-service obligations could limit the government’s ability to finance other critical sectors.
He therefore advocated stronger revenue mobilisation, public-private partnerships and better commercialisation of government assets as alternatives to excessive borrowing.
Other analysts also projected that domestic borrowing could rise further before the end of 2026.
Estimates suggest that borrowing could close at around N29 trillion if the government remains within its revised target, but could rise to between N30 trillion and N34 trillion if spending continues to exceed revenue expectations and refinancing needs increase.
The government’s domestic borrowing target has already been revised upward from the original N17.9 trillion to approximately N29.2 trillion.
The rising borrowing profile has therefore intensified debate over whether increased government spending is translating into sufficient economic growth and infrastructure development, or whether mounting debt-service obligations could increasingly constrain fiscal space and private-sector investment.