ACCORDING TO VANGUARD NEWSPAPER The federal government increased its borrowing from domestic investors by 90.5 per cent, year-on-year (YoY), to N24.7 trillion in the eight months to August 2026, against N12.98 trillion in the corresponding period of 2025 (8M’25).
Financial Vanguard findings from the government’s various public finance data also showed that credit to government grew more than four times faster than credit to the private sector during the same period. The data are generated from the Debt Management Office, DMO, and the Central Bank of Nigeria, CBN’s current reports.
These developments come against the backdrop of a massive rise in government revenue, as reported by some key agencies, including the Nigerian Revenue Service; Nigerian Customs Service; and the Nigerian National Petroleum Company Limited, among others. In addition to the massive revenue inflow, public concerns also point to savings from petrol subsidy removal, as well as massive naira cash translations from the floating of the exchange rate.
Many public commentators point to extra-budgetary spending and other unaccounted fiscal exposures as compounding the government’s cash-flow crises that may have compelled extensive borrowing across domestic and foreign windows. Meanwhile, the latest CBN data on money and credit showed that credit to the government rose by 43 per cent YoY to N33.92 trillion in July 2026 from N23.69 trillion in July 2025. But credit to the private sector grew by only 9.6 per cent YoY to N83.43 trillion in July 2026 from N76.13 trillion in July 2025. Thus, credit to the government grew 4.5 times faster than credit to the private sector. Financial Vanguard findings showed that the surge in FG’s borrowing was driven largely by increased issuance of FGN Bonds; FGN Savings Bonds; and Nigerian Treasury, NTBs.
Further breakdown showed that borrowing through FGN bonds rose by 145 per cent YoY to N7.78 trillion in 8M’26, from N3.18 trillion in 8M’25. Similarly, borrowing through NTBs increased by 78.6 per cent YoY to N16.92 trillion in 8M’26, from N9.47 trillion in 8M’25, while FGN Savings Bonds borrowing rose by 22 per cent YoY to N40.56 billion in 8M’26 from N33.18 billion in 8M’25.
Experts who spoke to Financial Vanguard attributed the sharp increase in borrowing to the government’s larger financing requirements, amid a significant fiscal deficit, higher expenditure and rising debt-service obligations. But the experts also raised concerns that the federal government’s increased appetite for domestic borrowing could squeeze businesses and households out of available credit. They also noted that the increased borrowing could lead to an increase in debt-service spending and thus reduce the government’s ability to fund infrastructure, education and health.
2026 fiscal headlines
Under the 2026 Budget, the federal government plans to spend N68.32 trillion, against revenue of N36.87 trillion, indicating a fiscal deficit of N31.45 trillion, with N29.20 trillion to be funded through domestic and external borrowing, while the remaining deficit is expected to be covered through multilateral and bilateral project-tied loans and privatisation proceeds. The N24.7 trillion borrowed in 8M’26 represents 84.7 per cent of the N29.2 trillion domestic borrowing target, leaving about N4.5 trillion for the remaining four months. At an average monthly borrowing of about N3.08 trillion between January and August, maintaining the current pace would result in the government exceeding its annual target.
Chief Executive Officer, MDU Capital Ltd, Ayodeji Ebo, said the increase in borrowing reflected “larger financing requirements arising from high debt-service costs, recurrent expenditure, infrastructure and security needs, and a fiscal deficit that remains significant despite improved revenue.” He said the government might also be relying more on the domestic market to limit its foreign-exchange exposure. However, Ebo cautioned that part of the NTB issuance represented refinancing or rollover of maturing obligations and should not be interpreted entirely as fresh borrowing. Chief Economist, United Capital Plc, Ayodele Akinwunmi, said infrastructure spending and the need to bridge fiscal deficits were among the factors driving the increase in borrowing. He said the impact of the borrowing should also be assessed from the perspective of the infrastructure being financed by the government. “Across the country, we have witnessed significant growth in infrastructure development, ranging from physical projects, such as roads and railways, to soft infrastructure, including education, healthcare and security.
“These advancements have contributed positively to the ease of doing business, creating a more enabling environment for economic activity,” Akinwunmi said. He said Nigeria’s huge infrastructure financing gap meant that the government could not rely solely on annual budgetary allocations to address the deficit, noting that Nigeria’s infrastructure deficit was estimated at about $2.3 trillion by 2043, with an annual financing gap of roughly $100 billion. “Building a robust infrastructure base is essential not only for economic competitiveness but also for job creation and inclusive growth,” he said.
Govt credit grows
4.5 times faster Speaking on the impact of the increased FG’s domestic borrowing on the economy, Ebo said: “For investors, the increased supply of government securities provides attractive risk-free investment opportunities and higher yields. “However, it can crowd out the private sector because banks and institutional investors may prefer government securities to lending to businesses. “This raises borrowing costs for companies and households, potentially slowing private investment, consumption and job creation. Higher debt-service obligations may also reduce the government’s capacity to fund infrastructure and essential public services.” Similarly, Co-Founder, Comecio Partners, Nnamdi Nwizu, said the sharp rise in domestic borrowing had produced mixed effects across the economy. He stated: “Investors, particularly pension funds, banks and money market funds, have benefited from high yields on government bonds and treasury bills, which also helps explain steady FPIs flow into local markets. “However, this comes at a cost to businesses because banks can earn safe, attractive returns by lending to the government; they have less incentive to lend to the private sector, which keeps borrowing costs high for businesses. “For households, higher yields mean better returns on savings products like money market funds and FGN Savings Bonds, but the flip side is rising debt-service costs for the government. “The total money spent on interest payments was over N3 trillion in Q1 alone, which is money not available for infrastructure, healthcare or education, which ultimately affects ordinary Nigerians.”
