In September 2024, Nigeria’s money supply reached an unprecedented N109 trillion, marking a 1.68% increase from the previous month and a 62.8% rise year-on-year. Credit to the private sector also saw growth, reaching N75.84 trillion—an annual increase of 27.46%. Currency circulation expanded to N4.31 trillion, underscoring increased public liquidity and a rapidly evolving financial landscape driven by rising government and private sector borrowing.
The Central Bank of Nigeria (CBN) reported that banks’ credit to the government hit a record N42 trillion, up 89.8% from the previous year. This increase, from N31.15 trillion in August to N42.01 trillion in September, points to the government’s growing dependence on domestic bank financing, largely via bond issuance, to fund infrastructure projects and manage budget deficits. While this strategy provides vital funding, it could also increase national debt.
This rise in government borrowing raises concerns over a crowding-out effect, where banks may favor government loans over private-sector financing. Such a trend could hinder private sector growth, making it harder for businesses to secure necessary funding. Despite this, private sector credit remains in upward development, reflecting a complex balance between public and private financing in Nigeria’s economic landscape.
