Nigeria’s ₦24.7 Trillion Borrowing Surge: What It Means for Businesses, Workers and the Economy

 

Nigeria’s Borrowing Has Nearly Doubled. Why Should Nigerians Care?

Nigeria’s Federal Government has dramatically increased its reliance on domestic borrowing, raising fresh questions about the country’s finances, access to credit for businesses and the amount of public money that could eventually be required to service the debt.

New analysis of data from the Debt Management Office and the Central Bank of Nigeria shows that the Federal Government borrowed ₦24.7 trillion from domestic investors between January and August 2026.

That represents a 90.5 per cent increase compared with the ₦12.98 trillion borrowed during the same period in 2025.

The figure is significant not simply because of its size, but because of what is happening alongside it.

While government credit has expanded rapidly, lending to the private sector has grown at a much slower pace.

That difference is becoming one of the most important stories in Nigeria’s economy because businesses need access to affordable financing to expand, employ workers, purchase equipment and survive rising operating costs.

The question now is straightforward:

Is government borrowing helping to finance Nigeria’s development, or is it taking too much money away from the productive economy?

The Numbers Behind the Borrowing Surge

The latest figures show that government borrowing increased across several major domestic instruments.

Federal Government bond borrowing rose by 145 per cent, from ₦3.18 trillion during the first eight months of 2025 to ₦7.78 trillion during the corresponding period of 2026.

Treasury Bills also increased sharply.

Borrowing through Nigerian Treasury Bills rose by 78.6 per cent, reaching ₦16.92 trillion compared with ₦9.47 trillion in the same period of 2025.

Borrowing through FGN Savings Bonds increased by about 22 per cent to ₦40.56 billion.

Together, these instruments have helped the government raise substantial funds from Nigeria's financial system.

But there is another figure that deserves attention.

According to the latest analysis of CBN data, credit to the Federal Government increased by 43 per cent year-on-year to ₦33.92 trillion in July 2026, compared with ₦23.69 trillion a year earlier.

Credit to the private sector, meanwhile, increased by only 9.6 per cent, rising from ₦76.13 trillion to ₦83.43 trillion.

In other words, government credit was expanding roughly 4.5 times faster than private-sector credit.

That is where the concern about a potential credit squeeze comes from.

Why Is the Government Borrowing So Much?

The answer is not necessarily that government revenue has collapsed.

In fact, Nigeria has recorded stronger revenue collections from several sources following major economic reforms.

Tax collection has increased, customs revenue has improved, and oil-sector earnings have also benefited from changes in the foreign-exchange and petroleum environment.

The removal of petrol subsidies has also fundamentally changed the government's fiscal position.

Yet Nigeria still has a huge gap between what government plans to spend and what it expects to collect.

Under the 2026 budget, the Federal Government projects expenditure of approximately ₦68.32 trillion, against expected revenue of about ₦36.87 trillion.

That creates a fiscal deficit of approximately ₦31.45 trillion.

Government plans to fund a large portion of that gap through borrowing.

The 2026 budget provides for approximately ₦29.20 trillion in domestic and external borrowing to help finance the deficit.

By the end of August, the ₦24.7 trillion domestic borrowing figure already represented about 84.7 per cent of that ₦29.2 trillion borrowing target.

That leaves relatively little room if the government wants to remain within the planned borrowing envelope.

The Bigger Question: Where Is the Money Going?

Borrowing is not automatically bad.

Almost every major economy borrows.

Governments borrow to finance infrastructure, roads, railways, electricity projects, healthcare, education, security and other investments that may produce economic benefits over many years.

Nigeria also has a huge infrastructure deficit.

Economists who support borrowing for productive investment argue that government cannot close such a gap simply by waiting for annual revenue to become sufficient.

The important distinction, therefore, is what the borrowed money is used for.

Borrowing to build infrastructure that increases productivity can potentially generate long-term economic benefits.

Borrowing repeatedly to finance expenses without creating additional productive capacity is a different proposition.

This is why Nigeria's debt debate cannot be reduced to the question of whether the government should borrow.

The more important questions are:

How much is being borrowed?

At what cost?

For what purpose?

And will the investments generate enough economic activity and revenue to justify the borrowing?

Why Businesses Are Watching Closely

For Nigerian businesses, the issue is not theoretical.

Government competes for money in the same financial system used by businesses.

When government securities offer attractive returns with comparatively lower perceived risk, banks, pension funds, asset managers and other institutional investors may find government debt attractive.

That can potentially reduce the amount of money available for private-sector lending or make private borrowing more expensive.

This is commonly described as crowding out.

Imagine a small Nigerian manufacturer that wants to borrow ₦100 million to purchase equipment.

If banks are already heavily exposed to government securities and the cost of lending remains high, that manufacturer may face a difficult choice.

It could postpone the investment.

It could reduce the size of the project.

Or it could accept an expensive loan that makes the business less profitable.

Multiply that situation across thousands of businesses and the consequences become much larger.

Businesses that cannot access affordable capital cannot easily expand.

Businesses that cannot expand may not create new jobs.

And businesses under financial pressure may eventually pass higher costs to consumers.

That is why government borrowing can eventually affect people who never buy a government bond.

What About Ordinary Nigerians?

For the average Nigerian, government borrowing may appear distant from everyday life.

But the effects can eventually show up through several channels.

One is the cost of credit.

Another is inflation.

Another is government spending.

And another is taxation.

The government must eventually service its debts.

That means future budgets have to provide money for interest and principal repayments.

The more revenue committed to debt servicing, the less flexible government becomes when deciding how much to spend on roads, hospitals, schools, security and other priorities.

This does not mean that every naira borrowed automatically becomes a burden on Nigerians.

If borrowing generates productive infrastructure and stronger economic growth, the long-term outcome can be different.

But if borrowing continues rising without a corresponding improvement in productivity and government revenue, debt servicing can increasingly compete with development spending.

Nigeria Has Already Seen How Expensive Debt Can Become

Nigeria's overall public debt has been substantial for years.

The DMO reported total public debt of approximately ₦159.28 trillion as of December 31, 2025.

The figure included both domestic and external obligations involving the Federal Government, the states and the Federal Capital Territory.

Domestic debt accounted for the larger share.

This means the latest ₦24.7 trillion borrowing figure should not be confused with Nigeria's total debt stock.

It represents domestic borrowing during the first eight months of 2026.

That distinction is important.

Borrowing during a period is a flow. Total debt outstanding is a stock.

The two figures tell different stories.

Could Borrowing Go Above ₦29 Trillion?

There is another reason the latest figures deserve attention.

At an average monthly borrowing rate of approximately ₦3.08 trillion between January and August, maintaining the same pace for the rest of the year could push borrowing above the government's original target.

Financial analysts quoted in the latest reporting have suggested that domestic borrowing could eventually reach around ₦30 trillion, while some scenarios put the figure as high as ₦32 trillion to ₦34 trillion if spending pressures continue and revenue expectations fall short.

However, this should be treated as a projection rather than an established outcome.

The final borrowing figure will depend on government financing needs, revenue performance, refinancing requirements and decisions made during the remaining months of 2026.

Government Has an Argument Too

It would be incomplete to portray the borrowing figures only as evidence of fiscal failure.

There is another side to the story.

Economists cited in the latest analysis argue that Nigeria has enormous infrastructure financing requirements.

Roads, railways, electricity, healthcare, education and security all require enormous amounts of capital.

The government cannot necessarily finance all of these requirements from annual revenue alone.

Some economists therefore argue that borrowing can be justified when it supports projects capable of increasing productivity and economic growth.

The issue is whether the borrowed funds are actually converted into productive assets.

That is where transparency becomes critical.

Nigerians need to know not only how much government borrows but also what every major borrowing programme is intended to achieve.

The Red Flag to Watch

The biggest concern is not one year's borrowing figure in isolation.

It is the possibility of a continuing cycle:

Government spends more → government borrows more → debt servicing rises → less revenue is available for other priorities → government borrows again.

Breaking that cycle requires stronger revenue generation, disciplined expenditure, productive investment and sustained economic growth.

Nigeria's tax reforms and improved revenue collection could help if they continue to expand the government's non-oil revenue base.

Higher oil production and better management of the petroleum sector could also improve government revenue.

But higher revenue alone will not solve the problem if expenditure continues growing faster than income.

What Happens Next?

The next few months will therefore be important.

Investors will watch government borrowing requirements.

Businesses will watch interest rates and access to credit.

Economists will watch debt-service costs.

And ordinary Nigerians will ultimately watch the variables that affect their daily lives: food prices, employment, electricity, transport costs and the cost of borrowing.

The government, meanwhile, faces a delicate balancing act.

It needs money to fund infrastructure and development, but excessive reliance on borrowing can create another problem if debt-service costs begin consuming too much of the available revenue.

Nigeria's ₦24.7 trillion domestic borrowing figure is therefore more than a large financial statistic.

It is a warning sign that deserves scrutiny—but it is not, by itself, proof that Nigeria is heading for a debt crisis.

The real test will be what happens to the money.

If borrowing translates into infrastructure, productivity, jobs and stronger economic growth, the country may eventually see a return on that investment.

If borrowing simply finances recurring expenditure while debt-service obligations continue climbing, the pressure could become much harder to manage.

For Nigerians, the most important question is no longer simply “How much is government borrowing?”

It is:

“What are we getting for the money?”