A Nigerian business owner looking for money to expand does not need to be told that there is liquidity in the economy. Banks and investors are putting trillions of naira into government securities, businesses are borrowing, and the financial system continues to move enormous amounts of money.

Yet ask a manufacturer trying to buy equipment, a trader trying to increase inventory or a growing company looking for working capital, and the picture looks different. The money exists, but accessing it at a price that makes business sense is another matter.

That contradiction has become harder to ignore as the Federal Government increases its reliance on domestic borrowing. The government borrowed ₦24.7 trillion from domestic sources in the first eight months of 2026, up 90.5 percent from ₦12.98 trillion during the same period of 2025.

At the same time, Central Bank of Nigeria data show that private sector credit rose 8.74 percent year on year to ₦83.43 trillion in July. Credit to government, however, grew by 43 percent to ₦33.92 trillion.

The figures do not mean that every naira borrowed by government would otherwise have gone to a business. But they show how much more important government has become as a borrower in the domestic financial market.

The money is there, but it is not all looking for a business

For banks and institutional investors, lending is a calculation of risk and return. A business loan comes with questions about cash flow, collateral and the possibility that the borrower could fail.

Government securities offer a different proposition. Investors are lending to the sovereign, while the returns can be attractive and the perceived risk is generally lower than lending to a small business with limited assets.

That changes the incentive for financial institutions.

In the first eight months of 2026, borrowing through FGN bonds rose 145 percent year on year to ₦7.78 trillion, while borrowing through Treasury Bills increased 78.6 percent to ₦16.92 trillion.

For businesses, this creates pressure. Money placed in government securities cannot simultaneously be lent to a manufacturer, retailer or technology company.

This is the concern behind crowding out: when government absorbs more domestic capital, private businesses can find it harder to compete for financing, particularly when they are already considered riskier borrowers.

But the situation is not as simple as saying government borrowing has stopped banks from lending to businesses. Private sector credit is still growing. The problem is that the financing available may be too expensive, too short-term, or too difficult to obtain for the investment a business wants to make.

For businesses, the real problem is the cost of money

A loan only helps a business if it can make enough money from the borrowed capital to repay it and still have something left over. That calculation becomes difficult when interest rates are high.

The CBN retained its Monetary Policy Rate at 26.50 percent in July 2026 as it maintained a tight monetary policy stance. High rates influence the cost at which banks lend, making borrowing particularly difficult for businesses operating on thin margins.

For a large company with strong cash flow, expensive credit may be manageable. For a smaller business, it can make borrowing almost pointless.

This is why the size of private sector credit does not tell the whole story. Businesses need productive credit, not simply credit. They need financing with the right cost and repayment period to buy machinery, expand production, build inventory and manage cash flow.

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The distribution of credit also matters. CBN data showed that lending to agriculture stood at ₦3.86 trillion in March 2026, while manufacturing credit fell from ₦6.57 trillion in January to ₦5.77 trillion. Lending to power and energy rose from ₦1.30 trillion to ₦1.61 trillion, while real estate credit increased from ₦4.67 trillion to ₦6.29 trillion.

Nigeria needs money to move into productive businesses

There is an uncomfortable truth at the centre of Nigeria’s financing problem: banks cannot simply ignore risk because businesses need money.

If a company has poor financial records, unstable cash flow or inadequate collateral, a bank will naturally price that risk into the loan or decide not to lend.

Solving the problem therefore requires more than asking banks to lend more. Businesses need stronger financial records and credit information, while development finance institutions can help provide longer term funding where commercial banks are reluctant to take the risk.

Government borrowing also needs to produce economic value. If borrowed money finances infrastructure that reduces the cost of electricity, transport or logistics, businesses can ultimately benefit. If it simply creates another large interest bill without improving productive capacity, the pressure on future budgets becomes harder to justify.

Nigeria therefore does not have a simple shortage of money. It has a problem of allocation.

There is money in banks, government securities and financial markets. The question for the entrepreneur is much simpler: can I get enough of it, at a cost I can afford, to build something that will make more money and employ more people?

Until that becomes easier, Nigeria can continue reporting trillions of naira in credit while many businesses still feel as though they are operating in a cash drought.

Meiza Nigeria