Nigeria’s financial markets are witnessing one of their most active years yet as the Central Bank of Nigeria steps up its liquidity management efforts through large-scale domestic borrowing.
New figures show that from January 2 to November 21, the apex bank issued N17.59 trillion in primary market debt instruments while settling N14.72 trillion in repayments. This resulted in a net liquidity absorption of N2.87 trillion, underscoring a sustained tightening stance.
The News Chronicle gathered that the coordination between fiscal and monetary authorities has become more deliberate in recent months, with both sides pushing to stabilise the money supply, lower inflation and reduce dependence on central bank overdrafts. The approach marks a significant departure from previous years when unchecked financing of deficits contributed to rapid price increases.
Official transaction data reveals a year that began aggressively. January alone saw issuances worth N1.87 trillion against maturities of N595.78 billion. February and March maintained that tempo with over N3 trillion each in new instruments. Repayments in March, which reached N4.08 trillion, were the highest of the year as earlier debts matured.
Momentum slowed in the second quarter. Issuances in April, May and June declined progressively, reflecting rollover pressure and a recalibration of the bank’s liquidity strategy. Stability returned between July and October as issuance levels narrowed and repayments strengthened, peaking again in October. By November, activity on both sides had almost evened out, suggesting a measured approach ahead of year end.
Experts say the strategy demonstrates policy maturity. Proshare’s Chief Economist Teslim Shitta Bey noted that government is shifting from direct central bank financing to a market-based approach, which absorbs excess liquidity and gives institutional investors opportunities through attractive yields. He warned, however, that although investor confidence remains strong, debt accumulation is exceeding fiscal projections and could pose long term sustainability concerns.
At a recent Capital Market Academics of Nigeria symposium, analysts urged government to strengthen debt management frameworks and channel borrowings toward productive investments. Professor Wilfred Iyiegbunwe compared the current pace of borrowing to the period that led to the Paris Club debt crisis, calling for stricter adherence to medium term strategies.
Despite these worries, other market watchers see little risk of crowding out private sector credit. Agusto and Co’s Head of Research, Olubunmi Ayokunle, explained that auction oversubscription and strong system liquidity indicate that banks still have room to support corporate financing. He expects business borrowing to increase in 2026 as macroeconomic stability improves.
Outlook for the months ahead points to continued issuance of domestic debt for liquidity control and budget support. Investor appetite remains firm, but analysts agree that the real question is how effectively the borrowed funds will be deployed. Many argue that Nigeria’s economic trajectory will depend on whether these trillions build sustainable capacity or deepen the country’s fiscal vulnerabilities.
