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Nigeria Yields at Five-Year High Seen Cannibalizing Credit

  • Moody’s says banks have no incentive to lend to private sector
  • Government debt more attractive as non-performing loans soar
Updated on

The Nigerian government is offering such good rates on bonds and Treasury bills that the country’s banks would rather tie their money up in state debt than lend to businesses or consumers.

“Banks in Nigeria have a reduced incentive to lend to the private sector because of the favorable interest on government securities,” Akintunde Majekodunmi, a banking analyst at Moody’s Investors Service, said by phone from London on Wednesday. “They have increased appetite for government securities, which may cannibalize private-sector credit.”