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🇳🇬 Nigeria /Economy & Trade

Nigerian Banks Criticized for Hoarding N91.1 Trillion, Starving Economy of Credit

From ThisDay · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Commercial banks are criticized for parking N91.1 trillion at the Central Bank of Nigeria, starving the economy of credit, according to a report by the Alliance for Economic Research and Ethics (AERE).
  • The AERE report also raised concerns about Nigeria's fiscal sustainability, warning that rising debt and weak spending undermine budgetary effectiveness despite revenue improvements.
  • The report characterized the large sums held by banks at the CBN not as financial strength but as a symptom of banking failure and a lack of national duty, urging banks to self-regulate or face intervention.

Commercial banks in Nigeria are facing sharp criticism for holding a staggering N91.1 trillion in idle liquidity at the Central Bank of Nigeria (CBN). A report by the Alliance for Economic Research and Ethics (AERE) argues this practice starves the real sector of much-needed capital, undermining economic growth.

The N91.1 trillion is not a sign of banking strength. It is a symptom of banking failure, a failure of intermediation, a failure of purpose, and a failure of national duty.

— Alliance for Economic Research and Ethics (AERE) reportDescribing the scale of idle liquidity parked at the CBN.

The AERE report, chaired by Hon. Dele Oye, a former president of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), labels the situation a "failure of intermediation, a failure of purpose, and a failure of national duty." The report highlighted a "cosmetic drop" in CBN standing deposit facility placements from N92.32 trillion in April 2026 to N91.1 trillion in May, but noted that deposits had surged to N128.9 trillion in March 2026. Banks cumulatively placed N425.86 trillion with the CBN in the first five months of 2026, a nearly 700% year-on-year increase.

"This is not banking. This is financial mercantilism, the capture of state-derived liquidity for private gain, with minimal productive intermediation," the report stated. It contrasted this with a collapse in borrowing from the CBN’s Standing Lending Facility (SLF), which reportedly fell by 94.9% to N2.2 trillion from N43.42 trillion. This suggests a system where banks no longer need to lend to survive, with much of their reported strength being illusory.

The banks have a choice: self-regulate, reintermediate, and remember their source or face intervention that will be neither gentle nor forgiving.

— Alliance for Economic Research and Ethics (AERE) reportIssuing a warning to commercial banks about their practices.

Beyond the liquidity issue, AERE also voiced concerns about Nigeria's fiscal sustainability. Despite improvements in government revenue and narrowing budget deficits, the report warned that persistent leakages, rising debt obligations, and weak capital spending continue to undermine budgetary effectiveness. The gains are insufficient to offset mounting spending pressures and the growing burden of debt servicing. The report issued a stark warning to the banks: "The banks have a choice: self-regulate, reintermediate, and remember their source or face intervention that will be neither gentle nor forgiving."

This is not banking. This is financial mercantilism, the capture of state-derived liquidity for private gain, with minimal productive intermediation.

— Alliance for Economic Research and Ethics (AERE) reportCharacterizing the practice of parking funds at the CBN.
DistantNews Editorial

Originally published by ThisDay in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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