By Atoyebi Nike
Deposit Money Banks in Nigeria are shunning the Central Bank’s Standing Lending Facility despite shrinking liquidity buffers, fresh data from the apex bank reveal.
Between September 18 and 22, banks’ opening balances dropped sharply from ₦582.8bn to just ₦163.8bn, reflecting tightening liquidity pressures. Yet, no borrowings were recorded from the CBN’s SLF or repo windows, as lenders avoided the high costs of overnight borrowing.
Instead, banks placed excess funds in the Standing Deposit Facility ₦2.36tn on September 18, ₦1.45tn on September 19, and ₦1.69tn on September 22. Analysts say the trend underscores risk aversion, as lenders prioritise safety over lending, potentially worsening credit scarcity.
The squeeze was compounded by government debt operations, which drained liquidity through bond sales before partially offsetting it with maturities worth ₦337bn.
Market watchers warn that without fresh injections, interbank rates could spike, putting further pressure on the naira. With prime lending rates now at 25.5%-31% and maximum rates as high as 46%, analysts caution that Nigeria’s credit markets remain trapped in a paradox: excess liquidity at the CBN, but prohibitive borrowing costs for businesses and households.
