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Nigeria’s commercial paper market has expanded by more than fourfold in three years, as companies increasingly turn to short-term debt to finance working capital and operations amid limited access to fresh equity capital.
Data from FMDQ Securities Exchange showed that the outstanding value of commercial papers (CPs) rose from N117.32 billion in July 2023 to N489.45 billion in July 2026, representing a 317.4% increase over the period. The expansion translates to an additional N372.13 billion in outstanding commercial paper.
Debt Market Gains Momentum
The surge comes despite a strong performance by Nigeria’s equities market, suggesting that rising share prices have not necessarily translated into broader access to new capital for businesses.
The NGX All-Share Index gained about 57% in the first seven months of 2026, but fresh equity fundraising outside the banking and insurance sectors has remained concentrated among a relatively small number of companies.
The banking and insurance industries have accounted for significant primary-market activity largely because of regulatory recapitalisation requirements.
Other notable transactions include Dangote Sugar Refinery’s N485.88 billion rights issue and Neimeth International Pharmaceuticals’ N2.44 billion rights issue.
The trend highlights the difference between a rising secondary market, where existing shares change hands and gain value, and the primary market, where companies actually raise new capital.
Companies Seek Alternative Funding
With fresh equity opportunities relatively limited, more companies are accessing the commercial paper market to meet short-term financing needs.
Commercial papers are short-term debt instruments that allow companies to raise funds without surrendering ownership stakes. They can be used to finance working capital, inventory purchases and other immediate operational requirements.
FMDQ data showed that companies including Sunbeth Global Concepts, SKLD Integrated Services, Sycamore Integrated Solutions and C & I Leasing accessed the platform through CP quotations during 2026.
Sunbeth Global Concepts quoted N150.41 billion in multi-series commercial paper, while C & I Leasing quoted N18.90 billion under its N50 billion CP programme.
SKLD Integrated Services quoted N7.3 billion, while Sycamore Integrated Solutions raised N6.89 billion. FMDQ said proceeds from the C & I Leasing programme would support working capital and operational activities.
Other companies that accessed the market during the year include Miskay Boutique International, ARCO Worldwide Services, First Upland Ventures, Accion Microfinance Bank, HillCrest Agro-Allied Industries and MyCredit Investments.
July Issuance Records Sharp Increase
The latest expansion in outstanding CPs follows a significant jump in new commercial paper activity in July.
Commercial papers quoted on FMDQ during the month reached N126.71 billion, up 244.41% from N36.79 billion in June.
The increase amounted to an additional N89.92 billion, pointing to stronger corporate demand for short-term financing.
The agriculture sector was particularly active, accounting for 44.4% of the number of commercial papers quoted during July, with four issuances.
The development reflects growing efforts by businesses in the real sector to secure funding for production, inventory and other operational needs.
High Borrowing Costs Drive Shift
The growing popularity of commercial papers is also linked to the cost of conventional bank financing.
Businesses facing elevated lending rates are increasingly looking towards alternative funding channels that can provide shorter-term liquidity without relying entirely on bank loans.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, attributed the increase in CP activity largely to the prevailing monetary policy environment and high cost of bank credit.
According to him, companies are searching for more viable funding options as conventional borrowing becomes increasingly expensive.
Commercial Paper Comes With Repayment Pressure
While CPs provide companies with an alternative to equity financing, the structure also creates repayment obligations.
Unlike equity capital, which does not require companies to repay investors, commercial papers are debt instruments that mature within a specified period.
This means businesses relying heavily on CP financing must maintain sufficient cash flow to meet their obligations when the instruments mature.
The rise in CP usage therefore provides companies with greater funding flexibility but also places greater emphasis on effective liquidity and cash-flow management.
The Bigger Picture
The rapid expansion of Nigeria’s commercial paper market points to a changing corporate funding landscape.
The N489.45 billion outstanding value recorded in July shows that short-term debt has become an increasingly important source of capital for Nigerian businesses, particularly at a time when bank financing remains costly and broad-based equity fundraising is relatively limited.
For investors, commercial papers provide another avenue for accessing fixed-income returns, while companies gain a mechanism for raising funds without diluting existing ownership.
The challenge will be ensuring that the growth of short-term corporate borrowing is matched by sound cash-flow management and sufficient transparency, so that the expanding market remains a sustainable source of business financing.
