While the economy continues to make recovery effort after the recent cash crunch, the Central Bank of Nigeria (CBN) has revealed that the private sector owes the banking industry ₦44.1 trillion.
The banking industry’s regulatory body, the CBN revealed that loans from banks to private sector has continued to rise in recent times.
In its latest Money and Credit statistics report, the CBN, said the loan crossed a ₦44 trillion mark to ₦44.1 trillion in April 2023.
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According to the CBN, this ₦44.1trillion loan to the private sector, is the highest so far, 2.40% Month-on-Month (MoM) and 17.76% Year-on-Year (YoY) growth.
Commercial banks loan to the private sector increased by 6.6% Year-till-Date (YtD) from ₦41.54 trillion to ₦44.1 trillion recorded at the end of April 2023, after the cash crunch in the country reduced.
Credit growth slowed slightly in January and February 2023, from the fourth quarter of 2022 and foreign direct investment plunged in 2022.
Hampered by the US dollar shortage, scarcity of Naira and stagflation, leading some companies to cancel their expansion plans.
Specifically, credit to private sector added ₦212 billion between January that was ₦41.54 trillion to ₦41.75 trillion in February, and gained ₦1.3 trillion to ₦43.07 trillion in March 2023.
However, it added ₦1.03 trillion between March and April 2023.
Analysts at Cordros Research says the increase in the credit to the private sector is a reflection of the impact of improved domestic macroeconomic conditions and CBN-led interventions on the real sector.
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According to them, “we expect that the improvement of domestic economic activities will drive the willingness of commercial banks to create risky assets.
Also, we expect the CBN to maintain its intervention programmes at a steady pace, as the economy expands. Conclusively, we predict that the Credit to Private Sector (CPS) will maintain a double-digit expansion in 2023 full year.”
