The Banking sector credit to the private sector increased month-on-month (M-o-M) by N425.9 billion to N33.84 trillion as of September, up from the N33.4 trillion it was as at the end of August 2021.
The latest Central Bank of Nigeria (CBN) money and credit statistics posted on the regulator’s website revealed that the report figure of credit to private sector is all-time high banks lending to real sector.
THISDAY can report that credit to private sector Year-till-Date has added N3.19trillion or 10.41 per cent from N30.65 trillion in January to N33.84trillion as of September.
The apex bank had noted the improvement in lending to the real sector is following the introduction of the 65 per cent Loans-to-Deposit Ratio (LDR) in 2019.
In his personal statement at the last meeting of the Monetary Policy Committee of the CBN in September, Professor of Economics, University of Ibadan, Festus Adenikinju, said: “Most sectors of the economy, and households, benefitted from the increased credit. The various interventions by the Bank is providing a boost to personal consumptions and economic growth.”
On his part, the Permanent Secretary, Federal Ministry of Finance, Aliyu Ahmed who is also a member, attributed increase in credit to private sector to increase in industry funding base, as well as the CBN’s directive on LDR.
He added that the, the declining lending rates, although marginally, provides some assurance of improvement in lending to the private sector in the near term.
Deputy Governor, Economic Policy, CBN, Kingsley Obiora explained: ”The increased credit was recorded in manufacturing, consumer credit, general commerce, information and communication and agriculture. The credit growth was driven by the LDR policy, the extension of regulatory forbearance and other macro prudential measures.”
Recently, an Economist & Private Sector Advocate, Dr Muda Yusuf told THISDAY that the growth in credit to private sector is laudable, stressing that impact would depend on the sectoral spread, quality of credit, tenure of the funds and interest rate.
Yusuf said: “My guess is that a significant percentage of these have been given to large corporates, multinationals and high end medium enterprises. The CBN has done a lot in lending to agriculture, but the quality of the lending is an issue. Reports indicate high default rates in agricultural credit, especially the anchor borrowers’ scheme.
“Monetary intervention is imperative for real sector development. But it is not sufficient to guarantee the desired outcomes of growth and productivity. The context in which businesses are operating is as important as the funding, if not even more important. The totality of the investment environment must be right for sustainable real sector development to be achieved.”
He added, “Therefore, to complement the credit to the private sector, the other factors that should reckoned with include infrastructure quality, especially power, roads and railways. There are also issues around the quality of the regulatory environment, the foreign exchange policy regime, the ports situation, volatility of the naira exchange rate, the tax environment and the security situation.
“These are not things monetary intervention can solve. It takes an impactful fiscal policy intervention to fix these problems. Some of the issues border on economic reforms that need to happen. Engagements between the private sector stakeholders and policymakers is critical to achieving sustainable development of the economy.”