Banks’ Credit to Private Sector Crosses N44trn in April

Nume Ekeghe

The Central Bank of Nigeria (CBN) has disclosed that banking industry credit to the private sector crossed the N44 trillion mark to N44.1 trillion in April 2023 amid the recovery in economic conditions after the general elections.

The CBN in its latest Money and Credit statistics reported N44.1trillion credit to the private sector, the highest so far, 2.40 per cent Month-on-Month (MoM) and 17.76 per cent Year-on-Year (YoY) growth.

Deposit Money Banks (DMB) had begun to increase lending to the private sector as the effects of the cash crunch waned in the country, increasing the level of credit to the sector by 6.16 per cent Year-till-Date (YtD) from N41.54 trillion compared to N44.1 trillion that was recorded at the end of April 2023.

As a result of slow economic activities in first quarter 2023 (Q1), business conditions in the country deteriorated at the sharpest paces, while price pressures climbed further in March 2023 and at the same time, borrowing costs were increased to a new record high.

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 N212 billion between January that was N41.54 trillion to N41.75 trillion in February, and gained N1.3 trillion to N43.07 trillion in March 2023.

However, it added N1.03 trillion between March and April 2023.

Analysts at Cordros Research attributed the increase in the credit to the private sector reflects the impact of improved domestic macroeconomic conditions and CBN-led interventions on the real sector.

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 programme s 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.”