Credit to Private Sector Up 14.97% to N44.21trn in May

Nume Ekeghe

Central Bank of Nigeria (CBN) has revealed that credit to the private sector experienced a significant of 14.9 per cent year-on-year (Y-o-Y) increase, rising to N44.21 trillion in May 2023 compared with N38.46 trillion in 2022.

The reported N44.21 trillion in May 2023 follows the CBN directive mandating DMBs to lend to the real sector.  

According to the CBN money and credit statistics, credit to private sector on a Month-on-Month and Year-till-Date basis grew by 1.26 per cent and 6.43 per cent respectively on the backdrop of the cash crunch and double-digit inflation rate. 

The CBN numbers showed that sectors such as Oil & Gas, Manufacturing, General Commerce and Information Technology were the key beneficiary of DMBs lending to the real sector.  

Commenting, analysts at Cordros Research attributed the increase in the credit to the private sector to improved domestic macroeconomic conditions and CBN-led interventions in the real sector.

They stated: “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.”

The statistics posted on the CBN’s website revealed that currency in circulation increased by N44.57 billion in May 2023 to N2.53trillion, up from N2.48 trillion in April 2023.

This is an increase of 82.2 per cent YtD growth from N1.39 trillion CBN reported in January 2023 as the reported figure in May is the highest so far.

The Money and Credit statistics for April had revealed that currency in circulation rose by 42 per cent from N1.68 trillion in March to N2.38 trillion in April.

Analysis of the CBN numbers showed that the rise is slowly sprinting to the previous peak of N2.73 trillion outside banks as of September 2022 which was 85 per cent of N3.2 trillion of CIC which initially prompted the CBN to act against hoarding and opted to redesign the naira.

The Head, Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle had attributed the significant increase in currency in circulation to the spill over effect of the cash crunch and that average Nigerians are hoarding the new notes and are not depositing in the banks because of distrust in electronic banking.