Credit to Private Sector Increased by 38% YoY in June

Nume Ekeghe

Despite economic challenges, credit to the private sector experienced a notable surge, increasing by 38 per cent year-on-year (YoY) in June 2024, a report by the Central Bank of Nigeria (CBN) has revealed.

The money and credit statistics report revealed that total credit extended to the private sector in June 2024 reached N73.12 trillion, a significant rise from the N52.81 trillion recorded in June 2023.

The YoY increase of 38 per cent highlights the ongoing efforts by banks and financial institutions to bolster lending to businesses and individuals, contributing to overall economic growth.

However, when comparing month-on-month (MoM) figures, there was a slight decline in credit extended to the private sector. In May 2024, credit stood at N74.31 trillion, which means June 2024, saw a modest decrease of 1.6 per cent.

This slight contraction, according to market watchers, may be attributed to seasonal factors, temporary tightening of credit conditions, or a cautious approach by lenders in response to specific economic indicators.

The credit extended to the private sector in Nigeria during the first four months of 2024 showed that in January 2024, credit to the private sector stood at N76.48 trillion. By February 2024, this figure saw a significant increase, rising by 5.7 per cent to N80.86 trillion.

However, March 2024 brought a sharp decline, with credit dropping by 11.9 per cent to N71.21 trillion. While in April 2024, credit to the private sector saw a slight recovery, increasing by 2.4 per cent to N72.92 trillion.

But, credit extended to the government witnessed a significant YoY decline in June 2024, alongside a slight MoM decrease.

According to the latest data, credit to the government stood at N28.05 trillion in June 2024, marking a 10.2 per cent drop from the N31.23 trillion recorded in June 2023.

The YoY contraction in government credit underscores a deliberate move by the government to curb borrowing, possibly in a bid to manage debt levels and reduce the fiscal deficit. The decline could also suggest a more disciplined approach to public finance, with the government seeking to lower its dependence on credit from the domestic financial system.

On a MoM basis, credit to the government also saw a modest decline of 1.1 per cent, decreasing from N28.38 trillion in May 2024 to N28.05 trillion in June 2024.

The credit extended to the government in Nigeria during the first four months of 2024 exhibited significant volatility, reflecting shifts in government borrowing needs and fiscal policy adjustments.

In January 2024, credit to the government was N23.52 trillion, indicating a relatively moderate level of borrowing as the government likely managed its fiscal commitments at the start of the year. By February 2024, this figure saw a substantial increase, rising by 44.3 per cent to N33.93 trillion.

However, March 2024 witnessed a sharp decline, with credit dropping by 42.3 per cent to N19.59 trillion, while in April 2024, credit to the government saw a slight increase, rising by 2 per cent to N19.98 trillion.