CBN: credit to private sector reached 33.84 billion naira in September


Darasimi Adebisi
Credit from the banking sector to the private sector increased from N425.9 billion to N33.84 billion in September, compared to N33.4 trillion at the end of August 2021.

The latest Central Bank of Nigeria (CBN) monetary and credit statistics posted on the regulator’s website revealed that the private sector credit report figure is the record level for banks lending to the real sector.

THISDAY can report that credit to the private sector to date added 3.19 trillion naira or 10.41 percent, from 30.65 trillion naira in January to 33.84 trillion naira in September.

The umbrella bank noted that the improvement in lending to the real sector followed the introduction of the loan-to-deposit ratio (LDR) of 65% in 2019.

In his personal statement at the last meeting of the CBN Monetary Policy Committee in September, University of Ibadan economics professor Festus Adenikinju said: “Most sectors of the economy, and households, benefited from the increase in credit. The Bank’s various interventions stimulate personal consumption and economic growth.

For his part, the permanent secretary of the Federal Ministry of Finance, Aliyu Ahmed, who is also a member, attributed the increase in credit to the private sector to the increase in the financing base of the industry, as well as the directive of the CBN on the LDR.

He added that the fall in lending rates, although marginal, gives some assurance that lending to the private sector will improve in the short term.

Deputy Governor, Economic Policy, CBN, Kingsley Obiora explained, “The increase in credit has been recorded in manufacturing, consumer credit, general commerce, information and communications, and agriculture. Credit growth has been driven by the LDR policy, the extension of regulatory forbearance and other macroprudential measures.

Recently, private sector economist and advocate Dr Muda Yusuf TODAY said growth in credit to the private sector is commendable, stressing that the impact would depend on sector allocation, credit quality, duration. funds and interest rate.
Yusuf said, “I guess a significant percentage of these were donated to large corporations, multinationals, and high-end mid-sized companies. The CBN has made a lot of agricultural loans, but the quality of the loans is an issue. Reports indicate high default rates in agricultural credit, especially the regime of key borrowers.

“Monetary intervention is imperative for a real development of the sector. But this is not enough to guarantee the desired results of growth and productivity. The context in which businesses operate is as important, if not more, than financing. The entire investment environment must be conducive to sustainable development of the real sector.

He added, “Therefore, to complement credit to the private sector, other factors to be reckoned with include the quality of infrastructure, especially electricity, roads and railways. There are also issues related to the quality of the regulatory environment, the exchange rate policy regime, the port situation, the volatility of the naira exchange rate, the fiscal environment and the security situation.

“These are not things that monetary intervention can solve. It takes a hard-hitting fiscal policy intervention to resolve these issues. Some of the problems relate to the economic reforms that need to be put in place. Commitments between private sector stakeholders and policy makers are essential to achieve sustainable development of the economy.

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