Data from the Central Bank of Nigeria, shows that Nigeria’s total credit to the private sector of the economy rose to an unusual N32.63 trillion as of June 2021, making the 5th consecutive month of rising domestic credit to the private sector
Over the last five years, the Central Bank of Nigeria has adopted an aggressive policy towards expanding credit to the domestic sector, with the expectation that such will advance the GDP Growth Rate. This follows a CBN research report that recommends that private sector credit to major sectors of the economy holds great potential for promoting economic growth in Nigeria.
Read also: How real estate firms can manipulate the difficult times occasioned by the Pandemic
This has resulted in its policy of combining high loan to deposit ratio and cash reserve requirements as tools used to force banks to lend more to the private sector. Total credit to the private sector since it began this policy in March 2020 has increased by about N4.2 trillion. Commercial Bank lending remains a major component of this total. The CBN estimates bank lending to the private sector at about N22.6 trillion as of May 2021.
In its last monetary policy communique, the apex bank implored on banks to continue extending even more credit as they continue to hit multiple new heights.
While credit to the private sector is on the rise, the CBN data reveals credit to the government fell from N12.4 trillion in May 2021 to N11.74 trillion. In summary, total Net Domestic credit to the overall economy is reported at N44.38 trillion a slight drop from the record N44.5 trillion reported in May 2021. This again highlights the level of credit expansion currently taking place in the country.
