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Nigerian Banks’ loans to private sector increase by N3.50 trillion in one year – CBN

Data states that the credit was stimulated by the policy on Loan-to-Deposit Ratio (LDR).

The value of loans given to the private sector by Nigerian banks increased by N3.5 trillion –from N16.251 trillion in June 2019 to N18.632 trillion as at the end of May 2020.

This is according to data obtained from the Central Bank of Nigeria. According to the data, this growth represents an increase of 21.53%.

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Breakdown of loans

At the end of June 2019, a total of  N15.13 trillion was given to the private sector. The figure increased to N15.61 trillion by the end of July 2019 before dropping to N15.56 trillion at the end of August 2019.

Out of the total N18.63 trillion credit to the private sector in May 2020, the Oil and Gas industry (downstream, natural gas and crude oil refining) attracted N3.60 trillion.

  • This was followed by the Manufacturing sector which attracted N1.99 trillion within the same period.
  • The General Services segment also attracted N1.60 trillion in May 2020.
  • The Finance, Insurance and Capital market segment followed with a N1.32 trillion credit.
  • The Oil and Gas sector (upstream oil and gas services) attracted N1.29 trillion in May 2020.
  • Trade and General Commerce attracted N1.25 trillion.
  • During the year, credit to the private sector hit the highest in May 2020 at N18.53 trillion.
  • On the other hand, credit to the government rose to the highest at N1.55 trillion in January 2020.
  • A closer look shows that credit to government was at its lowest at N1,21 trillion by August 2019.

While speaking recently during a webinar by the Development Bank of Nigeria, Access Bank’s Group Head of Emerging Business, Ayodele Olojode, explained that MSMEs do not have regular and sustained access to finance at high-interest rates. This problem couples with lack of tangible collateral and economic conditions, which hamper MSMEs' access to finance.

She further noted that the credit guarantee industry in Nigeria is still at a nascent stage, where the volume of guarantees and the size of the industry contributions to SMEs remain low compared to peers in other economies.

In all, Credit Guarantee is the future because it will compensate for insufficient collateral, provide regulatory capital relief for banks, growth for MSMEs, increased economic GDP, and job creation.