Credit to private sector drops by 2.2% to N29.7trn in September

Credit to the private sector has dropped by 2.2 per cent in September 2020 to N29.7trillion from N30.38 trillion in August, the Central Bank of Nigeria (CBN) has revealed.

However, between January and September, the money and credit statistics by the apex bank noted that credit to the private sector gained 11.48 per cent from N26.65trillion in January to N29.7trillion in September.

Our correspondent gathered that credit to the private sector closed February at N26.57trillion. It increases significantly to N28.3trillion in March and appreciated further to N28.78trillion in April.

The Deputy Governor, Financial System Stability, CBN, Mrs Aisha Ahmad who gave the update in her personal comment at September’s Monetary Policy Committee (MPC) meeting, said credit to the economy increased by N3.77trillion from N15.57trillion at end-May 2019 to N19.3trillion at end-August.

She attributed the growth to the apex bank’s Loans to Deposit (LDR) policy that was introduced last

“Focused implementation of the LDR policy over the last year continues to promote credit growth to the real sector and lower deposit and lending rates, – which supported banks’ net interest margins,” she said.

She said the significant growth recorded in manufacturing, consumer credit, general commerce and agriculture.”

The Deputy Governor, Economic Policy, CBN, Dr Kingsley Obiora noted that despite the persistence of the pandemic, the financial system has remained relatively stable and robust to withstand shocks.

“Credit to various sectors witnessed a significant boost from N15.57 trillion to N19.33 trillion between May 2019 and August 2020.

“This outcome reflects the continued implementation of the LDR Policy. In particular, the credit growth was mainly directed to manufacturing (N866.27 billion), consumer credit (N527.65 billion), oil & gas (N477.65 billion), agriculture (N287.11 billion) and construction (N270.97 billion),” he said in his statement.

Also, another member of the MPC, Dr Aliyu Sanusi, Associate Professor, Ahmadu Bello University, Zaria, in his statement said, “A review of the Banking System reveals that the industry continues to be stable and the NPL continues to decline. Between end-May 2019 and end-August 2020, the total credit to the economy has increased by N3.766 trillion, or 20.43per cent, due to the CBN’s LDR policy which encouraged banks to lend.

“Since the last MPC (end-June 2020 to end-August 2020), total credit to the economy has increased by N432.92 billion. Most of this increase in credit was extended to manufacturing, consumer credit, general commerce, ICT and Agriculture.

“The report shows that the various interventions to promote financial stability and improve economic recovery after the lockdown continue to work in the desired direction. For instance, over N7.7 trillion or 43.02per cent of the industry has been restructured as a result of the forbearance granted to banks.”