This Day (Lagos)

Nigeria: Credit to Private Sector Now N14.845 Trillion

Banking sector credit to the private sector increased to N14.845 trillion in July, reflecting a year-on-year increase of 49.2 per cent, latest data obtained from the Central Bank of Nigeria's (CBN's) website has shown.

But THISDAY checks showed that the amount represented a 1.02 per cent growth, compared with the N14.694 trillion recorded in June.

The CBN's economic indicator also showed that broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts, stood at N13.391 trillion as at July.

Renaissance Capital (RenCap) had in a recent report, faulted the computation of credit growth figures by the CBN.

But commenting on the development yesterday, sub-Saharan African Economist, RenCap, Yvonne Mhango, said: "We expect year-on-year credit growth to slow sharply in August to 40 per cent (as the base effect will begin to kick in) and thereafter to continue slowing to the mid- to late-teens by the end of 2012.

The National Bureau of Statistics (NBS) is expected to release Gross Domestic Product (GDP) data this Thursday.

"The near term risk of a slowdown in year-on-year credit growth and stronger GDP growth increases the small risk of a rate cut in the short term," Mhango added.

RenCap had downwardly revised its 2012 real GDP growth forecast for Nigeria to 6.3 per cent from 6.7 per cent due to the weakening growth outlook.

"Nigeria started the year on the back foot when a petrol price hike set off a nationwide strike that brought economic activity to a standstill for almost two weeks.

"This, and increased security concerns in northern parts of Nigeria that undermined agricultural production, largely explain the slowdown in growth in first quarter to 6.2 per cent year on year from 7.1 per cent year-on-year," RenCap had said.

The CBN's second quarter report for 2012 had shown that real GDP growth strengthened to 6.6 per cent year-on-year, from 6.2 per cent year-on-year in first quarter of 2012.

"At N13.313 trillion aggregate banking system credit to the domestic economy, fell by 2.7 per cent at the end of the second quarter of 2012, compared with the marginal decline of 0.1 per cent at the end of the preceding quarter. It however, rose by 8.3 per cent at the end of the corresponding quarter of 2011.

"The decline in the aggregate banking system credit relative to the preceding quarter's level reflected, largely, the substantial decline in net credit to the Federal Government, which dampened the effect of the increase in claims on the private sector," the apex bank had revealed.

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