Nigeria: Credit to Economy Rises By 6.3 Percent to N38tr in H1'2020

3 August 2020

Credit to the economy rose by 6.3 percent to N38 trillion in the first half of the year (H1'2020) driven by 9.85 percent upsurge in credit to the federal government.

This reflects the impact of the various intervention funds introduced by the Central Bank of Nigeria (CBN) to spur lending and stimulate economic growth in the face of the challenges of the COVID-19 pandemic.

Meanwhile, banks were able to grow their current account (demand) deposits by 21.7 percent or N1.84 trillion in H1'2020, defying the severe impact of COVID-19 pandemic on economic activities during the period.

The CBN disclosed these in its Deposit Corporation Survey for June 2020.

READ ALSOOsun: Man dies after attempting to free remanded suspect at Akire palace

Financial Vanguard analysis of the report showed that Net Credit to the Domestic (NCD) economy rose by N2.23 trillion or 6.23 percent to N38.1 trillion in H1'2020 from N35.82 trillion at the end of 2019.

This growth was powered by Credit to the Private sector which rose by N2.62 trillion or 9.85 percent to N29.18 trillion at the end of 2019.

Credit to the Government however fell by N381 billion or 4.13 percent to N8.86 trillion in H1'2020 from N9.24 trillion at the end of 2019.

The report also showed upsurge in banks' current account (demand) deposits, which shot up by N1.84 trillion or 21.7 percent to N10.31 trillion in H1'2020 from N8.47 trillion at the end of 2019.

According to the report, Broad Money Supply (M3 money) rose by 3.54 percent to N35.35 trillion in H1 2020, resulting from a 13.67 percent increase in Net Foreign Assets (NFA) to N7.58 trillion which was also supported by a 1.09 percent rise in Net Domestic Assets (NDA) to N27.77 trillion.

The report also showed that the increase in NDA was chiefly driven by a 6.23 percent jump in Net Domestic Credit (NDC) to N38.05 trillion in H1 2020.

Further breakdown of the NDC showed a 4.13 percent decline in Credit to the Government to N8.86 trillion; however, Credit to the Private sector rose by 9.85 percent to N29.18 trillion.

On the liabilities side, the 3.54 percent increase in M3 Money was driven by the 10.48 percent increase in M2 Money to N32.17 trillion in H1 2020, but was offset by a 36.71 percent fall in treasury bills held by money holding sector to N3.17 trillion.

The increase in M2 was propelled by a 18.14 percent rise in Narrow Money (M1) to N12.20 trillion (of which Demand Deposits increased by 21.69 percent to N10.31 trillion, and currency outside banks, rose by 1.92 percent to N1.89 trillion), and accompanied by a 6.27 percent rise in Quasi Money (near maturing short term financial instruments) to N19.97 trillion.

Reserve Money (Base Money) strongly rose by 57.97 percent to N13.26 trillion as Bank reserves sky rocketed by 78.37 percent to N10.96 trillion, accompanied by a 2.27 percent rise in currency in circulation to N2.30 trillion.

"

More From: Vanguard

Don't Miss

AllAfrica publishes around 900 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.