Mariam Abeeb
Data from the Central Bank of Nigeria has shown that credit to the public has expanded at a faster rate than credit to the private sector in the past year.
According to the Money and Credit Statistics data obtained from the CBN’s website, credit to the government stood at N42.02tn as of September 2024, compared to N22.14tn as of the same period in the previous year, indicating an 89.79 per cent increment.
During the same period, credit to the private sector also rose, albeit at a slower pace, to N75.85tn from N59.51tn in September 2023, marking a 27.46 per cent increase in one year.
Credit to the private sector from banks includes loans, trade credits, and other account receivables and supports provided by banks to the private sector within a period. Government credit comprises credit facilities extended to the government.
Credit to the private sector had been squeezed by the sustained hikes in the benchmark interest rate by the Monetary Policy Committee of the CBN, which raised the MPR at all of its meetings this year by over 800 bps to 27.50 per cent from 18.75 per cent as of December 2023.
However, CBN data showed that there had been dips and upswings in credit to the government, but it had mostly stayed below N30tn. However, in the third quarter, credit to the government had risen from N19.83tn in July to N31.15tn in August and then N42.02tn in September.
There may be even more constriction in the flow of credit to the private sector in the coming year as the Governor of the CBN, Olayemi Cardoso, has maintained the apex bank would maintain its hawkish stance to tackle inflation.
Speaking at the annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria in November, Cardoso said, “Our foremost priority is to achieve price stability, with inflation as a central focus. While inflation has shown early signs of moderation, we are fully committed to doing everything in our power to tame inflationary pressures in 2025. To this end, we will maintain vigilance through the strategic deployment of our monetary policy tools.
our anchor for inflation management, calibrated on evolving economic conditions and data. The cash reserve ratio and open market operations will be adjusted as necessary to ensure liquidity levels in the banking system remain aligned with our inflationary goals.”
