Credit to Nigerian economy surges in November, hits N64.22trn

Credit to the Nigerian economy surged to unprecedented levels in November 2022, reaching an all-time high of N64.22 trillion, representing an increase of 1.16 per cent compared to N63.48 trillion recorded as of the previous month.

In data released by the Central Bank of Nigeria (CBN), on a year-to-date basis, the total credit to the Nigerian economy (government and private sector) rose by a massive N15.48 trillion between January and November 2022.

As of November 2022, credit to the government stood at N22.64 trillion while credit to the private sector was N41.58 trillion, representing 35 per cent and 65 per cent of the total credit to the economy, respectively.

On the flip side, these interventions have in recent times been viewed as a major bane to the Nigerian economy, triggering a 17-year high inflation rate of over 21 per cent as the broad money supply touched levels not seen in the history of the country.

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In response, the CBN has adopted a tightening monetary stance, increasing the monetary policy rate by 500 basis points to 16.5 per cent in a bid to reduce currency liquidity in the economy.

Government loans drive credit growth: Credit to the public sector, which comprises loans to the federal and state governments, has surged by over 63 per cent year to date, contributing about 57 per cent to the total new net loans recorded in the review period.

The increase in net loans in the Nigerian economy is particularly interesting considering that the CBN is trying to mop up liquidity by discouraging credit with higher interest rates. Comparing the N15.46 trillion increase to previous years, Nigeria’s loan facility to the economy has surged significantly.

In the whole of 2021, aggregate loans grew by N7.38 trillion, in 2020 loans increased by N5.2 trillion, while in 2019 loans to the economy surged by N7.53 trillion.

According to the apex bank’s November 2022 MPC communique, the policies of the bank have helped ensure a sustained positive trajectory for the economy.

“The economy has thus, sustained positive output growth for seven consecutive quarters, following the exit from recession in 2020. The consistent positive performance recorded was driven largely by the positive growth in the non-oil sector, particularly in the services and agricultural sub-sectors, complemented by continued policy support by the Bank,” the bank stated.