Banks’ credit to the private sector of the economy rose by 33.7 percent to N35.3 trillion in November 2021 Year-on-Year.
This is an increase from N26.4 trillion in the corresponding period of 2020.
Data from the Central Bank of Nigeria show that net domestic credit also rose YoY by 36 percent to N48.3 trillion in November 2021 from N35.5 trillion in 2020, signifying an uptick in economic activities.
The CBN drive towards expanding bank credit to the economy resulted in its policy of increasing the loan to deposit ratio, LDR, to force banks to lend more to the private sector.
Total credit to the private sector since it began this policy in March 2020 has increased tremendously.
In his statement in the CBN communique 139 of the Monetary Policy Committee, MPC, meeting held in November last year, a member of the Committee, Adenikinju Festus, said even non-bank financial institutions contributed significantly to the rise in aggregate credit to the economy.
According to him, “the report on the Other Financial Institutions (OFIs) showed that they contributed significantly to aggregate consumer credit. Other Financial Institutions granted 22.39 million facilities to 9.23 million loan beneficiaries out of which 69.26 thousand were corporate consumers. Overall, OFIs contributed an additional N2.79 trillion or 10.62 per cent to banking sector credit in the past one year.”
Ahmad Aishah, a member of the committee, also said that the improvements in the macroeconomy were propelled by a resilient financial system which channeled significant credit to support growth enhancing sectors such as agriculture, manufacturing and general commerce, as well as individuals and households.
She stated:”Total credit increased by N4.10 trillion (21.12 per cent) between end October 2020 and end October 2021 , due largely to the increase in the industry funding base and the CBN’s Loans to Deposit Ratio policy, which has encouraged banks to increase lending to the real sector of the economy. This credit to the real sector has been critical for the economic recovery.”