This picture taken on January 29, 2016 in Lagos shows 1000 naira banknotes, Nigeria’s currency. Nigeria’s central bank governor, Godwin Emefiele, on January 26 dismissed calls to devalue the naira in his monetary policy committee statement. Instead he chose to continue propping up the currency at 197-199 naira to the dollar and maintain foreign-exchange restrictions. As a result, the naira on the black market is hovering around a record low of 305, fuelling complaints from domestic and foreign businesses who can’t access dollars required for imports. / AFP / PIUS UTOMI EKPEI (Photo credit should read PIUS UTOMI EKPEI/AFP/Getty Images)

Credit To The Economy Rises To 34%

Data from the Central Bank of Nigeria has shown that banks’ credit to the economy rose year-on-year (YoY) by 34 percent to N63.3 trillion in the third quarter, 2022.

This is an increase from N46.9 trillion in the corresponding period of 2021.

The CBN’s Money and Credit Statistics shows that the total credit comprises government borrowing of  N22.8 trillion and private sector borrowing of N40.5 trillion. 

Further details show that growth in government borrowings was outpacing private sector borrowing as the former rose 75 percent while the later rose by 19 percent YoY, indicating the government borrowing is crowding out the private sector.

Line chart showing CBN credit to Government and Private Sectors.

Earlier this month, the Senate agreed to N8.4 trillion  ($19 billion) of new loans for 2023 to help fund an estimated federal government budget shortfall of N10.5 trillion.

According to the World Bank, the new loans would add to Nigeria’s rising debt-service costs, which already exceeded revenue in the first four months of this year and could reach 102 percent of government income by end of 2022.

The Finance Minister Zainab Ahmed said that the proposed 2023 budget deficit may rise to N12.4 trillion, if the government continues to subsidize petrol beyond June 2023 as guided by the current government. This would create the need for the  government  to borrow even more with revenues expected to total N8.46 trillion, less than half of the proposed 2023 expenditure of N19.76 trillion.

The CBN data also shows that currency-in-circulation rose YoY by 12.6 percent to N3.2 trillion in September 2022 from N2.84 trillion in September 2021.

Kehinde Ogunyale

Reporting on the data-driven economy, and investigations.

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