Data by the Central Bank of Nigeria (CBN) reveals a rise in credit facilitated by banks to the government and private sector as well as a drop in currency circulation.
The data also revealed that while banks’ credit to the private sector rose Month-On-Month, by 4.23% to N36.9 trillion last month from N35.4 trillion in January 2022, the volume of currency in circulation has dropped. The data shows that currency in circulation fell Month-on-Month by 0.27% to N3.29 trillion from N3.25 trillion in January 2022.
This data, tagged Money and Credit Statistics, was made available on Tuesday, 22nd March, was after the apex bank’s Monetary Policy Committee meeting. The data went ahead to reveal that the net domestic credit also rose Month-on-Month by 4.2% to N51.8 trillion in February 2022 against N49.7 trillion in January 2022.
Also, the net credit to the government also rose Month-on-Month by 4.2% to N14.9 trillion in February 2022 from N14.3 trillion in January 2022.
Following the availability of the data, members of the CBN MPC expressed confidence in the current CBN regulatory regime and the bank’s commitment to maintaining stability in the banking system. The MPC members also went ahead to urge the management to sustain its tight regulatory surveillance.
In the communiqué issued after the latest Monetary Policy Committee (MPC) meeting, the committee went ahead to indicate that the banking sector has shown strong resilience, which is evidenced by the further moderation of Non-Performing Loans (NPLs) to 4.84% in February 2022 from 4.90% in December 2021.
According to the MPC members, the increase in credit facilities to the private sector may signify positive activities in the economy where private sectors are receiving credit facilities from banks to fund a number of projects that will, in turn, boost the economy or lead to better lives and standards for their communities.
However, when you consider the drop in currency in circulation, the idea that the credit facilitated to the private sector is all for economic boost becomes too far to grasp. With the current value of the local currency, Nigerians may be moving their money out of the economy because of the exchange rate in the United States in order to buy foreign currency. And that itself is a problem for Africa’s largest economy.
