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Currency in Circulation Falls as Banks’ Credit to Private Sector Rises

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Naira Exchange Rates - Investors King

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.

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Banking Sector

Buhari Expresses Confidence in Banking Institutions to Tackle Economic Challenges

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President Muhammadu Buhari

President Muhammadu Buhari has expressed his confidence in the West African Banking Association (WABA) to tackle economic challenges in the West African region.

The president expressed his trust while receiving a team from WABA, led by its President, Thierno Seydou Nourou Sy, at the State House in Abuja.

The president stated that the sub-region needs to come to an agreement on low access to financial services and recovery from the COVID-19 pandemic.

According to him, the association, founded in 1981, brings together over 250 commercial banks and 15 institutions from across West Africa, and for many centuries, African countries have traded with one another without a formalized and structured system. He, however, noted that over time, global trade had become more complex and organized.

The president expressed optimism that the launch of the African Continental Free Trade Area will mark a watershed moment in the way African countries do business.

“More importantly, we will turn the page in ensuring that we deepen and expand our industrial capabilities by making sure we export less of what we have been endowed with in the primary or raw form, and convert larger portions of these resources into finished materials.

“That will allow us to benefit from the revenue earned from the added value of exporting a finished product,” he said.

“Our ability to overcome the current phase of our development lies in our resolve to work jointly via our regional and sub-regional organizations where we can all reach a common understanding to fight against a common enemy.

“This is one of the reasons I am delighted with the strides ECOWAS has been making towards unanimity and forging alliances with a goal to resolve issues that confront the sub-region.

“I believe that this is also the approach that is being followed in the West African Bankers’ Association and the West African Monetary Union,’’ he added.

While commenting on WABA’s ongoing attempts to synchronize monetary and fiscal policy, the president pushed the organization to find common ground despite the particular macroeconomic challenges that each member-state faces.

He pledged that Nigeria would always be ready to support efforts that are geared towards improving the lives of all its citizens “as long as they do not place us at a disadvantage.”

The WABA President praised Nigeria’s leadership role in the African economy, while also praising President Buhari’s leadership.

“That’s why we are here for counsel and guidance for the financial sector in West Africa,” he said. He further urged the president to be an advocate for the greater inclusion of WABA in the ECOWAS structure.

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Finance

NGX Sheds 0.13% on Monday to Extend its Decline

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Stock - Investors King

The Nigerian Exchange Limited (NGX) extended its decline on Monday as investors exchanged 263,338,835 shares worth N3.549 billion in 4,549 billion.

The market value of all listed equities decreased by N37 billion from N28.562 trillion it closed on Friday to N25.525 trillion while NGX shed 0.13% to close at 52,911.51 index points on Monday.

Jaiz Bank led the most traded stocks with 114007816 shares worth N101,752,697.03. Followed by GTCO’s 12,872,851 shares valued N302,842,620.75. See other details below.

Top Gainers 

Symbols Last Close Current Change %Change
CONOIL N 31.15 N 34.25 3.10 9.95 %
MRS N 13.60 N 14.95 1.35 9.93 %
MCNICHOLS N 2.13 N 2.34 0.21 9.86 %
ACADEMY N 1.23 N 1.35 0.12 9.76 %
NPFMCRFBK N 1.87 N 2.02 0.15 8.02 %

Top Losers 

Symbols Last Close Current Change %Change
PRESCO N 200.00 N 180.00 -20.00 -10.00 %
GSPECPLC N 3.41 N 3.07 -0.34 -9.97 %
NEIMETH N 1.76 N 1.59 -0.17 -9.66 %
UACN N 14.40 N 13.20 -1.20 -8.33 %
NEM N 4.39 N 4.05 -0.34 -7.74 %

Top Trades

Symbols Volume Value
JAIZBANK 114007816.00 101752697.03
GTCO 12872851.00 302842620.75
TRANSCORP 12806324.00 16725610.46
ACCESSCORP 11657629.00 115657901.70
ZENITHBANK 8579430.00 207021363.25

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Finance

Nigeria Raises Interest Rate by 150 Basis Points to 13%

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) led Monetary Policy Committee on Tuesday unanimously agreed to raise interest rates by 150 basis points from 11.5% to 13% to rein in escalating consumer prices.

The apex Governor, Godwin Emefiele disclosed this while speaking to the media on Tuesday, May 24th, 2022.

In 2020, the committee cut interest by 50 basis points to 11.5% in September 2020 to encourage borrowing and deepen new investment to stir growth and halt the plunge in economic productivity during the peak of COVID-19.

The nine-member committee voted unanimously to keep Monetary Policy Rate (MPR) at 13% and others as follow:

  • The asymmetric corridor of +100/-700 basis points around the MPR was retained
  • CRR was retained at 27.5%
  • While Liquidity Ratio was also kept at 30%

The increase may not be unconnected to Nigeria’s high inflation rate of 16.82% in April. The committee is now projecting an aggressive increase in the inflation rate due to the forthcoming general election.

Emefiele said the MPC is suspicious “there might be an aggressive accretion of inflation”. Therefore, to prevent the looming inflation, he said the committee had to raise the interest rate by 150 basis points.

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