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Credit to Private Sector Hits N39.87 Trillion in July 2022

The latest data showed credit to the private sector grew by N4.69 trillion to N39.87 trillion in July 2022

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Efforts of the Central Bank of Nigeria (CBN) to ensure that Deposit Money Banks (DMBs) improve credit facility to the real sector of the economy have started yielding results as the latest data showed credit to the private sector grew by N4.69 trillion to N39.87 trillion in July 2022.

The latest money and credit statistics report released by the CBN showed credit to the private sector rose from N38.46 trillion in June to N39.87 trillion in July, representing a 3.6% month-on-month increase.

On a yearly basis, credit to the private sector increased by 21.33% when compared to N32.86 trillion reported in July 2021.

A further breakdown revealed that Oil & Gas, Manufacturing and General were the top three sectors with the most credit in the month under review.

The data also showed that credit to the government rose to N20.09 trillion in July, an increase of 11.29% on a month-on-month basis and 42.36% on a yearly basis.

Speaking on the advantage of the increase in the credit facility to the private sector, an analyst at PAC Holdings, Mr. Wole Adeyeye said “The increase in credit to private sector is not expected to create more jobs as businesses are facing high cost of inputs, mainly driven by high inflation.

“Nigeria’s inflation rate hit 17-year high at 19.64 per cent in July 2022. This shows that businesses will have to borrow more to produce (most times, below the maximum production level). Demand-pull inflation may create more jobs but unfortunately, Nigeria is witnessing cost-push inflation at the moment.”

While on his part, Mr. Tajudeen Olayinka, the CEO, Wyoming Capital & Partners, said, “The 3.67 per cent MoM growth in credit to private sector in July 2022 was a clear demonstration of how inflation has affected nominal demand for Naira by private sector businesses, given continuing rise in input cost and the usual burden of imported inflation.

“Since this nature of demand for money may not necessarily translate to improved productivity, it follows, therefore, that economy may not also benefit in terms of additional jobs or output growth. This is just an evidence of unstable state of macroeconomic environment in Nigeria.”

“Since this nature of demand for money may not necessarily translate to improved productivity, it follows, therefore, that economy may not also benefit in terms of additional jobs or output growth. This is just an evidence of unstable state of macroeconomic environment in Nigeria.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

Intervention Funds: CBN Disburses N9.3 Trillion to SMEs, Agriculture, Others

The Central Bank of Nigeria (CBN) said it has so far disbursed a total sum of N9.3 trillion to Small and Medium Enterprises (SMEs), Agriculture, manufacturing and health sectors under its intervention funds program.

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The Central Bank of Nigeria (CBN) said it has so far disbursed a total sum of N9.3 trillion to Small and Medium Enterprises (SMEs), Agriculture, manufacturing and health sectors under its intervention funds program.

Dr Yusuf Yila, Director of Development Finance, CBN, made the announcement during a media engagement in Abuja on Wednesday.

According to the director, the apex bank has recovered N3.7 trillion from the total amount disbursed, saying the remaining N5 trillion was not yet due.

He, however, stated that 31% of the total amount was disbursed to the manufacturing sector, the largest for any sector.

“Some of the loans are under moratorium. We have moved from agriculture to manufacturing. So far, manufacturing, agriculture, health, exports and SMEs, have benefitted from the intervention,” he said.

Yila further stated that the central bank has now slowed down fund disbursement under its various intervention programs to curb rising inflation after data showed inflation rose to 20.52% in the month of August despite efforts to contain it.

The CBN-led monetary policy committee on Tuesday raised the interest rate by 150 basis points from 14% to 15.5% to rein in inflation and also remain competitive against global economies in luring investors into the Nigerian economy.

Developed economies started raising interest rates after the Russia-Ukraine war impacted global economies and compelled most nations to start tightening monetary policy to curb consumer prices. The persistent increase in interest rates (borrowing costs) in developed economies is expected to hurt capital inflow into the Nigerian economy, except the CBN raised borrowing costs to compensate for emerging market risks.

On Anchor Borrowers Programme, the CBN said it has disbursed N1 trillion to date, but announced that only N400 billion has been recovered.

He, however, warned debtors to ensure to repay their loans to various banks that granted them as the bank has collaborated with the Economic and Financial Crimes Commission (EFCC) to set up a unit that will help recover the loans.

“Any person who borrowed from us will pay back. We have recovered from states and we debit their FAAC. Every single loan taken from our development finance will be returned.”

 

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Fidelity Bank Collaborates With SMEDAN, Seeks to Enhance SMEs Access to Fund

Fidelity Bank has partnered with the Small And Medium Enterprises Development Agency (SMEDAN) to bridge the funding gap in small businesses in Nigeria

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Nigerian commercial bank, Fidelity Bank has partnered with the Small And Medium Enterprises Development Agency (SMEDAN) to bridge the funding gap in small businesses in Nigeria.

At a Memorandum of Understanding (MOU) signing ceremony recently held in Lagos, the Managing Director/Chief Executive Officer of Fidelity bank Mrs. Nneka Onyeali-Ikpe who was represented by Executive Director, Lagos and South-West Dr. Ken Opara, disclosed that the partnership with SMEDAN reinforces the fact that the bank is a leading supporter of SMEs in Nigeria.

Her words, “For us at Fidelity Bank, supporting SMEs is in our DNA and for more than two decades, we have been creating multiple platforms to help them thrive.

“These include the numerous products we have pioneered, our collaboration with the Lagos Business School to host the Export Management Programme, the Fidelity SME Academy, and our weekly SME Forum radio program successful business owners and SMEDAN share tips on running thriving ventures with listeners.

“This partnership is therefore another step in our journey of helping entrepreneurs grow and compete favorably in any market they operate and we are very happy to have SMEDAN join us.”

Also, the Director-General/Chief Executive Officer of SMEDAN, Olawale Fasanya expressed gratitude to Fidelity Bank for facilitating the partnership, emphasizing that the MOU was particularly significant not just to the Agency but to the MSMEs ecosystem.

He said, “Fidelity Bank is one of the few commercial banks in Nigeria that have shown immense interest in providing support to the large MSME community. I am very aware of some of your products purposely designed to serve the MSMEs.

“This explains why the Agency is very excited entering into this relationship that we believe will help change the narratives of the sub-sector”.

Knowing that SMEs are the backbone of any economy, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has on several occasions launched different initiatives for small and medium enterprises (SMEs) in the country to help boost sales and enhance capacity building.

On the other hand, Fidelity Bank has continued to play a pivotal role in the development of SMEs in the country by offering numerous support through partnerships with different firms and agencies.

It should be recalled that in June 2022, Investors King reported that Fidelity bank partnered with impactHER a non-profit organization, to empower 1,052 female entrepreneurs with sales skills in Nigeria.

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Finance

CBN Raises Interest Rate to 15.5 Percent Amid Inflation Concerns

The Central Bank of Nigeria (CBN) has raised interest rates to 15.5 percent, the highest in the last 20 years. 

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has raised interest rates to 15.5 percent, the highest in the last 20 years. 

Godwin Emefiele, the Governor of CBN, announced the increase shortly after the Monetary Policy Committee (MPC) meeting that was held at the CBN headquarters in Abuja on Tuesday.

The CBN Governor disclosed that all 10 members of the monetary policy committee voted for the hike to contain escalating inflation rate.

Investors King had earlier reported that central banks of the three biggest economies (Nigeria, South Africa and Egypt) are expected to raise interest rates in an effort to curb rising inflation. 

Addressing journalists after the meeting, the CBN Governor stated that the committee will continue to increase interest rates to reduce the high effect of inflation. 

The CBN governor was quoted to have said ” The tested monetary policy theory is that the easiest way to tame inflationary pressure is to raise rates”. 

In August 2022, Nigeria’s inflation rose to 20.52 percent which is 17 years high. This has caused the Monetary Policy Committee (MPC) to increase interest rates to 14 percent.

The committee also raised the Cash Reserve Ratio (CRR) to 32.5 percent from 27.5 percent. Cash Reserve Ratio is the specified minimum percentage of a bank’s total deposits that must be in the custody of the Central bank in form of liquid cash.

Meanwhile, the recent hike in interest has generated mixed feelings among financial analysts and economic observers. While some analysts believed the hike is the way to go considering the inflation rate which currently stands at 20. 52 percent, others argued that the hike will affect borrowers who are due for repayment. 

Analysts fear that borrowers might default in servicing their loans. Those who have taken credit facilities will have to pay more to reflect the new interest rates.

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