The total net domestic credit of Nigeria’s economy rose to N61.1 trillion in August, the highest the economy has ever recorded, according to the data retrieved from the Central Bank of Nigeria (CBN) on the money supply in the country.
Net domestic credit signifies the local loans given to both the public and private sectors in the country over a certain period.
In December 2021, Nigeria recorded a net domestic credit of N48.7 trillion. However, by August 2022 total domestic credit had risen to N61.1 trillion, representing an increase of N12.4 trillion or 26% when compared to N48.7 trillion achieved in December 2021.
Further analysis of the data by Investors King shows that the private sector has the highest domestic credit rate of N40.1 trillion, 66% of the total credit to the economy. While the public sector has a domestic credit of N21 trillion.
However, a more critical analysis of the available data revealed that the N12.4 trillion increase recorded between December 2021 to August 2022 was majorly from the public sector domestic credit.
The public sector domestic credit includes borrowings from the state and Federal Government which totaled to a sum of N7.1 trillion this year alone.
Nigeria has been struggling with limited fiscal space following the decline in its crude oil production due to oil theft and a series of other factors. Foreign revenue generation dropped across the board as the nation dropped to fourth on Africa’s largest producers‘ list in September 2022.
Therefore, the country’s inability to up crude oil production despite the global oil rally has affected the economy more than the obvious.
Again, the Nigerian Naira, a key indicator of the healthiness of the economy, depreciated further against the United States Dollar on Wednesday, trading at N741 to a U.S. Dollar at the parallel market.
Meanwhile, the Central Bank of Nigeria (CBN) continued to struggle with escalating inflation rate of 20.52%. The apex bank-led monetary policy committee had raised the interest rate by 15.5% in an effort to curb inflationary pressure and rein in prices.
The CBN Governor, Godwin Emefiele stated that the interest rate will continue to rise in an attempt to reduce the high the money in circulation and lure investors into the economy.
However, in hopes of reviving the dying economy, the Nigerian National Petroleum Cooperation disclosed that Nigeria is soon expected to increase its daily production of crude oil by 500,000 barrels per day.