The Deposit Money Banks (DMBs) injected N41.80 trillion in credit facility into the private sector in the 2022 financial year, the Central Bank of Nigeria (CBN) report has shown.
This was N6.88 trillion or 19.7% higher than the N34.92 trillion facility offered to the sector in the 2021 financial year, Investors King reports.
In CBN’s latest Money and Credit Statistics report, the apex bank noted that the improvement was a result of the surge in Nigeria’s inflation rate to double-digit and other local and global economic challenges.
A breakdown of the data showed that in January 2022 N35.18 trillion was the credit facility offered the private sector. This grew to N35.99 trillion in February 2022 and expanded to N36.47 trillion, N37.45 trillion, N38.46 trillion and N39.23 trillion in March, April, May and June 2022, respectively.
In amount injected into the private sector rose to N39.85 trillion in July and N40.20 trillion in August of the same year.
Credit facility inched higher by 0.8% to N40.52 trillion in September. While in October, November and December it increased to N40.84 trillion, N41.58 trillion and N41.8 trillion, respectively.
Speaking on the report, Mr. Tajudeen Olayinka, the Chief Executive Officer of Wyoming Capital and Partners, explained that the increase in the credit facility to the private sector was a result of the jump in demand for credit facility.
According to him, the focus should be on increasing economic productivity. He said “one should be concerned about the relative contribution of the sector to the country’s economic growth. Since N6.88 trillion credit growth to the private sector has not translated to significant economic growth for Nigeria, it follows therefore that credit growth reported for 2022 was just a mere money illusion, and that what was required to trigger economic growth could be much more than the reported figure.”
Also, commenting on the reason for the increase in credit facility, Mr. Ambrose Omordion, Chief Operating Officer, said improved business transactions post-Covid-19 contributed to the jump in the credit facility
He noted that the latest increase in CBN’s Monetary Policy Rate (MPR) influenced the credit needs of the private sector. In 2022, alone the Monetary Policy Committee raised the interest rate by 500 basis points.
This increase influences the cost of production and subsequently affects the economy of the country.