- Loans to Oil Sector Increase by N300 Billion in Q2
Positive global oil outlook boosted the attractiveness of the Nigerian oil sector in the second quarter (Q2) of the year.
According to the National Bureau of Statistics (NBS), loans to the sector rose by N300 billion from N3.42 trillion in the first quarter to N3.45 trillion in Q2.
The report also showed loans granted by banks to private sector dropped from N16 trillion in the first quarter to N15.34 trillion in the second quarter of the year. Representing a difference of N600.60 billion and the sixth consecutive quarter of decline.
Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), said banks are finding it hard to lend to the real sector as stipulated by the Central Bank of Nigeria (CBN).
Credit facility to the manufacturing sector drop from N2.07 trillion in the first quarter to N2.01 trillion in the second quarter. Still, below CBN requirement.
“One of the greatest challenges facing the manufacturing sector in the country is lack of long-term financing and high-interest rate,” Jacobs said.
“It is quite disturbing to us that the banks are not lending as much as we need because that is the only way to grow the economy.”
Accordingly, Mr Madu Yusuf, Director-General, Lagos Chamber of Commerce and Industry (LCCI) said more fund should be provided to the private sector to better stimulate productivity and aid economic diversification plan of the government.
However, he said declining loans indicate unfavourable business environment as lenders are generally risk-averse, therefore, until government address these challenges, the trend may not change anytime soon.
Despite the surge in business loans to the oil sector, the sector contracted by 3.95 percent during the quarter and 7.48 percent when compared to the first quarter of 2018.
Again, foreign investment inflow into the sector dropped by 70.98 percent or $60.77 million to $24.85 million in the second quarter. Suggesting that investors are wary of growing uncertainty ahead of the forthcoming general election.