The Central Bank of Nigeria (CBN) Money and Credit Statistics data reveals that Nigeria’s private sector took a total of N35.31 trillion in loans from banks as of November 2021. This figure is a result of the N5.16 trillion net new loans incurred within January and November in the same year.
As of December, loans to the private sector increased by 17% compared to N30.2 trillion in 2020. Owing to the increase in CBN activities and initiatives in the Nigerian lending industry, particularly with fintech, Nigerian bank credit has increased in recent years.
In November 2021, Nigeria’s private sector loans from banks increased by N694.2 billion month on month, rising from N34.62 trillion in October 2021 to N35.3 trillion in November. This was done to improve credit to the private sector to help drive growth and recovery from the economic slowdown that began in 2020.
According to CBN’s report, the currency in circulation increased by 8% to N3.15 trillion in November 2021, compared to the N2.91 billion at the end of 2020. During the November Monetary Policy Meeting (MPM), CBN also stated that maintaining the loan rate has aided growth recovery and is positioned to promote price stability, which is beneficial to long-term growth.
The loans to the government rose by 5% to N13.03 trillion in November 2021 compared to N12.4 trillion at the end of 2020. This indicates that the economy’s credit facility has improved
Despite the growth in the bank loans to the economy, lending rates remain high, with the maximum loan rate climbing to 27.26% in November 2021 from 27.1% the previous month.
Also, the savings deposit rate jumped to 1.83% in November 2021, up from 1.28% the previous month. With a one month rate at 3.72%, 4.96%, 5.36%, and 7.34% as of the review month.
Despite the high lending rates, the growth in rates and credit indicates that Nigerian firms are still willing to borrow more.
After seeing a significant increase in inflation from 2020 to 2021, CBN has maintained its monetary stance to improve credit by keeping the Monetary Policy Rate (MPR) at 11.5% to spur economic growth and safeguard the price stability of the country.
In its final monetary policy committee meeting in November 2021, the CBN stated that its policy had begun to deliver positive outcomes, citing an increase in Nigeria’s GDP to +4.03% in the third quarter of 2021 and a moderated inflation rate of 15.4% in November 2021.
While the committee encourages banks to increase credit availability to Nigeria’s private sector, it also encourages the top banks to maintain their strict prudential regime to keep the Non-Performing Loan (NPL) percentage below the prudential target of 5%.