The various monetary policies of the Central Bank of Nigeria (CBN) to boost credit availability to the real sector of the economy may have impacted the level of bank credit currently in the system going by the available statistics from the National Bureau of Statistics (NBS).
The Apex Bank in its effort to boost credit availability to reals sector had introduced several measures even before the Covid-19 pandemic. Some of the measure includes: (i) 65% Loan to Deposit Ratio (LDR) – aimed at ensuring that money lenders in the country make more credit available from the deposit to qualified borrowers and does not keep idle funds in government instrument’ (ii) Exclusion of Commercial Banks in OMO operations. (iii) Several other Intervention funds at single digit rates to critical sectors of the economy
Some of the other policy measure adopted by the CBN to cushion the effect of Covid-19 are (i) 1-year extension of a moratorium on principal repayments for CBN intervention facilities (ii) Creation of NGN 50 billion target credit facility for affected households and small and medium enterprises through the NIRSAL Microfinance Bank (iii). Creation of a NGN100 billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of our healthcare institutions (iv) Creation of a research fund, which is designed to support the development of vaccines in Nigeria. (v). A N1 trillion facility in loans to boost local manufacturing and production across critical sectors (vi) Regulatory Forbearance was granted to banks to restructure loans given to sectors that were severally affected by the pandemic.
These efforts by the apex bank which also includes delayed payments in form of moratorium on existing bank facilities has resulted in the 9.84% growth in total bank credits to various sectors of the economy. The figure which grew from N17.19 trillion in December 2019 to N18.82 trillion as at end of June 2020.
A review of the 6 months sectoral growth revealed that in the Industry Category, the Manufacturing Industry had the highest growth in amount with a N446.9bn increase from N2.99trn to N3.06tn (17.04%), followed by the Oil and Gas Industry with a growth of N199.27bn (5.83%), Construction Industry with a growth of N136.01bn (18.08%), and the Agriculture Industry with an increase of N131.33bn (17.00%). Credit to the Trade and Commerce Industry however declined by N14.96bn (-1.2%)
The Service Category, Credit to the General Services sector grew the most in the 6 month period ending June 2020, with a growth of N214.77bn (15.02%) followed by Oil and Gas with a growth of N165.43bn (14.43%), Finance and Capital Market with a growth of N97.81bn (7.69%) and Information and Communication with a growth of N72.74 (8.24%). While Credit to the Education Sector grew the least of the service sector with N10.14bn (17.37%).
In terms of percentage growth, Loans to the Construction Industry grew the most by 18.81% followed by the Transport and Storage Service sector which grew by 18.00%; The Education Service which grew by 17.37% and Manufacturing Industry with 17.04%.
The least growth in percentage came from Power and Energy services, Power and Energy industry and Oil and Gas Industry with growths of 6.32%, 6.07% and 5.07% respectively. While Trade and General Commerce and Government sectors had negative credit growth of -1.20% and -2.34% respectively.