Banks’ loan to private sector increases in 2019

Analysis of data published by the Central Bank of Nigeria (CBN), has revealed that the credit to the real sector of the economy by commercial banks in the country increased by N3.46 trillion in 2019 (between January and November, 2019).
According to the data, the credit offered to the private sector rose by 15 per cent (N3.47 trillion), from N22.94 trillion in January2019 to N26.41 trillion as of November 2019.

At the end of November 2019, the total net domestic credit in the Nigerian economy rose from N28.65 trillion in January to N35.51trillion. This means that the net domestic credit in the economy rose by N6.86trillion or 23.9 per cent.
Out of the total N35.51 trillion net credit in the domestic economy, credit to private sector rose to N26.4 trillion, while credit to government also rose to N9.10 trillion.
That is, in the Nigerian economy, credit to private sector constitutes 74 per cent, while credit to government constitutes 26 percent of the total net domestic credit.
During the year, credit to private sector hits the highest in December 2019. On the other hand, credit to the government rose to the highest in October.

A closer look shows that credit to government dropped byN1.35 trillion between October and December 2019.
Across the sectors, as at the end of September 2019, the oil and gas sector recorded the biggest gross domestic loan estimated at N4.50trillion, followed by manufacturing (N2.56 trillion) and Government (N1.34trillion).

In a year featured with several policies introduced by the apex bank, the boost witnessed in the credit given to the private could be attributed to the upward review of the Loan-to-Deposit ratio (LDR).
In 2019, the CBN increased the LDR for Deposit Money Banks (DMBs) twice from 55% to 60%, and later to 65 per cent. In December 2019,several media reports revealed the plans of the CBN to increase the LDR to 70per cent in 2020.