Total net domestic credit rose to N46.8 trillion, about 28.5 per cent of Gross Domestic Product (GDP) as at end of September 2021, the highest since 1960, data by the Central Bank of Nigeria (CBN) revealed.
Credit to the private sector rose to N33.8 trillion, while credit to government increased toN13 trillion, making a net credit of N46.8 trillion.
Analysts attributed the increase to new technology and a surge in FinTech which have become active in borrowing space.
In the previous quarter, credit to the private sector had rose to N32.6 trillion. it added an additional N1.2 trillion in another quarter. This year alone, the private sector has recorded a net increase of N3.69 trillion in net borrowings. Over the last five years, credit to the private sector has risen by over 100 per cent growing from N18.7 trillion in December 2015 and nearly doubling to N32.6 trillion this year.
At the last Monetary Policy Committee Meeting (MPC) of the apex bank held in September, it noted the effect of the growth in credit on stimulating the economy, encouraging banks to continue to channel credit to the real sector.
“The Committee noted the improvement in lending to the real sector following the introduction of the Loans-to-Deposit Ratio (LDR) in 2019. Industry gross credit increased by N6.63 trillion from N15.57 trillion at end-May, 2019 to N22.20 trillion at end-July, 2021. The credit growth was largely recorded in manufacturing, oil and gas and agriculture sectors,” they said.
