Credit to Private Sector Increases by 4.7% in 12 Months
The amount of credit channeled to the private sector increased by 4.7% year on year at the end of May, according to data obtained from the Central Bank of Nigeria (CBN) report.
Some analysts said the rate of growth was insignificant for the private sector to contribute meaningfully to Nigerian economic growth. Borrowing costs remain elevated since the monetary policy tightening pushed the benchmark interest rate near 28%.
Many companies are scaling back on expansion projects due to elevated costs of borrowing from banks and other funding sources. The CBN revealed that Credit to the Private Sector (CPS) increased by 4.7% year on year to N77.83 trillion in May compared with N74.31 trillion in the comparable period in 2024.
Analysts at Cordros Capital Limited noted that the pace of growth has slowed significantly relative to the previous year, largely due to the reduced impact of currency depreciation on banks’ foreign-denominated assets, following the recent stabilization of the naira as well as the CBN’s tight monetary policy.
At the same time, credit to the government declined by 11.6% year on year to N25.07 trillion from N28.38 trillion, indicating reduced government borrowing from domestic banks for deficit financing.
Overall, broad money supply (M3) rose by 19.9% year on year to N119.00 trillion, following increases across narrow and quasi money supply. Details revealed the narrow money, which represents the most liquid forms of money readily available for transactions within an economy, surged by 20.9% year on year.
Also, quasi money, liquid assets that can be easily converted into cash, climbed by 19.8% in the same period. On a month-on-month basis, the CPS declined moderately by 0.3% to N77.82 trillion in May after a record gain of +2.1% in April to N78.08 trillion. Analysts said they expect CPS growth to remain subdued in the near term, constrained by the prevailing tight monetary policy stance.
However, a potential pivot toward monetary easing in the second half of 2025 could provide some support for a gradual recovery in CPS growth over the medium term. #Credit to Private Sector Increases by 4.7% in 12 Months British Pound Rises Against Dollar, Hovers at 4-Year High
