Credit to Private Sector Rises 10% to ₦29.31 trillion

Credit to Private Sector Rises 10% to ₦29.31 trillion

Credit to private sector of the economy expanded by about 10% to ₦29.31 trillion, data released from the Central Bank of Nigeria (CBN) shows.

CBN report showed a 5.21% year to date rise in Broad Money Supply (M3 money) to ₦36.59 trillion in November 2020.

This resulted from a 34.78% increase in Net Foreign Assets (NFA) to ₦7.82 trillion and a 0.72% increase in Net Domestic Asset (NDA) to ₦28.76 trillion.

“We witnessed a 10.90% year to date rise in Net Domestic Credit (NDC) to ₦40.12 trillion in November 2020 despite the marginal decline in Net Domestic Asset”, Cowry Asset Management said in a note.

Further breakdown of the NDC showed a 13.73% year to date increase in credit to the Government to ₦10.79 trillion.

It was also noted that credit to the private sector rose by 9.89% to ₦29.31 trillion.

On the liabilities side, the significant 5.21% increase in M3 Money was chiefly driven by a 26.83% rise in M2 Money to ₦36.50 trillion.

But, this was partly offset by the 98.62% year to date decline in treasury bills held by money holding sector to ₦82.59 billion in November 2020.

Analysts noted that the increase in M2 was propelled by a 40.70% rise in Narrow Money (M1) to ₦14.82 trillion (of which Demand Deposits increased by 47.63% to ₦12.56 trillion.

Just as the currency outside banks rose by 11.54% to ₦2.26 trillion), and 18.82% increase in Quasi Money (near maturing short term financial instruments) to ₦21.68 trillion in November 2020.

Reserve money or base money rose sharply year to date by 76.58% to ₦15.31 trillion as Bank reserves increased by 98.06% to ₦12.33 trillion.

Even as currency in circulation increased by 8.87% to ₦2.66 trillion in November 2020.

“The 9.89% increase in credit to the private sector over the 11 months period 2020 further reflects the push by CBN to drive increased production output in joint effort with the fiscal authority.

“However, we are beginning to see a backlash of the expansionary policy stance amid rising inflation rate and weakening Naira against other currencies, especially the greenback”, Cowry Asset stated.

Stronger Private Sector Could Boost Nigeria’s Economic Growth-Report

However, the firm noted that direction of interest rates may generally trend northwards at some point further afield in 2021 amid expected increase in borrowings by the fiscal authority to fund its budget deficit.

Credit to Private Sector Rises 10% to ₦29.31 trillion