According to the Central Bank of Nigeria’s Sectoral Analysis of Deposit Money Banks’ Credit, the total debt owed by operators in the country’s manufacturing sector to Nigerian banks has increased from ₦5.56 trillion in January 2023 to ₦6.98 trillion in June 2023.
News.ng further learnt that the amount borrowed between January 2023 and June 2023 was ₦1.42 trillion. This shows that as the sector obtained the highest amount of bank credit during the study period, banks’ credit jumped by 52.08 per cent in a single year, from ₦4.53 trillion as of June 2022 to ₦6.98 trillion as of June this year.
According to a monthly lending study, ₦5.56 trillion was borrowed in January, ₦5.57 trillion in February, ₦5.65 trillion in March, ₦5.81 trillion in April, ₦5.70 trillion in May, and ₦6.98 trillion in June.
Recall that as part of efforts to lower inflation and remove liquidity from circulation, the Monetary Policy Committee of the central bank raised the benchmark interest rate eight times in a row, from 11.5 per cent in June of last year to 18.75 per cent in June of this year.
Stakeholders in the manufacturing industry have argued that the present double-digit loan rate is unfavourable due to the rise in debt since it directly affects the industry’s competitiveness and production costs. The administration reiterated its commitment to expanding loans to private sector operators in the recently released Medium-Term Expenditure Framework and Fiscal Strategy Paper.
“Despite being on an upward track, the Net Domestic Credit estimate represents the anticipated credit dynamics in the economy. Over time, the government’s credit is expected to decline as a result of the anticipated substantial decrease in fiscal deficits brought on by the elimination of fuel subsidies.
The government’s strategy to attain a higher degree of growth led by the private sector, on the other hand, is likely to increase loans to the private sector, according to a portion of the report.
Farmers’ borrowing to grow agricultural products, however, decreased to ₦1.83 trillion in June from ₦1.85 trillion in January, indicating a reduction in their desire for loans.
In a previous interview with Newsmen, the association’s chairman, Salihu Imam, stated that a large decrease in borrowing rates would spur agricultural growth and improve food security in the country.
Reducing financing prices to two per cent is not just something that Imam demanded, but it is also essential to the expansion of our agricultural sector. Our country’s farmers are its backbone, and reasonably priced loans are the engine that keeps us moving forward. Offering loans at reasonable rates is an investment in our future as a group, guaranteeing both economic stability and food security.
