The Central Bank of Nigeria (CBN) has statistics that show that overall credit to the Nigerian economy, comprising the Federal Government and the private sector, increased to a staggering N15.48 trillion between January and November 2022, despite the country’s economic fragilities.
Credit to the domestic economy plays a significant role in the economy’s growth as it helps spur growth in economic activities in the real sector.
The “Money and Credit” data of the apex bank show that in November 2022, credit to the private sector economy skyrocketed to previously unheard-of levels, reaching an all-time high of N64.22 trillion.
Compared to the N63.48 trillion figure from the previous month, this implies an increase of 1.16 percent.
Loans from the banking sector to the government as of November 2022 totaled N22.64 trillion, while credit to the private sector was N41.58 trillion, or 35% and 65%, respectively, of the total credit to the economy.
The data analysis revealed that the government sector was primarily responsible for the rise in total credit.
For instance, during the review period, credit to the government climbed by N8.79 trillion, from N13.84 trillion recorded as of December 2021 to N22.64 trillion, a 63.6 percent rise in just 11 months.
On the other hand, credit to the private sector increased by N6.66 trillion between January and November 2022 to stand at N41.58 trillion, a 19.1 percent increase year to date.
The Nigerian economy witnessed a massive surge in its credit in the past three years, on the back of the low-interest rate environment following the COVID-19-induced recession in 2020, as seen in the data obtained from the bank’s website.
According to the CBN, the Nigerian economy recovered from the economic contraction at a faster pace due to the intervention of credit into the economy, which ensured that the nation recorded growth after only two consecutive GDP declines.
The CBN during its November 2022 MPC communique revealed that its policies have helped ensure a sustained positive trajectory for the economy.
“The economy has thus, sustained positive output growth for seven consecutive quarters, following the exit from recession in 2020. The consistent positive performance recorded was driven largely by the positive growth in the non-oil sector, particularly in the services and agricultural sub-sectors, complemented by continued policy support by the bank,” the CBN said.