He made this known in an exclusive interview with our correspondence on Wednesday, while reacting to the recent data released by the Money and Credit Statistics of the Central Bank of Nigeria (CBN).

The Central Bank of Nigeria (CBN), through the Money and Credit Statistics said that total credit to the Nigerian economy at the end of last year by the banking industry rose by 44.8 per cent year on year to N96.2 trillion.

According to the Money and Credit Statistics of the CBN, lending to both the government and the private sector rose from N66.398 trillion in December 2022 to N92.188 trillion at the end of December last year.

Banking credit is the total amount of funds a person or business can borrow from a financial Institution. However, Credit approval is largely determined by borrowers’ credit rating, income, collateral, assets, and pre-existing debt.

According to the Central Bank of Nigeria (CBN), the data reflects lending by the CBN and state-owned development banks, such as the Bank of Industry (BoI), and smaller credit extensions by other banks, such as micro-finance banks and non-interest banks.

Progressively, credit to the government rose by 36.6 percent in the period under review, rising from N24.656 trillion as of December 2022 to N33.669 trillion at the end of December 2023, whilst lending to the private sector by 49.8 percent to N62.519 trillion by the end of last year from N41.741 trillion which it was at the end of 2022.

Speaking further, Wunmi noted that a keen look at the 36.6 percent increase to the government, amounting to N33.6 trillion, already raised questions about how much goes into the infrastructure. What percentage goes to Bureau de Change, or goes on being converted to dollars by the unscrupulous public officers?

Meanwhile, ahead of the February 26 Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), analysts say they expect the monetary policymakers to continue to adopt an aggressive stance.

This is also the view of Dr Olayemi Cardoso, the CBN governor, who had hinted that the apex bank will continue with a tightening position as a measure to curb inflation in the country.

Projecting that inflation which is currently at 28.92 percent will average 21 percent this year, Cardoso had emphasized the plan to use traditional monetary policies to fight rising inflation in the country.

According to him, the apex bank has reverted to the conventional monetary policy approach with a focus on attaining price stability, which fosters sustainable economic growth for Nigeria.

“Our MPC meeting on the 26th and 27th of February is also expected to review the situation and take further decisions on these important issues.

“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, aiming to rein in inflation to 21.4 percent in the medium term, aided by improved agricultural productivity and easing global supply chain pressures.

“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lowered policy rates, stimulating investment, fueling growth, and creating job opportunities. Additionally, the CBN’s adoption of an inflation-targeting framework involves clear communication and collaboration with fiscal authorities to achieve price stability, potentially leading to lowered policy rates, stimulating investment, and creating job opportunities,” he stressed.

Speaking further, Wunmi, however, pointed out that the consequence or the implication of Banking Credit is not determined by the volume or the percentage rise or fall but rather by the sectoral allocation to the real sector of the economy.

In his words:

“If you look at it, even the ones that go to the economy, the majority of it might be in the Oil and gas sector, and a very very negligible part might probably go to manufacturing and even a lesser amount would go to Agriculture and that is why you see this big figures, but you cannot see any commensurable results in the real sectors of the economy, and that is why you may not have any effects on employment or the rate of inflation. The sectoral allocations are more important than the volume or the percentage increase or decrease in banking credit and to the Economy as a whole”.

How much of that would go to probably Oil and Gas? How much goes to manufacturing? How much goes to agriculture, and general commerce.  That is why you have all these kinds of volumes and the effect is not seen in the general economy, the problem lies in the portfolio allocation.

For instance, the one for the government might probably end up in consumption rather than being devoted to capital expenditure and might end up in recurrent expenditure. So it depends on the usage.

Meanwhile, the International Monetary Fund (IMF) had urged the CBN to adopt an aggressive monetary policy to be able to curb the rising inflation which had made the cost of living soar above the means of many Nigerians.

Stating that aggressive monetary tightening and fiscal adjustment combined with support from development partners would be needed to restore macroeconomic stability, the IMF said: “Continuing to raise the monetary policy rate until it is positive in real terms would be an important signal of the direction of monetary policy.”

The Central Bank of Nigeria (CBN), has been advised to treat violation of the instructions given to the Nigerian commercial Banks on Foreign currencies (FX) as an economic Sabotage.

Dr. Wunmi Bewaji, an expert in Securities and Financial Regulations, made the comment in an interview with Techeconomy correspondent on Thursday.

Airing his view on the position and various efforts of the apex bank to address the problem associated with the foreign currencies exchange (FX), Bewaji, Leeds tutored scholar, highlighted the benefits of the CBN’s directives to Deposit Money Banks (DMBs).

This, he said, will bring an immediate, noticeable increment in supply of foreign exchange in the market.

In his words: “What the banks have been doing then is to hoard the foreign currencies (FX), kind of betting or let’s say speculations. So this reduction will have the effect of increasing supply, there will be an immediate, noticeable increment in supply of foreign exchange in the market.”

Meanwhile, data from FMDQ on Wednesday showed that the Naira marginally appreciated N1,455.59 per US dollar from N1,482.57 on Tuesday.

On a day-to-day level, the Naira appreciated by N26.98 gain or a 1.85 per cent increase, to close at N1,455.59 from N1,482.57 per Dollar on Tuesday. But the black market remained unchanged at N1,470 per US Dollar at the close of Wednesday.

Flip to Thursday, the naira- exchanged between N1,300 and N1,350/$ as against over N1400/$ it exchanges the previous day.

However, with Naira ending at N1,455.59 per US dollar, the nation’s currency recorded a 37.6 per cent depreciation in January 2024.

This comes as the Association of Bureau De Change operators said it will close its offices for business on Thursday over dollar scarcity.

Wunmi said, “In the short term the price of dollars is going to crash, but in the long term, whether or not it is going to work will depend on the ability of the CBN to ensure compliance, so the CBN would have to look at the issue of effective enforcement.  This is not a question of treating violations of this policy as mere infractions. It should be more than that, it should be treated as economic sabotage

He however said, “that, the success of the  CBN’s policies will  to  be will determined by its strong enforcement, because some unscrupulous banks are going to do a lot of disguised compliance, because a lot of the banks are already trading in the misfortune of the Naira,

“If the CBN can enforce not just through payment of fines, but if  heavy penalties are imposed, compliance is effectively monitored and non-compliance is punished.  I think  it will have  significant effects on the value of the Naira.

Recall that the Central Bank of Nigeria, on Wednesday through a circular titled:  “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, ordered Deposit Money Banks to sell their excess dollar stock latest February 1, 2024.

The CBN, which in the circular also warned lenders against hoarding excess foreign currencies for profit. According to officials, the central bank believes some commercial banks hold long-term foreign exchange positions to enable them to profit from the volatile movements of exchange rates.

The new circular introduces a set of guidelines aimed at reducing the risks associated with these practices.