Private Sector Loans Rose to N76 Trillion in 2024, Up 27% From 2023
- The 2024 CBN Economic Report has revealed that Credit to Private Sector amounted to N76 trillion in 2024, an impressive 27% growth from 2023
- The report also showed that government borrowings from Nigerian banks also increased by more than 50% from 2023
- Experts predict that the private sector loans will continue to go up in the short term but may slow down over time due to MPC policies
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Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade experience in business reporting across digital and mainstream media.
A new report has shown that Bank Credits to Private Sector (CPS) rose to N75.96 trillion in 2024, a 27.3% growth from the figure in 2023.
This data is contained in the 2024 Central Bank of Nigeria (CBN) economic report.
This means that privately held businesses in Nigeria accessed more credit facilities in 2024 than the preceding year.
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The CPS also grew 2.5% in November 2024, up from the figure in October 2024.
According to The Nation, this may be linked to the CBN policy change adjusting the Loan to Deposit ratio (LDR) to 50%, from 65%, and monitoring banks to ensure compliance.
Experts expect the figure to keep going up in the short term. Analysts at Codros Securities predicted that the CBN's LDR enforcement will pressure commercial banks to continue to create risk assets for the private sector.
They acknowledged, however, that as the Monetary Policy Committee continues to introduce inflation-tightening measures, the growth may slow down in the long term.
Government loans increased 54%
The report also shows increased government borrowings from Nigerian banks in the period, hitting a peak record of N39.62 trillion in November 2024. This marked a 54.4% growth compared to the November 2023 record of N25.66 trillion.
This, according to analysts indicates that the government may have increased its domestic borrowings to fund budget deficits.
MPC measures to curb inflation
The headline inflation rate has continued to rise over the last year, closing at 34.6% by November 2024. This is the highest level since the all-time high of 47.56% in January 1996.
The CBN Monetary Policy Committee has taken several measures to curb inflation, including consistently raising interest rates.
CBN also tied its decision to lower the Loan to Deposit ratio (LDR) to 50% from 65% and increase the Cash Reserve Ratio (CRR) to its monetary tightening strategy.
The policy change, according to CBN, would test banks' lending capacity and risk management to ensure stability.
However, all of these have not been effective in curbing inflation in Nigeria. Experts pointed out that the ever-increasing interest rate was dampening investments in the real sectors.
Increasing dollar inflows
Meanwhile, the CBN recently reported a massive rise in International Money Transfer Operator (IMTO) remittance inflows in the first nine months of 2024.
The apex bank data showed that the inflows increased 63.7% from $2.33 billion in the same period in 2023 to $3.83 billion in 2024.
A yearly review of the data shows that the monthly remittance continued to rise every month throughout the year.
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Source: Legit.ng
