Credit to the Private Sector Increased 14.97% to N44.21 trillion in May.

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The Central Bank of Nigeria (CBN) has reported a significant 14.9% year-on-year increase in credit to the private sector, reaching N44.21 trillion in May 2023, compared to N38.46 trillion in 2022. This follows the CBN’s directive to Deposit Money Banks (DMBs) to increase lending to the real sector.

According to the CBN’s money and credit statistics, credit to the private sector grew by 1.26% month-on-month and 6.43% year-to-date, despite a cash crunch and double-digit inflation rate. The sectors benefiting the most from DMBs’ lending to the real sector include Oil & Gas, Manufacturing, General Commerce, and Information Technology.

Analysts at Cordros Research attribute the increase in credit to the private sector to improved domestic macroeconomic conditions and CBN-led interventions in the real sector. They anticipate that the expansion of domestic economic activities will drive banks’ willingness to create risk assets. They also expect the CBN to maintain its intervention programs to support the expanding economy, leading to double-digit expansion in credit to the private sector for the full year of 2023.

The CBN’s statistics also reveal that currency in circulation increased by N44.57 billion in May 2023, reaching N2.53 trillion, up from N2.48 trillion in April 2023. This represents an 82.2% year-to-date growth and the highest reported figure so far. The rise in currency in circulation is attributed to the spill-over effect of the cash crunch, with individuals hoarding new notes and exhibiting distrust in electronic banking, leading to a lower deposit inflow into banks.

Overall, the increase in credit to the private sector and currency in circulation reflects the efforts of the CBN to stimulate economic growth and support the real sector through lending initiatives and the provision of physical cash.


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