Nigerian Banks increased their total loans to the Nigerian economy by N1.55 trillion between December 2020 and May 2021. This is according to the information contained in the monetary policy communiqué of the Central Bank of Nigeria read out by the governor, Godwin Emefiele.
According to Emefiele, aggregate credit surged from N22.63 trillion as of December 2020 to N24.23 trillion by the end of May 2021, representing an increase of about N1.55 trillion within the period under review. Affirming this Meffy as he is fondly called said: ‘’ Accordingly, aggregate credit at end-May 2021 stood at N24.23 trillion, compared with N22.68 trillion at end-December 2020. This represents a year-to-date increase of N1.55 trillion.’’
Going further, the apex bank governor decried the slump recorded in monetary aggregates as of the end of June, 2021. Commenting on this, he said: ‘’On the performance of monetary aggregates, the Committee noted that broad money supply (M3) declined to 2.02 percent in June 2021, compared with 2.99 percent in May 2021. This development was largely driven by a slowdown in the growth rate of Net Domestic Assets (NDA) and Net Foreign Assets (NFA). Net Foreign Assets contracted by 3.65 percent due to the contraction of foreign asset holdings of the central bank, as well as non-interest, primary mortgage, and microfinance banks. The marginal decline in Net Domestic Assets reflected the slowdown in aggregate credit net, which decreased to 4.30 percent in June 2021, from 4.79 percent in May 2021.’’
Naijabusiness.com.ng gathered that similarly, as of December 2020, an additional sum of N774.28 billion was issued out as new loans by Nigerian banks to their numerous customers, just as the total aggregates as at then stood at N25.02 trillion.
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Analysts at naijabusiness.com.ng believe that the uptick in the credit expansion is in line with the CBN’s expansionary monetary policy, aimed at supporting growth and revival of the Nigerian economy from the hard biting impact of the dreaded COVID-19 Pandemic. To demonstrate this, the apex bank introduced a number of initiatives such as; Nigerian Youth Investment Fund, AGSMEIS, Targeted Credit Facility for households and small businesses, among others, all of which were designed to support growth.
Assessing the impact of these intervention loans and grants, the Chief economist of Coronation Merchant Bank, Chinwe Egwim, in a recently concluded webinar held by Nairametrics Financial Advocates Limited, themed ‘’How to get out of the Economic Crisis,’’ noted that some of these credits and intervention loans are yet to achieve the desired impact.
Speaking further, the expert stated: ‘’Interventions are essential, I wouldn’t say that should stop but I do share the same view that the impact is not really aligned with the progression of growth.
‘’I can give an example, agriculture. Before the pandemic, that sector enjoyed a lot of interventions and stock injections, but then when you look at the output numbers released by the NBS, I can’t remember the last time I saw it at 5% YoY.’’
