Data obtained from the Central Bank of Nigeria (CBN) has stated that between January and December 2021, the Nigerian banking sector’s credit to the private sector rose by N5.1tn indicating a 16.67 per cent rise.
According to the Money and Credit statistics released by the regulator, credit to the private sector stood at N30.6tn during the first month of 2021.
The data, however, put credit to the private sector at N35.7tn by December of last year, indicating a N5.1tn increase.
A close analysis of the monthly credit value shows a continuous increase throughout the year, except for February when credit to the sector dropped by N100bn. In February, the figure fell to N30.5tn from the N30.6tn recorded in January.
However, bank lending to the private sector rose to N31.4tn in March, further to N31.9tn in April, N32.1tn in May, and N32.6tn in June.
The climb continued in July as credit to the sector rose to N32.8tn. It increased to N33.4tn in August, N34.39tn in September, N35.3tn in October and N35.7tn in November.
On a year-on-year basis, credit to the private sector rose by N5.6tn, from N30.1tn recorded in December 2020 to N35.7tn in December 2021.
In June 2019, the Central Bank introduced a new policy measure, which required Deposit Money Banks to maintain a minimum of 60 per cent Loan to Deposit Ratio.
The objective was to grow the economy by making credit available to the real sector of the economy.
At the end of the last quarter of that year, the Nigerian banking sector recorded the most credit growth of the real sector of the economy in almost five years, hitting N17.1tn in the fourth quarter of 2019.
To further spur growth in the economy, the CBN in October 2019 raised the LDR of banks to 65 per cent, after the September 30 deadline given to the banks to meet the 60 per cent LDR directive.
