The Federal Government has shown dominance in accessing credit in the financial market as lending to it increased by 150.4 percent to N19.6 trillion in March 2024, from N9.4 trillion in the same period last year.
On the other hand, credit to the private sector shows a concerning growth of 12 percent to N71.21 trillion as at March 2024 from N63.6 trillion in the corresponding period of 2023.
This is according to the latest credit data obtained from the website of the Central Bank of Nigeria which further revealed that credit to both the government and private sector declined month on month between February and March 2024.
According to the CBN, total credit to the Federal Government in the month of March 2024 tumbled by 42.3 percent month on month to N19.6 trillion when compared with N33.9 trillion in the prior month, similarly, lending to private sector experienced a decline of 11.9 percent month on month as total credit to the sector dropped to N71.2 trillion in March 2024 from N80.9 trillion in February 2024.
Further analysis of the data shows that on the average, credit to government printed at N25.7 trillion so far in 2024 as against the N16.1 trillion with that to the private sector averaging N72.8 trillion as against the N61.9 trillion in the same period last year.
Some financial experts disclosed that the annual growth rate is commendable stressing that the gradual growth could be attributed to the improved level of economic activity post-COVID, signaling economic recovery and increased demand for credit by major businesses despite the prevailing high interest rate environment.
They added that the data also indicates an improvement and growth in the total banking system liquidity during the period, providing more lending opportunities for banks.
The CBN has implemented various initiatives aimed at boosting credit delivery to the private sector, including the increase of the loan-to-deposit policy and targeted intervention programmes for sectors like trade, agriculture and manufacturing.
However, the declined month on month performance could be linked to the effect of the policy rate hikes by the monetary authority on the economy where the CBN’s Monetary Policy Committee has raised interest rate by 600 basis points to 24.75 percent so far in 2024 from 18.75 percent just to achieve price stability.
This rate hike was precipitated by the fight against rising inflation that has maintained acceleration since December 2022 to the recent reading of 33.20 percent in March 2024.
Meanwhile, there has been an unprecedented growth in the total monetary aggregate, according to the Central Bank data as obtained from its website.
Consequently, the money supply and broad money supply of the bank (M2 and M3) have soared by 69 percent and 66 percent year on year to N93.8 trillion in March 2024 and N94.6 trillion respectively.
However, these aggregates went on a slight southward movement month on month from N95.6 trillion (M3) and N93.9 trillion (M2) to the current levels as a result of the impact of the tightening measures of the MPC.
