Consumer credit reduced by 3.4 per cent, from N762.07 billion to N736.19 billion, between 2016 and 2017 due to prevailing economic uncertainties, which made banks more risk averse to consumer lending.
According to the Central Bank of Nigeria’s financial stability report, consumer credit constituted 3.54 per cent of total credit to the core private sector, and was 0.09 percentage point lower than the proportion in the second half of 2016.
The banks’ credit to the various sectors trended downward during the review period. Credit to the private sector fell by 1.47 per cent from N16, 293.48 billion in December 2016 to N15, 907.47 billion by the end of 2017.
The oil and gas sector accounted for the highest share of total credit at 29.29 per cent at end-June 2017, similar to 30.02 per cent in the second half of 2016.
The contribution of manufacturing, construction, and power and energy sub-sectors to total credit rose from 13.59, 3.89 and 4.46 per cent in the preceding half year to 13.97, 3.98 and 4.83 per cent, respectively.
However, agriculture, forestry and fishery sub-sectors declined to 3.18 per cent from 3.25 per cent in the preceding half year.
Reserve money declined by 6.76 per cent, from N5.88 billion as at the end of December 2016 to N5.48 billion at the end of June 2017. This was higher than the second quarter indicative benchmark of N5.45 billion by 0.6 per cent.
The downward movement in reserve money reflected the 5.55 and 2.90 per cent decline in net domestic assets and net foreign assets, respectively. The corresponding downward movement in the liabilities of reserve money reflected the decline in currency-in-circulation and banks’ deposits with the CBN.
However, Currency-in-circulation, which constituted 34.13 per cent of reserve money, fell by 14.03 per cent to N1. 87 billion at end-June 2017, compared with the level at end December 2016.
Similarly, bank deposits with the CBN fell by 2.51 per cent to N3. 61 billion at end-June 2017, compared with N3.7 billion at end-December 2016.
The tight monetary policy stance of the apex bank, coupled with the new flexible foreign exchange policy during the first half of 2017 affected liquidity in the money market.
Consequently, rates varied in line with liquidity conditions with significant spikes due to high demand for foreign exchange and special sales of CBN bills. The average short-term money market rates traded mostly above the MPR of 14 per cent.
