Nigerian banks granted about N2.3 trillion in loan facilities to the private sector between June and July of this year.
This was contained in the Credit to the Private Sector (CPS) report of the Central Bank of Nigeria (CBN).
Indeed, experts have continually held that lending to the private sector plays a crucial role in driving economic growth, supporting businesses, and fostering development.
The figure indicated a 34 per cent increase from N56.46 trillion in July 2023 to N75.5 trillion in July 2024.
The report showed that CPS rose by 33.7 per cent to N75.48 trillion in July 2024 as against N56.46 trillion recorded in July 2023, an increase of N19.02 trillion.
The report also showed that banks’ loans to the private sector increased by 3.1 per cent or N2.29 trillion to N75.48 trillion in July 2024 compared with N73.19 trillion in June 2024.
A further breakdown of the report indicated that banks’ demand deposits rose from N26.7 trillion recorded at the end of December 2023 to N33.0 trillion by June 2024.
Total demand deposits in the first quarter ended March 2024 rose by 8.1 per cent to N28.9 trillion while in the second quarter ended June 2024, banks’ deposits increased by 14.3 per cent to N33 trillion.
This comes as businesses continue to face rising costs of production, huge inventory, high interest rates and rising energy costs.
With about 30 per cent interest rate, stakeholders continue to push for access to funding for expansion, investment in new projects, and capital expenditures as these interventions enable businesses to grow, create jobs, and contribute to economic development by increasing productivity and output.
An investment banker, TolulopeAlayande, argued that increased access to credit for businesses through bank lending can stimulate job creation and reduce unemployment rates, adding, “Businesses that secure loans can hire more workers, expand their operations, and contribute to the overall labour market.
This will support innovation and entrepreneurship by providing funding for startups, small and medium-sized enterprises (SMEs), and innovative ventures.”
He added that since the private sector drives employment generation, the government promotes inclusive lending in the sector to enhance economic participation, foster entrepreneurship and broaden access to financial services.
MEANWHILE, despite this lending, inflation continued to drag the economy, subsequently contracting the industrial sector’s purchasing managers index (PMI) for the seventh consecutive time. It recorded 49.2 points in August, according to the August 2024 PMI report by the CBN.
The report, which showed that businesses recorded their first expansion in 13 consecutive months, said PMI in August 2024 stood at 50.2 index points, indicating expansion in economic activities for the first time in 13 consecutive months of contraction.
The 49.2 PMI recorded by the industry sector, represented a slight improvement from the contractionary position observed since March 2024.
According to the report, this suggests that while the sector continued to experience contraction, there has been a gradual recovery in industrial activities over the past few months.
