Banking sector lending to the private sector will rise to N16.7 trillion this year, up by 6.34 percent, from N15.7 trillion recorded in 2017.
Analysts at FSDH Merchant Bank made this projection in the company’s weekly insights released yesterday.
They also noted that the agricultural sector is faced with many challenges which make it difficult for it to attract more credit from the banks, while uncertainties about the fuel subsidy may constrain lending to the petroleum sector.
They stated: “The manufacturing sector should attract the highest credit. The uncertainties surrounding the fuel subsidy in the petroleum marketing sector may lead to a contraction of credit to the sector.”
The provisional figure that the National Bureau of Statistics (NBS) released for the fourth quarter (Q4) 2017 shows that the banking sector credit to the private sector dropped from N16.1trillion in Q4, 2016 to N15.7trillion in Q4 2017.
FSDH analysts explained: “Although the total credit as at the end of 2017 was higher than the figure of N13.1trilion in Q4 2015, the impact of the devaluation of the local currency may be responsible for the growth in 2017 over 2015.”
The sector with the highest credit allocation as at Q4, 2017 was Mining & Quarrying and Petroleum Marketing, which accounted for 28 percent of the total banking sector credit to the private sector.
This was followed by Manufacturing 14 percent; General Services 18 percent; and Trade 7 percent. We note that Agriculture, which contributed about 29 percent of the Gross Domestic Product (GDP) in Nigeria in Q3 2017, attracted 3 percent of the total credit.
FSDH stated: “Our findings show that the Agriculture sector in Nigeria is faced with many problems. Thus the sector is unable to attract the required credit.
“Some of the problems are: inadequate storage facilities; poor transport network; inadequate research to develop improved seedlings; and weak integration between the sector and the manufacturing sector in providing manufacturing inputs.”
CBN sells N369bn TBs
Meanwhile the Central Bank of Nigeria (CBN) will sell treasury bills (TBs) worth N369.4 billion this week. These include N260 billion worth of Primary Market (fresh) and N109.4 billion worth of secondary market TBs.
The primary market bills which would be offered tomorrow comprise: N7.9 billion worth of 91-Days TBs, N30 billion worth of 182 days TBs and N222.2 billion worth of 364-Days TBs.