Banks’ Credit To Private Sector Rise To N16.7trn In 2018, As the macroeconomic and business environment in Nigeria improves alongside a growing consumer confidence, analysts at FSDH Research said they expect banking industry credit to the private sector to grow in 2018.
The analysts in a report yesterday said the drop in the yields on the Nigerian Treasury Bills (NTBs) will be the main drivers of the expected credit growth.
The report said it expects the banking sector credit to the private sector to grow to N16.7 trillion in 2018, representing a growth of 6.34 per cent from N15.7 trillion recorded in 2017.
The bulk of this, according to the analysts is expected to go to the manufacturing sector as uncertainties surrounding the fuel subsidy in the petroleum marketing sector may lead to a contraction of credit to the oil sector.
The provisional figure that the National Bureau of Statistics (NBS) released for the fourth quarter of 2017 shows that the banking sector credit to the private sector dropped from N16.1 trillion in Q4, 2016 to N15.7trillion in Q4 2017. 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 and Quarrying, and Petroleum Marketing which accounted for 28 per cent of the total banking sector credit to the private sector. This was followed by Manufacturing 14 per cent; General Services 18 per cent; and Trade seven per cent. We note that Agriculture, which contributed about 29 per cent of the Gross Domestic Product (GDP) in Nigeria in Q3 2017, attracted three per cent of the total credit.
The analysts said their 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”, the FSDH analysts said.