Credit to the private sector hit a record high of 35.31 trillion naira in November 2021, representing 5.16 trillion naira in new net lending between January and November 2021. This is according to Central Bank data. Nigeria’s (CBN) currency and credit statistics. .

Bank credit to the private sector in Nigeria has increased by 17% from the N30.2 trillion recorded in December 2020. Bank credit in Nigeria has skyrocketed in recent times, due to a chain of CBN policies and increased activity in the Nigerian lending space, in particular with fintechs.

On a monthly basis, credit to the private sector increased by N694.2 billion in November 2021, from N34.62 trillion recorded in October 2021 to N35.3 trillion during the reporting period. .

The Central Bank has voted throughout the year to keep the Reference Monetary Rate (TPM) at 11.5%, which determines the rate at which loans are acquired from banks. A decision that was taken in order to help stimulate real growth and recovery from the economic recession recorded in 2020 by improving credit to the real sector.

The umbrella bank stressed at the November monetary policy meeting that the position to hold the rate has supported the resumption of growth and is poised to improve price stability which is conducive to sustainable growth.

The Central Bank report also shows that the currency in circulation also increased by 8% during the review period to reach N3.15 trillion in November 2021, from N2.91 billion at the end of the year. last year.

In addition, credit to the government increased by 5% to 13.03 trillion naira in November 2021, from 12.4 trillion naira recorded at the end of the previous year, showing an improvement in the ease of payment. credit to the economy.

Lending rates still at the highest

Despite the increase in the amount of bank credit to the economy, lending rates still remain high, the maximum lending rate in November 2021 rising to 27.26% against 27.1% recorded the previous month.

Also, the savings deposit rate reached its highest level in six months at 1.83% in November 2021 against 1.28% recorded the previous month. At the review month, the one-month, three-month, six-month and twelve-month rates were 3.72%, 4.96%, 5.36% and 7.34%, respectively.

Rising rates and the supply of credit mean that Nigerian companies are still open to more borrowing despite the high lending rates.

CBN position on loans

The central bank maintained its monetary position to stimulate credit by keeping the MPR rate at 11.5% in order to stimulate the growth of the economy and ensure price stability in the country, after suffering a sharp increase in the inflation rate from 2020 to 2021..

During its last monetary policy committee of the year in November 2021, the CBN underlined that its policy had started to yield positive results given the improvement in Nigeria’s GDP (+ 4.03% in Q3 2021) and the moderation of the inflation rate (15.4% in November 2021).

However, while the committee continues to encourage improvement in the supply of credit to the sector by banks, it also urged the umbrella bank to maintain its strict prudential regime to bring the ratio of non-performing loans (NPL) down to below the prudential benchmark of 5%.