Credit facilities to private sectors by Deposit Money Banks (DMBs) increased by N4.69 trillion to hit N39.87 trillion in July 2022, OduNews reports.
According to the latest money and credit statistics report released by the CBN, credit to the private sector rose from N38.46 trillion in June to N39.87 trillion in July, representing a 3.6% month-on-month increase.
On a yearly basis, credit to the private sector increased by 21.33% when compared to N32.86 trillion reported in July 2021.
A further breakdown revealed that Oil & Gas, Manufacturing and General were the top three sectors with the most credit in the month under review.
The data also showed that credit to the government rose to N20.09 trillion in July, an increase of 11.29% on a month-on-month basis and 42.36% on a yearly basis.
Speaking on the advantage of the increase in the credit facility to the private sector, an analyst at PAC Holdings, Mr. Wole Adeyeye said “The increase in credit to private sector is not expected to create more jobs as businesses are facing high cost of inputs, mainly driven by high inflation.
“Nigeria’s inflation rate hit 17-year high at 19.64 per cent in July 2022. This shows that businesses will have to borrow more to produce (most times, below the maximum production level). Demand-pull inflation may create more jobs but unfortunately, Nigeria is witnessing cost-push inflation at the moment.”
While on his part, Mr. Tajudeen Olayinka, the CEO, Wyoming Capital & Partners, said, “The 3.67 per cent MoM growth in credit to private sector in July 2022 was a clear demonstration of how inflation has affected nominal demand for Naira by private sector businesses, given continuing rise in input cost and the usual burden of imported inflation.
“Since this nature of demand for money may not necessarily translate to improved productivity, it follows, therefore, that economy may not also benefit in terms of additional jobs or output growth. This is just an evidence of unstable state of macroeconomic environment in Nigeria.”
“Since this nature of demand for money may not necessarily translate to improved productivity, it follows, therefore, that economy may not also benefit in terms of additional jobs or output growth. This is just an evidence of unstable state of macroeconomic environment in Nigeria.”
