Nigerian banks’ credit to the private sector has surged by 33.6% year-on-year, reaching N75.5 trillion in July 2024, compared to N56.5 trillion during the same period in 2023. This significant rise in credit indicates a positive outlook for the country’s economic recovery. The credit includes loans, trade credits, and other account receivables extended to private sector operators, showcasing the banking sector’s critical role in economic activities.
Financial expert David Adonri, Vice Executive Chairman of High Cap Securities Limited, described the increase in private sector credit as a key driver of economic growth. He emphasized the connection between credit growth and the nation’s Gross Domestic Product (GDP). However, Adonri urged the Central Bank of Nigeria (CBN) to reduce the Monetary Policy Rate (MPR) to sustain this growth, especially as inflation eases.
The report from the CBN showed that banks’ credit to the private sector grew by 2.8% in Q2 2024, rising to N73.2 trillion from N71.2 trillion in Q1 2024. This increase was fueled by a notable rise in bank deposits during the first half of the year, which climbed from N26.7 trillion in December 2023 to N33 trillion by June 2024. Demand deposits in particular saw steady growth, rising 14.3% in Q2 2024 after an 8.1% increase in Q1 2024.
The sustained growth in deposits has provided banks with the capacity to extend more loans and credit, further supporting economic expansion. With the continued growth in credit and deposits, there is cautious optimism for the private sector’s role in Nigeria’s economic recovery.
