Credit to private sector rises to N31.822trn

Banking sector credit to the private sector increased year-on-year by N382 billion to N31.823 trillion as of April, up from the N31.440 trillion it was as at the end of March.

The data were compiled from the latest Central Bank of Nigeria (CBN) money and credit statistics for April 2021, posted on the regulator’s website.

The development could be attributed to the aggressive development finance interventions by the central bank since the outbreak of the COVID-19 pandemic.

Also, net credit to the government increased to N12.156 trillion year-on-year, as at the end of April, higher than the N11.994 trillion it was at the end of the previous month.

However, demand deposits, which are funds held in an account from which deposited funds can be withdrawn at any time, fell marginally from N13.834 trillion the previous month, to N13.690 trillion in the review month. Also, narrow money supply (M1), which includes all physical monies such as coins and currency along with demand deposits and other assets held by the central bank, dropped to N15.996 trillion in April, compared with the N16.139 trillion it was at the end of the previous month.

But Quasi Money, which are highly liquid assets other than cash, that can be quickly converted, stood at N22.386 trillion in the review month, from N22.079 trillion the previous month.

Currency-in-circulation also dropped marginally to N2.796 trillion, compared with the N2.809 6 trillion it was the previous month.

The data showed that currency outside banks increased marginally to N2.307 trillion as of the review month, up from the N2.306 trillion it was the previous month.

However, Banks’ Reserves dropped to N10.406 trillion in April, from the N10.529 trillion it was at the end of March.

Meanwhile, as the CBN’s Monetary Policy Committee (MPC) ends its two-day meeting today, analysts have predicted retention of all the major monetary policy instruments.

The country recorded a Gross Domestic Product (GDP) growth rate of 0.51 percent (year-on-year) in the first quarter of 2021, (Q1 2021) compared with the 0.11 per cent recorded in the fourth quarter (Q4) 2020, according to figures the National Bureau of Statistics (NBS) released on Sunday.

Owing to this, analysts at Lagos-based CSL Stockbrokers Limited, expects the MPC to keep the policy rate stable at 11.5 per cent.

The research and investment firm said despite the growth trajectory witnessed in the first quarter of the year, the economy remained fragile and weaker compared with pre-pandemic level.

“As such, a rate hike might worsen the fundamentals. On the other hand, although inflation retreated in April, risks are firmly tilted to the upside and we expect this to remain a concern for the committee which should stop any consideration of a reduction in rate. We however forecast a 50-basis-points hike in the rate in the second half of the year as the output the gap is projected to narrow,” it added.

Also, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said: “The MPC will need to think very deeply about managing the trade-offs because inflation is still very high; you can take a stand that growth is beginning to come out and you don’t want to stall it. So, I will not be surprised if they maintain the status quo.”