Nigerians borrowing less due to rising interest rates – CBN

Records from the Central Bank of Nigeria (CBN) have shown that outstanding consumer credit in Nigeria declined by 6.78% to N1,933.18 billion at end of June 2022, from N2,073.76 billion as of December 2021.

This means Nigerians are borrowing less as of June 2022, compared to December 2021 when borrowing was high.

The CBN blamed the fall on the rising interest rates as central banks around the world raise rates to tame inflation.

The apex bank disclosed this in its latest Financial Stability Report published on Friday.

Credit to real sectors: Meanwhile, the total credit to various sectors of the economy grew by 10.12% to N26,846.40 billion in end-June 2022, due to a 12.41% increase in credit to N14,624.15 billion in the Services Sector.

Note that consumer credit outstanding accounted for 7.22% of total credit to the private sector.

“The decrease was due, largely, to the reduction in personal loans, owing to the rise in lending rates. Total credit to various sectors of the economy grew by 10.12 percent to N26,846.40 billion in end-June 2022, owing, largely, to a 12.41 percent increase in credit to N14,624.15 billion in the Services Sector.

“CBN added that credit to Agriculture and Industry increased by 11.84 and 6.87 percent to ₦1,630.38 billion and N10,591.87 billion, respectively. Services and Industry remained the dominant sectors, accounting for 54.47 and 39.45 percent of the total credit, respectively, compared with 53.36 and 40.66 percent in December 2021.

“The share of the Agricultural Sector increased by 0.09 percentage points to 6.07 percent, compared with 5.98 percent, at end-December 2021. The improved flow of credit to the real sector reflected the Bank’s sustained effort in support productivity, real output growth and employment generation in the economy.”

OFIs now more than 6k: The report added that the total number of Other Financial Institutions (OFIs) increased by 15% to 6,697 at end-June 2022, compared with 6,682 in end-December 2021, due to the licensing of six Finance Companies (FCs) and nine Microfinance Banks (MFBs) in the review period.