Manufacturers’ debt to Nigerian banks increased from N5.56 trillion in January 2023 to N6.98 trillion by June 2023, according to data from the Central Bank of Nigeria.
The Times reported that the Sectoral Analysis of Deposit Money Banks’ Credit report from the CBN states that manufacturers took out a significant N1.42 trillion in loans between January and June 2023.
The amount of credit provided by banks to the sector rose from N4.53 trillion in June 2022 to N6.98 trillion in June of the present year in just one year.
N5.56 trillion in January, N5.57 trillion in February, N5.65 trillion in March, N5.81 trillion in April, N5.70 trillion in May, and N6.98 trillion in June 2023 are the statistics obtained from a month-by-month examination of loans.
It is important to remember that the central bank’s Monetary Policy Committee increased the benchmark interest rate from 11.5% in the beginning of the year to 18.75% in June.
This was one of eight rate increases in a row that were intended to lower inflation and decrease the amount of liquidity in the economy.
Amidst the increasing debt, manufacturing stakeholders have persistently contended that the existing double-digit loan rate is unfavourable, given its direct influence on production costs and the industry’s competitiveness.
The forecast for net domestic credit, while still on an upward track, represents the anticipated credit dynamics in the economy, according to the research. Over time, the government’s credit is anticipated to decline as a result of the anticipated substantial decrease in fiscal deficits brought on by the removal of fuel subsidies.
However, because of the government’s intention to attain a greater degree of growth fueled by the private sector, loans to the private sector are anticipated to rise.
Conversely, farmers’ borrowing for agricultural production fell to N1.83 trillion in June from N1.85 trillion in January, indicating a decrease in their desire for loans.
