In Five Months, Manufacturers Receive N459.69bn Of N1.169trn Loans — CBN
Following the loans to deposition ration policy recently announced by the Central Bank of Nigeria (CBN), aggregate deposit money banks’ lending to the real sector has peaked N1.169trn in five months as the manufacturing industry gets a record N459.69bn within the period, the highest in two decades.
The CBN Governor, Mr. Godwin Emefiele disclosed this yesterday while briefing journalists at the end of the November 2019 Monetary Policy Committee Meeting (MPC) and the last for 2019.
Recall the CBN recently raised the Loan to Deposit Ratio (LDR) of banks from 60 to 65 percent to raise real sector lending and December 31st 2019 for all DMBs to comply, a situation that is spurring lending to businesses. “Growth in credit to the private sector improved from 13.08 percent in October 2019 from 12.49 percent in the previous month, reflecting the impact of the CBN recent policy on loans to deposit ratio.
An increase in the absolute growth credit amounting to N1.169trn was recorded between the end of May and end of October 2019” he explained. He explained further that “consequently, the manufacturing sector received N459.69bn, the highest in two decades.
This was followed by the consumer loans of N356.65bn, general commerce N142.98bn, information and communication, N82.07bn, construction, N74.52bn agriculture forest and fishery, N73.02bn, mining and quarry, N3.64bn and transportation and storage N3.09bn among others.” The MPC further noted that these actions have assisted in boosting credit to the agricultural and manufacturing sectors, hence, the positive outcome on the GDP.
The MPC is hopeful that the LDR initiative must be sustained as interest rates being paid by borrowers have so far dropped by up to 400 basis points between June and October 2019 adding that tthese have happened with corresponding decline in NPLs to 6.5 per cent at end-October 2019. On the key rates, the MPC voted for the fourth time to hold all rates constant, the Committee decided by a unanimous vote to retain the Monetary Policy Rate (MPR) at 13.5 per cent and to hold all other policy parameters constant” Emefiele said.
The MPC backed the border closure and asked the federal government to sustain the closure for the gains to be crystalize. He noted that the impact of the closure on prices of foods which has driven inflation up is simply reactionary and temporal thus of no consequential impact going forward. “On the impact of the recent closure of Nigerian land borders on domestic food prices, the Committee noted that any upward price movement arising from the closure was reactionary and therefore temporary.
Moreover, significant investment has been made over the last three years to sustainably increase domestic food supply” the CBN Governor announced adding that the gains from these investments will mitigate the impacts. Thus, “we will continue to advise the government to sustain the border closer to ensure that we use the opportunity of this grow output and keep our industries alive,” he said.