Total banking credit grew 1.75% to N43.67trn between January and February 2021 – CBN

…. Records 0.3% marginal increase in broad money supply resulting from NFA contractions

Charles Abuede

Recent data provided by the Central Bank of Nigeria (CBN) shows that total banking credit to the Nigerian economy grew by 1.75 per cent to N43.67 trillion in February 2021 from N42.92 trillion in January 2021, reflecting the ongoing broad-based monetary and fiscal stimulus to various sectors of the economy. This revelation was made by Godwin Emefiele, the Governor of Nigeria’s Central Bank while reading out the MPC communiqué at the CBN headquarters in Abuja on Tuesday.

According to Emefiele, the credit growth is a reflection of the ongoing broad-based monetary and fiscal stimulus to various sectors of the economy. Also, the bank governor also revealed that there was 0.3 per cent marginal growth in the broad money supply (M3) in February 2021 following a substantial growth of 13.54 per cent in December 2020 and was largely driven by the contraction in Net Foreign Assets (NFA); while the Net Domestic Assets (NDA) grew by 3.02 per cent in February 2021, from 2.22 per cent in December 2020.

Furthermore, Emefiele noted that the performance of the financial soundness indicators (FSIs) of the deposit money banks (DMBs) showed a Capital Adequacy Ratio (CAR) of 15.2 per cent, Non-Performing Loans (NPL) ratio of 6.3 per cent which still remains above the prudential benchmark of 5 per cent, as the apex bank seeks to sustain its regulatory measures to bring it below the prudential benchmark. Thus, the Liquidity Ratio (LR) stands at 40.5 per cent, as of February 2020.

In the words of the CBN boss as found in the communiqué, “Conscious of the persisting inflationary pressure fuelled largely by a continued uptick in food prices, the Committee noted the Bank’s interventions to boost food production particularly through its various Agricultural programmes. Other complementary measures included, increase in disbursement for the dry season agricultural programme to increase output, the adoption of high yield seeds to improve productivity and the adoption of harvested produce as a means of loan repayment, which has stemmed from hoarding and the activities of middlemen and rent seekers. The establishment of the strategic grain reserves for staple crops has also helped in addressing seasonality of agricultural commodities,” he stated.

In terms of the funding from the banking system, the CBN noted that it has disbursed funds under its various agricultural interventions towards improving food supply in Nigeria. Thus, it said that N107.60 billion has been paid out to 548,109 farmers cultivating 703,619 hectares of land between Q4 2020 and Q1 2021 to boost dry season output in support of agricultural value chain development.

“Total disbursements as of end-February 2021 amounted to N1.487 trillion under the various agricultural programmes, of which N686.59 billion was disbursed under the Commercial Agricultural Credit Scheme (CACS) and N601.75 billion under the Anchor Borrowers Programmes (ABP) to 3,038,649 farmers to support food supply and dampen inflationary pressures.

“Under the Targeted Credit Facility, CBN disbursed N218.16 billion to 475,376 beneficiaries, of which 34 per cent of beneficiaries are SMEs. Under AGSMEIS, the total sum of N111.62 billion has been disbursed to 28,961 beneficiaries, and 70 per cent of which are in the agricultural sector. Under the Creative Industry Financing Initiatives mainly targeted at youths, the sum of N3.19 billion has been disbursed to 341 beneficiaries, of which 53 per cent has gone to the movie industry,” Emefiele revealed.

Elsewhere, the Bank revealed that the National Mass Metering Programme has seen the sum of N33.45 billion have been disbursed to 9 distribution companies for the procurement of 605,852 meters, while N89.89 billion has been paid out under Nigeria Electricity Market Stabilisation Facility (NEMSF 2) to 11 distribution companies to improve the electricity supply industry in Nigeria.

At the event which was held in Abuja, at the CBN headquarters on Tuesday, the apex bank said it has also released the sum of N94.34 billion out of the N100 billion for the Health Care intervention Fund, and is willing to expand the facility, to 85 projects in the pharmaceutical industry, hospitals and State governments for both brownfield and greenfield projects, mostly to expand pharmaceutical drug lines, acquire magnetic resonance imaging (MRI) and other equipment and upgrade laboratories and other hospital services. And the total of N803.36 billion has been disbursed to 228 projects across various sectors in agro-allied, mining, steel production and packaging industries, amongst others under the N1 trillion manufacturing intervention stimulus.

Meanwhile, the CBN has reiterated its commitments to maintain its current drive to improve access to credit to the private sector, while exploring other initiatives with the fiscal authorities to improve funding to critical sectors of the economy.