The Nigerian banking industry credit to the private sector dropped slightly in August after rising by N2.3 trillion between June and July 2024, to stand at N74.73 trillion as lending to the government soared, data from the Central Bank of Nigeria(CBN) has shown.
This is as the cash outside the banking system continued to rise amidst scarcity of cash in the banking halls.
According to the data, the amount of cash outside the formal banking system rose to N3.627 trillion in August compared to N3.411 trillion which it was in July.
Currency outside banks has so far risen by 10.55 per cent compared to N3.281 trillion which it was at the beginning of the year as many bank customers continue to complain of unavailability of cash in the banking halls.
Meanwhile, lending to the private sector dropped from N75.508 trillion in July 2024 to N74.731 trillion in August. This is however a 4.98 per cent compared to N71.211 trillion credit that had been extended to the private sector by banks as at January this year.
The CBN data also revealed a trend of fluctuating borrowing by the three tiers of government from commercial lenders over the past months as credit to the Federal Government increased by N11.33 trillion or 57.11 per cent to N31.15 trillion in August from N19.83 trillion in July.
In June, the credit figure stood at N23.93 trillion, up from N19.98 trillion in April, but lower than the N28.38 trillion reported in May. The first quarter of the year also showed varying levels of borrowing, with credit reaching N23.52 trillion in January, peaking at N33.93 trillion in February, and then dropping to N19.59 trillion in March.
The steady borrowing trend highlights the Federal Government’s growing reliance on CBN facilities to fund capital projects, debt servicing, and other fiscal obligations. The combined total for government and private sector credit, along with money in circulation, amounted to N110.03 trillion in August, up from the previous month’s total, underscoring the ongoing fiscal and monetary dynamics in the Nigerian economy, with government borrowing dominating credit activities, crowding out the private sector.
In terms of currency in circulation, the total rose to N4.14n trillion in August from N4.05 trillion in July, reflecting an increase of N91.08 billion or 2.25 per cent.
