Credit to Private Sector Rises to N22.2tn

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By Obinna Chima
Banking sector credit to the private sector increased year-on-year to N22.172 trillion at the end of July 2017, compared with the N21.978 trillion it stood at the end of June 2017.
This was revealed by data gathered from the Central Bank of Nigeria’s (CBN) money and credit statistics for July 2017, obtained from its website.
Also, broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts climbed year-on-year to N22.200 trillion as at July, from N21.674 trillion at the end of June.
Similarly, narrow money (M1), which includes all physical monies such as coins and currency along with demand deposits and other assets held by the central bank edged higher year-on-year to N10.325 trillion in the review month, as against the N9.883 trillion recorded the previous month.
But currency-in-circulation dropped to N1.769 trillion at the end of July, compared with the N1.873 trillion position it was the previous month. However, while Banks’ Reserves increased to N3.446 trillion as at July, from N3.266 trillion, Quasi Money, which are highly liquid assets other than cash, that can be quickly converted, stood at N11.874 trillion as at the review month, from N11.790 trillion.
The Group Managing Director and Chief Executive Officer of Access Bank Plc, Mr. Herbert Wigwe, last week predicted a jump in banks’ lending to the private sector.
Wigwe, who said this during an interview on ARISE TV, the sister broadcast station of THISDAY, was optimistic that with the Secured Transactions in Movable Assets Act (otherwise known as National Collateral Registry Act) and the Credit Reporting Act, there would be an expansion in banks’ lending to Micro, Small and Medium Scale Enterprises (MSMEs) in the country.
The Collateral Registry Act ensures that MSMEs in Nigeria can register their movable assets such as motor vehicles, equipment, and accounts receivable in the National Collateral Registry, and use same as collateral for accessing loans.
On the other hand, the Credit Reporting Act provides for credit information sharing between Credit Bureaus and lenders (such as banks), as well as other institutions that provide services on credit such as telecommunication companies and retailers.
Continuing, Wigwe, who was responding to question on what to expect from banks following the new legislations, said: “I think seismic is too strong a word to use. A couple of steps have been taken that would ensure that you start to see those shifts.
“First of all, the Credit Registry Act and secondly the use of Bank Verification Numbers (BVN), which means that if somebody defaults on a loan, we can blacklist that person and he cannot have access to credit in the system.
“The fact that I can’t lend to somebody who had defaulted means that, that person has been excluded from borrowing in the system. Now, as banks are beginning to look for other ways to make money, look at even the EMTS exposure we are talking about, God knows how many millions of Nigerians you would have lent to, for you to have that amount of bad loan. But it is not even going to happen!
“So, people are looking for more ingenious ways to make money and it is happening. There is increased agency banking. One thing I can tell you for sure is certain, the proportion of loans that are going to be lent to retails and SMEs is going to be a lot more in 2017 than it was in 2016.
“And in 2018, it would be a lot more. If you take my bank, for instance, our traditional arrangement was we were a wholesale bank, but we are now a large diversified bank and we have invested significantly this year as far as expanding our channels and the retail network is concerned,” Wigwe explained.