By Obinna Chima
The value of consumer credit in the Nigerian economy fell by four per cent to N1.593 trillion in January 2021.
The Central Bank of Nigeria (CBN) revealed this in its monthly economic report for January.
It noted that at the aforementioned level, consumer credit constituted 8.2 per cent of credit to the core private sector, compared with 8.9 per cent in December 2020.
It stated that the decrease in the ratio largely reflected the decline in personal loans and advances by other depository corporations.
According to the report, a breakdown of consumer loans in January 2021, showed that personal loans accounted for the largest share of 69.4 per cent, but represented a decline of 1.3 percentage points from the level in December 2020, while retail loans accounted for 30.6 per cent and rose by 1.3 percentage points.
“Despite the second wave of the COVID-19 pandemic, bank customers demonstrated continued confidence in the banking system. “Accordingly, increased demand, savings, time and foreign currency deposits by bank customers led to the one per cent and 0.2 per cent growth in transferable and other deposits of the depository corporations, respectively, at end-January 2021,” it added.
Furthermore, it stated that currency outside depository corporations fell by 5.2 per cent, indicating an improvement in intermediation efficiency.
“The modest growth in liabilities to other depository corporations which reflected the adequate liquidity in the banking system, solely, explained the rise in reserve money,” it added.
The report noted that at N10.433 trillion, liabilities to other depository corporations grew by 2.3 per cent in January 2021, in contrast to a decline of 1.4 per cent in the corresponding period of 2020.
Also, currency-in-circulation declined by 2.7 per cent, compared with 7.9 per cent at end-January 2020.
Consequently, reserve money grew by 1.2 per cent to N13.264 trillion in contrast to a decline of 3.2 per cent at the end of January 2020.
The drivers of growth in reserve money were growth in net foreign assets, claims on other depository corporations, and claims on other sectors, which grew by 4.9 per cent, 3.2 per cent, and 0.2 per cent, respectively.
In the month under review, crude oil spot prices, of all the crude streams, rose to an 11-month high, amid the announcement of a voluntary output cut of one million barrels per day (mbpd) by Saudi Arabia, which was expected to bring the oil market into deficit for most of 2021.
“The monthly average spot price of Nigeria’s reference crude oil, the Bonny Light (32.9° API), rose by 8.7 per cent to $54.69 per barrel (pb) as at January 22, 2021, compared with $50.33pb in the preceding month, but declined by 18 per cent from the $66.69pb recorded in the corresponding period of 2020.
“In addition, the UK Brent at $54.40pb, Forcados at $54.89pb, WTI at $52.94pb, and the OPEC Basket of thirteen selected crude streams at $54pb, exhibited a similar trend as the Bonny Light.
“Traders expect that Saudi Arabia’s plan to voluntarily cut one million barrels per day of its output would bring the oil market into deficit for most part of the year 2021.
“Other reasons for the rise in crude oil prices included: supply cuts from Iraq and Libya; a weaker US dollar (which made crude oil cheaper for holders of other currencies); and expectations of large stimulus package, by the Biden Administration in the US and other economies,” it added.
It pointed out that the value of crude oil prices in January, Nigeria’s fiscal position appeared to have improved, with brightened prospects of effective execution of the 2021 Budget (benchmarked at $40pb and 1.8mbpd production volume, including condensates).
However, the prospect was constrained by the under-performance of the non-oil revenue sources, as economic activities continued to teeter, following the recession and the second wave of the COVID-19 pandemic.
