Despite the slow business activities in the country, Private sector credit surged to N54.16 trillion, marking a notable increase of 30.37 per cent or N12.62 trillion Year-to-Date (YtD) as of July 2023.
This growth occurred despite rising inflation, reduced business activities, and other challenges, according the Central Bank of Nigeria (CBN) Money and Credit Statistics report.
The report indicates that credit extended to the private sector exceeded N50 trillion in June, climbing from N44.79 trillion in May to N52.81 trillion in June.
During the period spanning from June to July, private sector credit continued to rise, experiencing a 2.55 per cent increase or N1.35 trillion Month-on-Month (MoM). This expansion has taken place amidst a backdrop of economic challenges such as diminished purchasing power, foreign exchange reforms, and the removal of fuel subsidies.
Remarkably, despite the inflation rate’s escalation from 21.82 per cent in January to 24.08 per cent in July, Deposit Money Banks (DMBs) have shown resilience in terms of lending and advances to customers, resulting in significant profit growth.
This achievement is in contrast to the downturn in business activity observed in Nigeria, as evidenced by the July Purchasing Managers’ Index (PMI) report, which hit a four-month low in 2023.
The monthly PMI released by Stanbic IBTC Bank reveals that while the headline PMI remained above the no-change mark of 50.0, it dropped to 51.7 in July 2023 from the previous month’s 53.2.
The report highlights that mounting price pressures have impacted demand, leading to a softening of growth in both new orders and business activity as the second half of the year commenced.
Furthermore, the report indicates that the rate of inflation tied to input prices matched the highest recorded since the series began in January 2014.
The report stated that rising price pressures impacted demand, with growth of both new orders and business activity softening as the second half of the year got underway.
The report further disclosed that inflation rate tied to input prices matched the fastest recorded since the series began in January 2014.
“Contributing to this inflation were higher fuel costs following subsidy removal and currency weakness, leading to higher purchase prices,” the report stated.
In another report, analysts at Stanbic IBTC Bank said the Nigerian private sector faces formidable challenges in navigating the current economic landscape.
“With business confidence at historic lows, policymakers and businesses alike will need to devise strategies to counteract the steep price pressures and foster an environment that supports sustainable growth,” the report added.