Nigerian banks closed 234 branches, 649 ATMs, IMF report

As currency in circulation grows

By Elizabeth Adegbesan

Banks’ credit to the private sector of the economy rose year-on-year (YoY)  by 20 percent to N34.9 trillion in October  2021 from N29.08 trillion in the corresponding period of 2020.

Vanguard findings from the  Money Statistics Data of the Central Bank of Nigeria, CBN, shows that net domestic credit also rose YoY by 19 percent to N47.3 trillion  in October 2021 from N39.53 trillion in 2020, signifying an uptick in economic activities.

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The CBN drive towards expanding credit to the domestic sector resulted in its policy of combining high loan to deposit ratio and cash reserve requirements as tools used to force banks to lend more to the private sector. Total credit to the private sector since it began this policy in March 2020 has increased tremendously. 

In its Monthly Economic Report for July 2021, the CBN had noted that growth in broad money was driven, largely, by the increase in domestic claims, particularly credit to the private sector, thus, supporting the push for higher growth and employment generation. 

It stated: “Credit extended to the private sector increased by 15.7 per cent, leading to a 5.7 per cent rise in domestic claims on the economy. 

“The increase in bank credit to the private sector was attributed to an uptick in economic activities, as shown by a rise in both the manufacturing and nonmanufacturing PMI, to 46.6 index points and 44.6 index points at endJuly 2021, from 45.5 index points and 43.0 index points in June 2021, respectively.

“Claims on the domestic economy grew by 5.7 per cent to ¦ 44.98 trillion, compared with the growth of 3.8 per cent at end-June 2021. The growth was due to an increase in claims on ‘other’ sectors, which Drivers of Money Supply Reserve contributed 7.0 percentage points to the growth in broad money (M3). The various intervention schemes reinforced the sustained growth in domestic claims by the CBN.”

Meanwhile, currency in circulation (CIC) grew by 20 percent to N2.9 trillion in  October 2021 from N2.4 trillion in October 2020.

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