Manufacturers Owe Banks N6.98tn – CBN

The Central Bank of Nigeria says the debt owed to banks by manufacturers in the country, has risen from N5.56tn in January 2023 to N6.98tn in June 2023.

The CBN’s Sectoral Analysis of Deposit Money Banks’ Credit report showed that  manufacturers also borrowed the sum of N1.42 trillion between January 2023 and June 2023.

This implies that banks’ credit to the sector increased by 52.08 percent in one year from N4.53tn as of June 2022 to N6.98tn as of June this year as the sector received the largest share of the credit from banks during the review period.

Monthly analysis of lending showed that N5.56tn was borrowed in January, N5.57tn in February, N5.65tn in March, N5.81tn in April, N5.70tn in May and N6.98tn in June 2023.

Recall that the Monetary Policy Committee of the apex bank increased the benchmark interest rate from 11.5 percent earlier last year, to 18.75 percent in June this year, across eight consecutive rate hikes as part of strategies to reduce inflation and mop up liquidity from circulation.

With the increase in debt, stakeholders in the manufacturing sector have maintained that the current double-digit lending rate is unfavourable as it has a direct impact on the cost of production and the competitiveness of the sector.

“The projection for the Net Domestic Credit, though on the upward trajectory, reflects the expected credit dynamics in the economy. Credit to the Government is expected to decrease over the period due to the expected significant reduction in fiscal deficits arising from the removal of fuel subsidy. On the other hand, credit to the private sector is expected to increase owing to the government’s plan to achieve a higher level of growth driven by the private sector,” the report read partly.

Meanwhile, borrowing by farmers to cultivate agricultural produce declined to N1.83tn in June from N1.85tn recorded in January, suggesting a reduction in loan appetite.

Punch/Hauwa Abu