The net domestic credit of the banking system to the economy grew by 11.1 per cent to N21.4tn at the end of the first half of this year, according to statistics obtained from the Central Bank of Nigeria.

The figure, which is contained in the financial stability report for the first half of this year, represents a decline when compared with the growth of 32.6 per cent and 14.8 per cent at the end of the preceding and corresponding period of 2014.

The CBN said the development reflected an increase in net claims on the Federal Government and the private sector credit.

The report explained that within the period, net credit to the Federal Government rose by 118.45 per cent to N2.51tn, compared with growth of 169.44 per cent or N1.15tn recorded at the end of the second half of 2014.

It stated, “The development reflected, wholly, the rise in investment in treasury securities by the banking system, particularly Nigerian Treasury Bills, which grew by 10.4 per cent.

“Persistent increase in credit to government deprives the private sector of needed credit to boost economic growth.”

The report added that consumer credit fell by 9.6 per cent to N768.67bn at the end of June below the level at the end of second half of 2014.

It attributed the decline to increased risk aversion for consumer credit.

Analysts have said that last week’s reduction of the Monetary Policy Rate from 13 per cent to 11 per cent would stimulate lending.

The Monetary Policy Committee of the CBN had on Tuesday reduced the MRR from 13 per cent to 11 per cent.

The decision was announced by the CBN Governor, Mr. Godwin Emefiele, while addressing journalists shortly after the MPC meeting in Abuja.

That was the first time in about six years that the committee would be reducing the MPR, which is the anchor rate at which the CBN lends money to Deposit Money Banks.

olumide81:
Hope it includes small businesses, the last time i checked such lendings are meant for politician and state goverments.