Total lending to the private sector has again increased at a double-digit rate y/y although momentum appears to be slowing. It rose by 10.9% y/y in June, to NGN32.64trn (USD79.32bn). This data series, which is captured in today's chart, covers lending from all sources including the CBN and the state-owned development banks. The decent rate of growth in this measure of private-sector credit extension (PSCE) is the result of the pressure by the industry regulator (the CBN) on the industry to expand loan books. There is a long way to go in boosting financial intermediation when we consider the scale of the unbanked informal economy. Nigeria's PSCE/GDP ratio was just 19.8% at end-2020.
Another CBN series in the Quarterly Statistical Bulletin (QSB) shows the allocation of credit by deposit money banks (DMBs). This gives us a total of NGN21.02trn in March 2021, representing a y/y increase of 13.7%. There is therefore a difference of approaching NGN12trn with the fuller measure (and a time lag of three months).
Part of the growth in lending by the DMBs is due to the weakness of the currency, which adds to the naira equivalent of the industry's fx-denominated loans. We assume that much of this lending would have been directed to the oil and gas industry, and note to our surprise that loans to this sector increased by just 8.6% to NGN5.28trn in the 12 months to March 2021.
Part of the noted difference in the two data series for lending to the private sector can be explained by the loans of four development finance institutions, led by the recapitalized Bank of Industry. These amounted to a further NGN940bn in aggregate at end-2020.
The greater part of the difference can be explained by the execution of the CBN's development finance role. This week's communique from the monetary policy committee notes disbursements of NGN760bn uinder the anchor borrowers' programme, NGN920bn under real sector intervention and NGN320bn under the targeted credit facility. We assume that these are disbursements since the onset of COVID-19. They cover three of more than ten CBN lending programmes for healthcare, the electricity business, the creative industry, youth and more.
The same MPC communique notes that gross banking sector credit increased by NGN1.55trn to NGN24.23trn in the five months to May 2021. This appears to be a measure for the DMBs but maddeningly different to that quoted in the QSB.