Pandemic pushes Nigerians to borrow the most in 5yrs – IMF

The number of borrowers from Nigeria’s commercial banks increased to 29.61 per 1,000 adults in 2020, the highest in five years from 23.81 per 1,000 adults in 2016, the International Monetary Fund (IMF) states in its latest report on Financial Access Survey (FAS) 2021 Trends and Developments.

The survey shows the number of commercial bank branches per 100,000 adults dropped to 4.45 in 2020 from 4.78 in 2019.

The number of Automated Teller Machines (ATM) of commercial banks declined to 16.15 per 100,000 adults in 2020 compared with 17.19 per 100,000 Nigerian adults in 2019.

However, the outstanding deposits with commercial banks per percentage of GDP rose to 20.50 in 2020 as against 16.31 in 2019. Outstanding loans from the deposit money banks increased to 12.93 per percentage of GDP in 2020 from 11.80 in 2019.

The Washington-based Fund says the 2021 round of the Financial Access Survey takes place in the second year of the COVID-19 pandemic, collecting data on access to and use of financial services in the midst of the crisis. Focusing on 2020 outturns, the 2021 FAS round offers a glimpse of what has happened during the pandemic on the financial access front.

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Kingsley Obiora, deputy governor, Central Bank of Nigeria, says the increased credit by banks was recorded in manufacturing, consumer credit, general commerce, information and communication and agriculture. The credit growth was driven by the loan-to-deposit ratio (LDR) policy, the extension of regulatory forbearance and other macro-prudential measures.

Nejo Muyiwa, a corporate relationship client manager in one of the Nigerian banks, notes that it is not surprising as a lot of people really borrowed funds last year, especially in the retail that is in low amounts.

“There was a mandate from CBN that banks should increase their lending. So, most of the banks brought out links, applications and facilities to secure loans, making a lot of people able to apply for them,” Nejo says.

Despite the ongoing challenges posed by the COVID-19 pandemic, the report states that countries’ commitment to the FAS data collection remains strong.

As of October 2021, 165 jurisdictions have submitted data to the FAS, with improved data reporting of gender-disaggregated data and digital financial services. The number of jurisdictions reporting gender-disaggregated data has risen to 71—a 10 percent increase relative to the previous round—reflecting both growing demand for such data and increased statistical capacity for data collection.

Five additional jurisdictions started to report data on the use of mobile money, increasing the number of mobile money reporters to 83, which accounts for roughly 90 percent of countries where mobile money services are available.

“This edition of the FAS Trends and Developments showcases some evidence on the impact of the COVID-19 pandemic on financial inclusion. Aggregated data from the current round suggest that both access to and use of financial services at commercial banks continued to be stable despite the pandemic even though country-level data point to some reversals. Use of digital financial services grew during the past year, helping undisrupted access to financial services. Data for SMEs and women show mixed outcomes for these vulnerable groups,” the IMF states.

The aggregated FAS data from the 2021 round do not show major disruptions in the access to and use of financial services at commercial banks even though country-level data reveal some varying outcomes. For low- and lower middle-income economies, the number of commercial bank branches per 100,000 adults and ATMs per 100,000 adults—two FAS indicators for the UN Sustainable Development Goals (SDGs) Target 8.101—have remained stable at 12 and 23, respectively, over the past few years, with a slight increase in 2020.

The average number of deposit and loan accounts continued to grow in 2020 across all country income groups. The number of deposit accounts per 1,000 adults grew at a higher rate than in the previous year in upper middle-income economies.

In terms of usage of financial services, the outstanding amounts of both deposits and loans grew faster on average in 2020, relative to the previous year in all country income groups.