Credit to private sector below benchmark – CBN

Credit to the private sector has remained below the benchmark, which warrants policies that will enhance flow of credit to the private sector, according to Central Bank of Nigeria (CBN).

Specifically, the benchmark for credit to private sector stood at about 25 percent while the actual credit was less than 5 percent in 2015.

Moses Tule, director, monetary policy, CBN, disclosed this while making a presentation on “monetary policy and financing real sector growth in Nigeria,” at the ongoing 21^st seminar for Finance Correspondent and Business Editors in Ibadan, Oyo State.

Tule noted some improvements in the agric sector in terms of number of projects by value chain under Commercial Agricultural Credit Scheme (CACS) as of February 2015.

Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) in collaboration with the Federal Ministry of Agriculture and Rural Development under the Growth Enhancement Support (GES) Scheme guaranteed over N20 billion in respect of agric projects.

As of October 2015, analysis by value of funds disbursed to various value chains indicates that production, processing and marketing accounted for 51.81 percent, 36.35 percent, and 6.93 percent, respectively, while storage accounted for 2.53 percent.

Speaking at the seminar, Bola Adesola, managing director/CEO, Standard Chartered Bank, Lagos, said domestic credit provided by banking sector (% of GDP) in Nigeria was last measured at 21.65 percent in 2014.

Yemi Owolabi, executive director, finance, Standard Chartered Bank, said domestic credit to private sector (% of GDP) in Nigeria was last measured at 14.61 percent in 2014.

The government can further help the growth and development of the financial sector by: implementing the Financial System Strategy 2020 (FSS2020) initiative, formulating and implementing enabling laws and regulations, connectedness of fiscal and monetary policy, provision of infrastructure and public utilities, ease of Doing Business – Transparency, Corruption, Cost of raising funds, Civil Service Bureaucracy, among others, Owolabi said.