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Increasing interest rates has caused Nigerians to borrow less – CBN
The CBN attributed the decline to the increase in interest rates, which central banks worldwide have been doing to combat inflation.
According to Central Bank of Nigeria (CBN) records, the amount of outstanding consumer credit in Nigeria decreased by 6.78% from N2,073.76 billion in December 2021 to N1,933.18 billion at the end of June 2022.
Accordingly, as of June 2022, Nigerians are borrowing less than they were in December 2021, when borrowing was at a high level.
The CBN attributed the decline to the increase in interest rates, which central banks worldwide have been doing to combat inflation. This information was included in the most recent Financial Stability Report, which was released on Friday.
As a result of a 12.41% growth in credit to N14,624.15 billion in the services sector, the total credit to all economic sectors increased by 10.12% to N26,846.40 billion by the end of June 2022.
Be aware that 7.22% of all outstanding credit to the private sector was for consumer debt.
“The decrease was largely due to the reduction in personal loans, owing to the rise in lending rates. Total credit to various sectors of the economy grew by 10.12 percent to N26,846.40 billion in end-June 2022, owing, largely, to a 12.41 percent increase in credit to N14,624.15 billion in the Services Sector.
“CBN added that credit to Agriculture and Industry increased by 11.84 and 6.87 percent to ₦1,630.38 billion and N10,591.87 billion, respectively. Services and Industry remained the dominant sectors, accounting for 54.47 and 39.45 percent of the total credit, respectively, compared with 53.36 and 40.66 percent in December 2021.
“The share of the Agricultural Sector increased by 0.09 percentage points to 6.07 percent, compared with 5.98 percent, in end-December 2021. The improved flow of credit to the real sector reflected the Bank’s sustained effort to support productivity, real output growth, and employment generation in the economy.”
As a result of the licensing of six Finance Companies (FCs) and nine Microfinance Banks (MFBs) during the review period, the overall number of Other Financial Institutions (OFIs) increased by 15% to 6,697 at the end of June 2022 from 6,682 at the end of December 2021, according to the report.
They said, “The 6,697 OFIs included Seven Development Finance Institutions (DFIs), 875 Mortgage Finance Banks, 106 Financial Companies, 34 Primary Mortgage Banks (PMBs), and 5,675 Bureaux-de-change (BDCs).”
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