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The Central Bank of Nigeria (CBN) says it will continue to implement strategies to drive Nigeria’s credit-to-GDP ratio above 50 per cent to deepen the financial sector contributions and ensure adequate support of real economic activities in the country.
Its Governor, Godwin Emefiele, stated this at the 57th annual bankers’ dinner which was organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos recently.
Credit-to-GDP ratio is a measure of the ratio of the entire credit in the economy to the productive economy in a given year.
Whilst thanking the leadership of the CIBN, led by Dr Ken Opara, Emefiele said that the recent drive of the CBN to channel more cheap lending to the real sector have led to a marked growth of banking system credits to the private sector.
He noted that in support of domestic productivity, credit to the core private sector of the economy has more than doubled in the last 5 years, expanding from N13.2 trillion at end-2018 to N16.2 trillion at the end of 2019 before surging to N27.7 trillion as at September 2022.
“This phenomenal growth is not nominal but rather deep-rooted support of the real economy. As a ratio of GDP, credit to core real sector grew from 9.4 per cent at the end of 2018 to almost 15 per cent as of September 2022. It is our objective to gradually drive this ratio above 50 per cent to ensure adequate support of real economic activities in Nigeria and concurrently deepen the financial sector contributions to the development of our country”, he said.
He also added that despite the global headwinds, the nation’s banking sector continued to remain sound and accommodative of growth.
“NPL ratios are currently under 5 per cent and the Capital Adequacy and Liquidity Ratios are above the prudential requirements at 13 and 40 per cent respectively.
We intend to continue to maintain strong oversight of our banking institutions to quickly identify any vulnerabilities and ensure that banks take suitable measures to mitigate any potential risks”, the CBN Governor revealed.
Speaking on the nation’s capital flows, Emefiele revealed that the monthly average capital outflows from Nigeria year-to-date is less than one-third of its value in 2019 having declined from $1.37 billion monthly to $0.58 billion in 2022.
“It is very imperative for us to ensure through innovative inward-looking structural policies that we find sustainable ways of adequately insulating the economy from the volatility associated with foreign portfolio flows”, he said.
