The total banking sector credit to the Nigerian economy has witnessed a significant surge, doubling year-on-year to reach approximately N53.2 trillion at the end of the first quarter of 2024. This substantial increase is based on the latest data released by the Central Bank of Nigeria (CBN), which provides a comprehensive overview of the banking sector’s lending activities to various sectors of the economy.
A closer examination of the CBN’s data reveals a remarkable 76% increase in credit allocation compared to the N30.3 trillion reported during the same period in 2023. Furthermore, this figure represents a notable 20% increase from the N44.5 trillion recorded at the end of 2023, indicating a sustained upward trend in the banking sector’s lending activities.
However, despite this notable growth, Nigeria’s credit to the Gross Domestic Product (GDP) ratio remains relatively low, at 22%. This is significantly lower than the 70% recorded in South Africa, highlighting the potential for further expansion in Nigeria’s credit market.
In the first three months of 2024, the banking sector facilitated approximately N8.7 trillion in loans across various sectors, underscoring banks’ critical role in supporting economic growth and development. This substantial amount of credit allocation is a testament to the banking sector’s commitment to providing financial support to individuals and businesses.
The CBN’s data provides valuable insights into the sectors that have benefited the most from bank credit. The top 10 sectors with the highest bank credit as of March 2024 are highlighted below, offering a glimpse into the areas of the economy that are driving growth and development.
The significant increase in bank credit allocation is a positive development for the Nigerian economy, as it indicates a growing confidence level among lenders and borrowers alike. As the economy continues to evolve, the banking sector is likely to play an increasingly important role in supporting growth and development.
1: Oil & Gas
Topping the list, the Oil and gas sector has received the highest bank credit, at N10.99 trillion, up from N4.88 trillion in March 2023, marking a 125.41% increase.
This sector is crucial for Nigeria’s economy as it includes activities related to the exploration and production of oil and natural gas, which are major sources of revenue and foreign exchange for the country.
The oil and gas sector contributed 6.38% to the GDP in Q1 2024. ,
The increase in oil production during the quarter to an average of 1.57 million bpd from the preceding quarter’s 1.55 million bpd contributed to the sector’s 5.70% growth.
2: General
The General sector, encompassing various unspecified or miscellaneous activities, has secured N8.75 trillion in bank credit, up from N2.79 trillion in March 2023, reflecting a 213.98% increase.
This category highlights the diverse nature of bank lending across multiple unspecified sub-sectors.
3: Manufacturing
The Manufacturing sector has received N8.70 trillion in bank credit, up from N5.66 trillion in March 2023, marking a 53.71% increase.
This sector includes producing goods, from consumer products to industrial equipment, and driving industrialization and economic diversification in Nigeria.
In Q1 2024, manufacturing contributed 9.98% to the real GDP, down from the 10.13% contribution by the sector in Q1 2023, but a 1.90%-point increase from the 8.23% contribution by the sector in the preceding quarter (Q4 2023). The sector grew by 1.49% during the quarter, a 0.12%-point drop from the 1.61% growth rate in Q1 2023.
4: Oil & Gas (Services)
The Oil and gas Services sector, which is the downstream sector, has secured N3.88 trillion in bank credit, up from N1.96 trillion in March 2023, a significant 97.96% increase. This includes services related to the post-production of crude oil and natural gas and bringing products to consumers, which are essential for the oil and gas industry.
5: Trade/General Commerce
Trade and General Commerce have received N3.80 trillion in bank credit, up from N2.33 trillion in March 2023, reflecting a 63.09% increase. This sector encompasses wholesale and retail trade, facilitating the movement of goods and services across the country.
Trade was the third largest contributor to the country’s GDP in Q1 2024 with 15.70%, slightly lower than the 15.97% recorded in the previous year but higher than the 15.50% noted in the fourth quarter of 2023.
During the quarter, the sector grew by 1.23%, which was 0.08%-points lower than the 1.31% growth rate recorded in Q1 2023 and 0.175 points lower than the 1.40% growth rate in the preceding quarter (Q3 2024).
6: Finance, Insurance, and Capital Market
The Finance, Insurance, and Capital Market sector has been credited with N3.41 trillion, up from N2.64 trillion in March 2023, indicating a 29.17% increase.
This sector includes banks, insurance companies, and investment firms, pivotal to financial stability and economic development.
The sector’s total contribution reached 6.81%, a 1.44 %-point increase from the 5.31% recorded in Q1 2023.
This was also 1.865 points higher than the 4.95% reported in Q4 2023. The sector is also one of the fastest-growing economies, expanding by 31.24% year-on-year in Q1 2024. This marks a 9.87 %-point growth from the 21.37% growth rate in Q1 2023.
7: Government
The Government sector also received N2.58 trillion in bank credit, slightly down from N2.60 trillion in March 2023, showing a 0.77% decrease.
This credit supports various government activities, including public administration, social services, and infrastructure projects.
8: Agriculture
Agriculture, a vital sector for Nigeria’s economy, has secured N2.58 trillion in bank credit, increasing from N1.89 trillion in March 2023, representing a 36.51% increase.
This financing supports farming, livestock, fisheries, and agribusiness, essential for food security and rural development. The sector contributed 21.07% to the GDP, with crop production alone accounting for 19.24% of this figure.
This represents a decrease from the contributions in the first quarter of 2023, which stood at 21.66%, and the fourth quarter of 2023, which stood at 26.11%.
In Q1 2024, the agricultural sector grew by 0.18% year-on-year, up by 1.08% points from Q1 2023 but down by 1.92% points from the previous quarter’s growth rate of 2.10%.
9: Construction
The Construction sector has N1.83 trillion in bank credit, up from N1.16 trillion in March 2023, marking a 57.76% increase.
This sector’s financing is crucial for infrastructure development, including roads, bridges, and residential and commercial buildings, which contribute to the country’s urbanization and economic growth.
The construction sector contracted by 0.29% in Q1 2024, compared to 37.7% growth in Q1 2023.
10: Information & Communication
The Information & Communication sector has N1.67 trillion in bank credit, up from N1.28 trillion in March 2023, reflecting a 30.47% increase.
This sector includes telecommunications, IT services, and broadcasting, essential for Nigeria’s digital connectivity and technological advancement. The sector grew 6.23% in the first quarter of 2024.
However, this marks a marginal decline compared to the 6.93% growth recorded in the last quarter of 2023. Also, the sector contributed 17.89% to the country’s GDP, making it the second largest contributor to its economy.
This signifies a 0.42%-point increase from the sector’s 17.47% contribution in Q1 2023 and a 1.23%-point increase from its 16.66% contribution in Q4 2023.
