Banks in Nigeria have been dishing out loans like there’s no tomorrow, and guess what? The total loans given out in the first half of 2023 hit a whopping N8.03 trillion! That’s a whole lot of cash, and you won’t believe which sectors grabbed the biggest chunk of the loans. It’s the oil and gas sector, followed closely by the manufacturing sector. These two sectors alone grabbed a massive 55.5% share of the loans. Can you imagine that?
According to data from the Central Bank of Nigeria, the Oil and Gas sector received a massive N3.09 trillion, while the manufacturing sector got a cool N1.42 trillion. The financial sector, which includes finance, insurance, and capital markets, also got a good share of N837 billion. Other sectors like trade, commerce, information technology, general services, and construction also got a piece of the loan pie.
But here’s the kicker – lending to the mining & quarrying sector and the education sector actually dropped in the first half of 2023. It seems like the banks are tightening their belts and being more cautious with their loans. The Head of Equity Research at FBNQuest Securities Limited, Tunde Abidoye, mentioned that the devaluation of the naira and the high-interest rates are some of the reasons behind these changes.
Abidoye also pointed out that the high-interest rates might start to affect banks’ lending to the real sector. This could lead to a slowdown in business investments and ultimately impact the country’s GDP growth.