Economy Defies Pandemic, As Credit Rose By  6.3% to N38tr in H1’2020.

Credit to the economy rose by 6.3 percent to N38 trillion in the first half of the year (H1’2020) pushed by 9.85 percent increase in credit to the federal government.

The Central Bank of Nigeria(CBN) disclosed in its Deposit Corporation Survey for June that banks were able to grow their current account (demand) deposits by 21.7 percent or N1.84 trillion in H1’2020, defying the severe impact of COVID-19 pandemic on economic activities during the period.

The report showed that Net Credit to the Domestic (NCD) economy rose by N2.23 trillion or 6.23 percent to N38.1 trillion in H1’2020 from N35.82 trillion at the end of 2019.

The report also showed upsurge in banks’ current account (demand) deposits, which shot up by N1.84 trillion or 21.7 percent to N10.31 trillion in H1’2020 from N8.47 trillion at the end of 2019.

According to the report, Broad Money Supply (M3 money) rose by 3.54 percent to N35.35 trillion in H1 2020, resulting from a 13.67 percent increase in Net Foreign Assets (NFA) to N7.58 trillion which was also supported by a 1.09 percent rise in Net Domestic Assets (NDA) to N27.77 trillion.

The report also showed that the increase in NDA was chiefly driven by a 6.23 percent jump in Net Domestic Credit (NDC) to N38.05 trillion in H1 2020. Further breakdown of the NDC showed a 4.13 percent decline in Credit to the Government to N8.86 trillion; however, Credit to the Private sector rose by 9.85 percent to N29.18 trillion. On the liabilities side, the 3.54 percent increase in M3 Money was driven by the 10.48 percent increase in M2 Money to N32.17 trillion in H1 2020, but was offset by a 36.71 percent fall in treasury bills held by money holding sector to N3.17 trillion.

The increase in M2 was propelled by a 18.14 percent rise in Narrow Money (M1) to N12.20 trillion (of which Demand Deposits increased by 21.69 percent to N10.31 trillion, and currency outside banks, rose by 1.92 percent to N1.89 trillion), and accompanied by a 6.27 percent rise in Quasi Money (near maturing short term financial instruments) to N19.97 trillion.

Reserve Money (Base Money) strongly rose by 57.97 percent to N13.26 trillion as Bank reserves sky rocketed by 78.37 percent to N10.96 trillion, accompanied by a 2.27 percent rise in currency in circulation to N2.30 trillion.