November 6, 2020

Nigeria Economic Update (Issue 42)

Total geographical distribution of credit by state increased by 1.82 percent to N18.9 trillion in the second quarter of 2020 from N18.56 trillion in the first quarter of 2020.1 Lagos State (N14.92 trillion) accounted for 78.94 percent of the total credit. Further disaggregation shows N77.6 billion was distributed as loan for mortgages in 2019 compared to N25 billion in 2018. 220,935 individuals registered for the National Housing Fund, representing a 33.6 percent increase from 2018. Also, N4 trillion was distributed under the Agricultural Credit Guarantee Scheme Fund in 2019, an increase from N2.9 trillion in 2018. The increase in credit particularly towards the agriculture sector will not only improve the living standard of beneficiaries but also enhance development through an increase in economic activities and trade; alongside building the resilience of the economy by improving the balance of payment account. However, providing loan guarantees to borrowers can considerably increase the contingent liability of the government with implications on its fiscal performance. As such, a cost-benefit analysis of these credit facility programmes and other available options to boost economic activities is required in order to determine the best approach.

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Nigeria Economic Update (Issue 24)

Crude oil price increased, in the week under review, to its highest price in 2016. Nigerias bonny light increased by $1.38 from $48.02 per barrel on May 20, 2016 to $49.64 per barrel on May 27, 2016, while Brent crude was sold for $50 per barrel on May 26, 2016. The catalyst for price gains in the period under review is the supply-side contractions, with unplanned production shortages in Nigeria, Canada and Iraq. The upward trend of prices may unlock more supplies in subsequent weeks, but the OPEC meeting scheduled for June 2, 2016, could moderate the effect. Nigeria is expected to benefit from crude oil price rising above the $38 per barrel benchmark. Unfortunately, supply disruptions continue to negatively affect oil revenue and may have contributed to the depletion of external reserve by over $153 millionthis week. The federal government, in collaboration with relevant security agencies, should find a lasting solution to the vandalism of oil pipelines and production facilities.