The Central Bank of Nigeria (CBN), in a recent letter, has announced the reduction of the Loan-to-Deposit Ratio (LDR) of commercial banks from 75 percent to 50 percent, indicating a decline of 15 percentage points. The LDR, a tool used by the CBN to influence the lending behaviour of commercial banks, is the ratio of a bank’s total loans to its total deposits. A low LDR means banks will lend out smaller portions of its deposits, and vice versa. The central bank’s move to reduce the value of LDR is part of its approach to maintain monetary tightening in the economy.
May 13, 2024
Nigerian Economic Update (Issue 16)
Related
Nigeria Economic Update (Issue 37)
Recent
data by the CBN shows a decline in manufacturing capacity utilization by 2.0
percentage points to 50.7 percent in 2016Q2. Foreign exchange
challenges in addition to cash squeeze in the review quarter, led to the
decline in capacity utilization. This has hindered activities in the sector
while impacting negatively on business confidence. Nonetheless, the CBN
recently directed authorized FX dealers to dedicate 60 percent of FX purchases
to manufacturers. This policy measure is therefore expected to meet
the sectors critical FX need for the purchase of imported raw material and
other machineries, while boosting the potential for economic growth in the long
term.
Nigeria Economic Update (Issue 22)
Available data from Nigeria Bureau of Statistics shows a decline in the Nigeria Aviation sub-sector (Transport Sector) real growth rate in 2017Q1. Compared to the preceding quarter, the sub-sector declined significantly by 9.6 percent, due to decline in the number of passengers and movement of aircrafts this may be connected to the closure of the Abuja airport for infrastructural development during the period. To ensure a near-optimal performance of the aviation sector, the government should also make efforts to improve aviation safety and security, establish a national carrier, and improve aircraft maintenance to world class standards.