BANKS’ CONSUMER LOANS UP 31% TO N2.55TRN ON RISING INFLATION

to spur growth increased by 2.5 per cent to N27.53trillion in July from N26.85trillion in June.

The report stated that “A breakdown of total credit utilisation shows that, credit to the agricultural sector expanded by 3.8 per cent to N1,694.08 billion, from the level at end-June.

“Similarly, credit to industry and services sectors grew by 2.7 per cent and 2.2 per cent, to N10,880.31 billion and N14,952.80 billion, respectively.

“In terms of share in total credit, services and industry maintained dominance with shares of 54.3 per cent and 39.5 per cent, respectively, while the share of agriculture stood at 6.2 per cent.”

The report noted that the federal government spent a whopping sum of N2.26trillion to service debts in seven months of 2022.

The CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka had stated that the debt servicing by the federal government has encouraged investors to provide additional support to the government with respect to further investment in government securities.

According to him, “It presents government in good light, with the opportunity to fund developmental projects across the country. The negative aspect of debt servicing in Nigeria is the sustainability problem that has now greeted the current administration of President Muhammadu Buhari, whereby, more than 100per cent of revenue is now being expended on debt servicing, giving room for possible default and failure of government in no distant future, especially with respect to foreign debt component.

“The fact that government spends its entire revenue to service debts, despite introducing new taxes and raising rates in some others, is an indication that economic agents are not generating enough outputs, sufficient to put Nigeria’s economy in the positive territory. It is actually a sign of declining output. It is simply a failure of fiscal policy.”

He hinted that the only way to cut the debt service figure down is for government to shift away from its current public sector dominance, and allow private sector businesses to occupy the driver’s seat, so as to consistently put the economy in the positive territory.

“Government should begin to consider removing subsidies in phases, in a manner that will not add more to the hardship on the ground. It also presents an opportunity to allow the economy to run a normal course of adjustment,” he added.

According to the report, “Debt service obligations in 2022Q1, amounted to N897.17 billion, compared with N428.60 billion in 2021Q4. The rise was attributed to the principal repayments and redemption of matured debt obligations.”