The National Bureau Statistics published its sectorial breakdown of credit in Q4-17 recently. According to the report, total credit to the private sector declined marginally by 0.5%q/q, reflecting the stronger appetite for high yielding government securities during the period. Commendably, credit to Mining & Quarrying Industry and Agriculture Industry expanded 114.7%q/q and 7.5%q/q to N25.2bn and N5.3bn respectively amid favorable policy environment.
However, credit to the Manufacturing, Power & Energy and Services industries declined 4.2%q/q, 1.2%q/q and 0.7%q/q respectively. Specifically, banking credit to the power and energy Industry remained under pressure as it experienced its 3rd consecutive q/q decline in 2017. Also, credit to the Manufacturing industry declined for the 2nd time in 2017. The sparse credit allocation to these sectors, especially Services, suggests the likelihood yet another weak Q4-17 Non-oil/Agric GDP as observed in Q3-17 despite exiting recession.
Looking forward, credit to the Non-oil/Agric sector is anticipated to strengthen amid rising optimism in the broader economy and lower outlook for yields. To buttress this position, credit to general commerce and Finance, insurance & capital market surged 7.3% and 22.8% in Q4-17, reflecting a gradual recovery in the services sector. Accordingly, the appetite for real sector credit should improve in 2018.
United Capital Group Nigeria