Sectoral allocation review of total credit to the private sector shows that the oil and gas sector has received the highest allocation over the last seven years. However, the sector’s contribution to the GDP did not match the volume of credit received. The sector contributed just 5.5 per cent to the overall GDP output and 7.24 per cent to the GDP growth.
At least N1 out of every N4 given as credit went to the oil and gas sector from 2015 to 2021. The sector received at least 25% of the total credit to the private sector over the last seven years, except in 2021, when it received 24.39% of the credits.
Credit to the private sector has grown over the last 4 years after a decline between 2017 and 2018. In 2017, the total credit to the private sector dropped by 19.04%, from N189.86 trillion in 2017 to N170.82 trillion in 2018. However, there was steady increase in the following years, going up to N189.24 trillion in 2019, a 10.78% increase from 2018, and N226.49 trillion in 2020, a 19.68% increase.
The N267.11 trillion given to the private sector in 2021 was higher by 17.92% than the N226.49 trillion given out in 2020.
Sectoral credit allocation by deposit banks shows that although all the sectors have seen a corresponding increase in credit allocation over four years, the oil and gas sector has been the highest benefactor of these credits over the last seven years.
Despite receiving one-quarter of the total credit to the private sector, the sector’s contribution to the country’s GDP didn’t reflect such. The sector contributed just 5.57% to the total GDP output in 2021 and was responsible for just 7.24% of the growth attained in the year.
The agricultural sector contributed the most to the total GDP output in 2021, making up 23.7% of the total GDP output in 2021 and accounting for 25.88% of the GDP growth in 2021, making it the best-performing sector. However, the sector received only N56.69 trillion in credit over the seven years under review and is the seventh on the credit allocation to private sectors list from 2015 to 2021. Over the years, credit to the agricultural sector has been less than 6 percent of the total credit given to sectors. In 2015, the sector received 3.56 percent of the total credit. This proportion dropped to 3.29 percent in 2017, then increased to 3.52 percent in 2018. It increased in the subsequent years, reaching 5.41 percent in 2021.
As Nigeria faces food insecurity, increased production to meet the increasing demand for food is a necessity and a World Bank analysis concluded that this can be achieved by increasing access to credit facilities for farmers.
The manufacturing sector, which contributed 14.83% to the GDP output received the second highest credit. This sector’s contribution is commeasurable to its output as it received the second-highest credit and also contributed the second-highest output.
In third place, based on contribution to output, is the trade sector. This sector is fifth in the volume of credit received in 2021 from private financial institutions.
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