Loans from banks to the industrial sector of the Nigerian economy grew by N1.74 trillion in three years from a total of N4.54 trillion in the first quarter of 2015 to N6.28 trillion by the final quarter of 2017.
The loans were disbursed to four sub-sectors of the industrial sector: mining and quarrying, oil and gas; power and energy; and manufacturing.
Data sourced from the National Bureau of Statistics (NBS) shows that the bulk of the loans to the industrial sector ended up in the oil and gas sub-sector.
Despite uncertainty in the global oil market, the loan to the oil and gas sector skyrocketed by N1.35tn in three years from N2.15tn in the first quarter of 2015 to N3.58tn by the end of 2017.
Loan to the oil and gas sector peaked in the third quarter of 2016 at N3.65tn from N2.15tn in the first quarter of 2015 before dropping to N3.58tn by the end of 2017.
The sub-sector that attracted the least loan in the industrial sector is mining and quarrying despite calls for diversification of the Nigerian economy; away from oil to mining and other non-oil products.
Data analysis of loans to the mining and quarrying sub-sector have been on steep decline, dropping by N197bn in three years from N222.3bn in the first quarter of 2015 to N25bn by the end of 2017.
A closer look at the NBS data shows that loan to the sub-sector slumped to N8.23bn in the first quarter of 2017 before climbing to slightly above N25bn by the end of last year.
Meanwhile, loans to the power and energy sub-sector doubled by N171.21bn in the last three years from N282.70bn as at the first quarter of 2015 to N453.91bn as at the end of 2017.
Though loans to the power and energy sub-sector peaked at N466.09bn during the three-year period in the second quarter of last year, the sub-sector, considered as one major problem affecting the growth of the industrial sector, cannot match the oil and gas sub-sector in terms of loan attraction.
Daily Trust’s analysis shows apathy by banks in funding the manufacturing sector that has the potential of reducing the country’s dependence on importation of finished goods.
Data shows that banks upped their loans to the manufacturing sector in the last three years by only N293.28bn compared to the N1.99tn recorded in the oil and gas sub-sector.
Loans to the manufacturing sector grew from N1.88tn recorded in the first quarter of 2015 to N2.17tn by the last quarter of 2017.
Loans to the sub-sector peaked at N2.27tn in the third quarter of 2017 before dropping to N2.17tn by the end of 2017.
Compared to other sectors of the economy, banks lend more money to the industrial sector than to the agricultural sector, but far less compared to the services sector.
Analysis of Banking Sector Credit to the Private Sector shows that loans to agriculture grew by N61.88bn in three years despite the present government’s diversification crusade towards agriculture.
Loans to agriculture increased from N466.38bn recorded in the first quarter of 2015 to N528.24bn by the end of 2017.
Daily Trust observed that the bulk of loans to the private sector went into the services sector of the economy.
The total of loans to the services sector stood at N8.99tn at the end of 2017, more than the N6.81tn disbursed to the industrial and agricultural sectors combined.
The loans to the services sector grew by N671bn in three years from N8.32tn recorded in the first quarter of 2015 to N8.99tn by the end of 2017.
The sub-sectors in the services sector that got the loans include construction, trade/general commerce, government, real estate, finance, insurance, capital market, oil and gas, power and energy, general, information and communication, transportation and storage, among others.
There have been concerns that manufacturers are having difficulty accessing loans from commercial banks coupled with high interest rates.
These concerns are being addressed by development finance institutions such as the Bank of Industry (BOI), Bank of Agriculture (BOA) and NEXIM Bank.
Manufacturers and investors in the agriculture value chain can explore alternative funding from several funds being managed by the BOI such as BOI/CBN Intervention Fund, Cassava Bread Fund, Cement Fund, Cottage Fund, Federal Government Special Intervention Fund for MSME (NEDEP), NADDC Fund, National Programme on Food Security (NPFS), Rice and Cassava Intervention Fund and the Sugar Development Council Fund.
Credit: Daily Trust