BY BONNY AMADI
Credit to the Private Sector (CPS) which in April increased by 6.8 per cent y/y to NGN77.91 trillion in April, against N2.92 trillion in April 2024, is billed to remain subdued driven by prevailing tight liquidity stance of the government.
Private Sector Credit contributes immensely to national economic growth, and reduction in credits available to the sector translates to subdued growth of the economy.
Experts at the Cordros Securities in their Weekly Economic and Market Report for the week ended 30 May, 2025, maintained this stand, as prevailing tight monetary policy stance of the federal government impacts CPS.
“Looking ahead, we expect CPS growth to remain subdued in the near term, reflecting the impact of the current tight monetary policy stance”.
Cordros however, expressed confidence that a potential shift toward monetary easing in the latter part of the year could offer some support for a gradual rebound in CPS growth over the medium term.
The report which also quoted data from the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX), noted that re duction of foreign inflows also impacted total transactions in the local bourse which significantly declined by 56.8 per cent m/m to NGN482.04 billion in April. The foreign portfolio declines however peaked in March at NGN1.12 trillion.
The performance was due to the normalisation of inflows from foreign sources, which were primarily boosted by block trade transactions in the previous month.
Specifically, inflows from foreign investors which accounted for 13.1 per cent of gross transactions dipped by 91.0 per cent m/m to NGN63.07 billion in April, which stood at NGN699.89 billion in March.
On the other hand, inflows from domestic investors which accounted for 86.9 per cent of gross transactions, marginally increased by 0.8 per cent m/m to NGN418.97 billion, This in March stood at NGN415.62 billion, driven by rise in transactions from institutional investors by 8.8 per cent m/m amid a decline in trans- actions from retail investors by -8.0 per cent m/m.
Net flows turned positive in April at NGN5.74 billion, against -NGN3.67 billion recorded in March, driven by strong net domestic inflows of NGN15.53 billion that out- weighed net foreign outflows of NGN9.79 billion.
“In the near term, we expect domestic investors to continue contributing the most to total transaction value, with the anticipated decline in yields in the fixed income market supporting buying activities.
On the other hand, while a more efficient FX market is expected to support foreign investors’ participation in the equities market, existing global uncertainties remain a downside risk to inflows” Cordros stated.
Meanwhile, according to data from the Central Bank of Nigeria (CBN), Credit to the Private Sector (CPS) increased by 6.8% y/y to NGN77.91 trillion in April (April 2024: NGN72.92 trillion).
Recommended for you
Leave a Reply
Leave a Reply
