The oil and gas sector received 31.1% of total credit from deposit money banks (DMBs) in Q3 2024, according to the Central Bank of Nigeria (CBN). This is up from 29.9% in the previous quarter.
In comparison, the manufacturing sector saw a decline of -6% in credit allocation, down to N8.7 trillion. The financial and insurance sector grew by +22% quarter-on-quarter, receiving 13% of total credit.
The agriculture sector struggled, with credit dropping by -5% to NGN2.3 trillion. It holds just 4% of the total loan share. General services also contracted by -9%, receiving N5.0 trillion.
Overall, DMBs’ credit to the economy grew by 5.1% to N58.6 trillion. However, this growth slowed from the 19.5% surge in Q1 2024.
FBNQuest analysts noted that the cautious approach of banks is due to rising non-performing loans (NPLs). The NPL ratio rose to 4.58% in Q3 2024, up from 3.9% in June.
Experts also highlighted that businesses are postponing investment decisions due to tight monetary policies.
The oil and gas sector’s large share of credit highlights its importance to Nigeria’s economy. However, experts say more credit should go to sectors like agriculture to reduce reliance on oil.
As inflation continues to rise, banks are expected to remain cautious. Financial conditions will likely stay tight in 2025.