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Despite Low Productivity, 13 Banks Raise Loans To Manufacturers By 16% To N2trn

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By KAYODE TOKEDE, Lagos

Despite low productivity in the manufacturing sector in 2016, mostly influenced by several factors, 13 banks reported a 16.1 per cent increase in total credit to the real sector from N1.8 trillion in 2015 to N2.1 trillion in the year under review.

LEADERSHIP review of these Deposit Money Banks (DBMs) showed intensive efforts to support the real sector of the nation’s economy while only one bank reported nearly four per cent decline in the manufacturing sector in 2016.

The Central Bank of Nigeria (CBN) said the oil and gas sector accounted for the highest share of total credit with N4.89 trillion or 30.02 per cent, followed by the manufacturing sector that accounted for N2.2 trillion or 13.6 per cent in 2016. The apex banking regulating body stated further that the sectoral distribution of Credit in 2016 was N16.29 trillion as against N13 trillion in 2015.

Consequently, the contribution of the manufacturing sector to the real GDP decreased to 3.46 per cent in 2016 from 0.70 per cent in 2015. CBN’s systematic important banks improved on the exposure to the manufacturing sector in 2016 with Access Bank Plc, United Bank for Africa Plc and Zenith Bank Plc leading Guaranty Trust Bank Plc and First Bank of Nigeria Holdings Plc.

Other DMBs reviewed include First City Monument Bank, Unity Bank Plc, Wema Bank Plc, Union Bank of Nigeria Plc, Fidelity Bank Plc, Sterling Bank Plc, Stanbic IBTC Holdings Plc and Diamond Bank Plc.

A breakdown of the figures, however, showed that while Access Bank credit to the manufacturing sector increased by 39.6 per cent to N258.96 billion in the reviewed year, up from N185 billion the previous year; United Bank for Africa gave out N224.4 billion as credit to manufacturing sector, 27.5 per cent increase over N175.9 billion recorded the previous year.

Similarly, while Zenith Bank credit to the sector hits N523 billion in 2016, from N462.8 billion the previous year;  Guaranty Trust Bank recorded N264 billion in 2016, 8.1 per cent increase over N244.6 billion in 2015; FBN Holdings  reported N372.78 billion in 2016, up from N366.9 billion in 2015.

Diamond Bank also reported an increase of 34.3 per cent from N85 billion in 2015 to N114.5 billion in 2016 while Stanbic IBTC Holdings exposure to the manufacturing sector grew by 31.6 per cent to N101 billion in 2016 from N76.9 billion recorded in 2015.

Others are Wema Bank that posted N11.6 billion in 2016 from N8.9 billion in 2015; Fidelity Bank Plc also posted N75 billion as credit to the manufacturing sector in 2016, up by 27.8 per cent from N58.67 billion the previous year; Unity Bank recorded 21.4 per cent increase in manufacturing sector exposure in 2016 to N47.2 billion from N38.8 billion in 2015; Union Bank Of Nigeria Plc reported N49 billion credit to the sector from N44.5 billion in 2015.

Sterling Bank credit to the manufacturing sector inched marginally by 3.1 per cent to N8.25 billion as against N8 billion in 2015 while FCMB reported a decline of four per cent in credit exposure to the manufacturing sector from N53.8 billion to N51.9 billion in 2016.

Commenting on banks credit to the sector, the director-general, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf explained to LEADERSHIP that banks’ exposure to the sector is not enough, stressing that the sector faced numerous crisis in 2016. According to him, the challenging environment in 2016 affected the manufacturing sector and it could have also affected the performance of their credit.

“For the manufacturing sector in 2016, banks faced foreign exchange crisis while the ban of 41 items took tolls on the sector. Their exposure could have been more than that if the business environment is friendly.” He was optimistic that the manufacturing sector in 2017 performance would be better and banks credit might increase following the stability in foreign exchange market and government stance   on the ban of 41 items adding “Once we have stability in the economy, banks credit in the manufacturing sector tends to improve this year.”

President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs thus disagree with the LCCI director-general. He told LEADERSHIP that banks are doing enough to support the real sector not only their exposure to the manufacturing sector. He however, pointed out that banks are not doing enough in their exposure to the Micro Small and Medium Enterprises (MSMEs) but investing in big companies.

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