Naira’s decline boosts oil loans to N11.8 trillion, up 78%.
Bank credit to Nigeria’s oil and gas companies surged by 78% to N11.8 trillion in 2023, driven by naira devaluation. This increase marked a substantial rise compared to other sectors, with the oil and gas sector leading in bank credit allocation. Upstream and services sub-sectors owed N8.3 trillion, while downstream, natural gas, and crude oil refining sub-sectors owed N3.4 trillion by December 2023.
Concerns arise about potential non-performing loans (NPLs), particularly for borrowers earning only in naira, as servicing these debts becomes more expensive. The International Monetary Fund (IMF) highlighted the rising NPLs in Nigerian banks, emphasizing the need for tighter supervision and increased minimum capital to mitigate risks. Other sectors, including manufacturing, finance, insurance, and capital markets, also witnessed significant borrowing growth, reflecting the broader impact of economic factors on borrowing trends across various industries.
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