Real estate and construction companies operating in Nigeria have managed to secure loans amounting to N2.26 trillion within an eight-month period.
These borrowed funds from various banks have been instrumental in expanding their service capabilities within the sector.
According to PUNCH, these loans, procured between November 2022 and June 2023, have exhibited significant growth, surging from N1.90 trillion to N2.26 trillion, marking an impressive 18.9 percent increase.
This financial upswing is notable, considering the Central Bank’s decision to elevate the benchmark interest rate from 11.5 percent, a rate observed earlier the previous year, to a higher 18.75 percent in June of the current year.
This interest rate surge took place over eight consecutive increments and was part of the central bank’s strategy to combat inflation and withdraw excess liquidity from circulation.
The latest Sectoral Analysis of Deposit Money Banks’ Credit by the Central Bank of Nigeria has disclosed that the real estate sector was able to secure a substantial loan amounting to N755 billion.
Simultaneously, the construction industry has obtained an even more impressive credit facility, totaling N1.51 trillion. Data provided by the CBN indicates that borrowing by real estate companies has surged from N712 billion to N755 billion, constituting a remarkable 44.4 percent increase.
Similarly, construction companies have seen their loans climb from N1.19 trillion to N1.51 trillion within the same timeframe. Breaking this down into a monthly perspective, loans worth N1.80 trillion were obtained in December, followed by N1.78 trillion in January, N1.82 trillion in February, N1.84 trillion in March, N1.88 trillion in April, and N1.84 trillion in May.
The increase in the benchmark interest rate has unquestionably had adverse effects on the country’s economy, aggravating the ongoing housing crisis. Consequently, this policy adjustment has prompted investors to adopt a more vigilant approach, given the ongoing rise in property prices.
Source: Businessday.ng
