Real estate and construction companies in Nigeria have successfully secured loans totaling N2.26 trillion in an eight-month period, allowing them to expand their operations in the sector.
These loans, obtained between November 2022 and June 2023, have shown substantial growth, increasing from N1.90 trillion to N2.26 trillion, representing an impressive 18.9 percent rise.
This financial growth is particularly noteworthy, given the Central Bank’s decision to raise the benchmark interest rate from 11.5 percent, which was in place earlier in the previous year, to a higher 18.75 percent in June of the current year. This interest rate hike occurred over eight consecutive increments and was part of the central bank’s strategy to combat inflation and reduce excess liquidity in circulation.
The most recent Sectoral Analysis of Deposit Money Banks’ Credit by the Central Bank of Nigeria has revealed that the real estate sector secured a substantial loan amounting to N755 billion. Simultaneously, the construction industry obtained an even more significant credit facility, totaling N1.51 trillion.
Data from the CBN shows that loans to real estate companies have increased from N712 billion to N755 billion, marking a remarkable 44.4 percent increase. Similarly, construction firms have witnessed their loans grow from N1.19 trillion to N1.51 trillion during the same period.
The increase in the benchmark interest rate has had adverse effects on Nigeria’s economy, exacerbating the ongoing housing crisis. This policy adjustment has prompted investors to adopt a more cautious approach due to the rising property prices.
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