By Daniel Edu
Real estate and construction companies in Nigeria have managed to secure loans totaling N2.26 trillion over an eight-month period, according to data obtained by The PUNCH.
These loans, sourced from various banks, were utilized as capital to expand operations in the real estate and construction sectors. The lending trend spanned from November 2022 to June 2023, revealing significant growth, increasing from N1.90 trillion to N2.26 trillion, marking an 18.9% increase.
Remarkably, this upward trajectory occurred in spite of the Central Bank of Nigeria’s decision to raise the benchmark interest rate. The interest rate surged from 11.5% early in the previous year to 18.75% by June of the current year. This hike was part of a series of eight consecutive rate increases aimed at reducing inflation and withdrawing excess liquidity from circulation.
The Central Bank’s Sectoral Analysis of Deposit Money Banks’ Credit showed that the real estate sector secured loans amounting to N755 billion, while the construction industry managed even more substantial credit facilities valued at N1.51 trillion.
Specifically, data from the CBN revealed that borrowing by real estate companies surged from N712 billion to N755 billion, representing an impressive 44.4% increase. Concurrently, loans provided to construction firms increased from N1.19 trillion to N1.51 trillion during the same period.
A monthly breakdown showed that N1.80 trillion was borrowed in December, 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 steady rise in the benchmark interest rate has posed challenges to the Nigerian economy, exacerbating the housing crisis and causing property prices to soar. Investors have adopted a cautious “watch-and-see” approach as a result.