Real estate and construction firms in Nigeria have successfully secured loans amounting to N2.26 trillion over an eight-month period. These borrowed funds, obtained from various banks, have played a vital role in expanding their service capacities within the sector.
According to a report by PUNCH, these loans were acquired between November 2022 and June 2023 and have shown significant growth, increasing from N1.90 trillion to N2.26 trillion, marking an impressive 18.9 percent rise.
This financial upturn is noteworthy, especially considering the Central Bank’s decision to raise the benchmark interest rate from 11.5 percent, as observed earlier the previous year, to a higher 18.75 percent in June of the current year.
This increase in interest rates occurred over eight consecutive increments and was part of the central bank’s strategy to combat inflation and withdraw excess liquidity from 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 significant loan amounting to N755 billion. Simultaneously, the construction industry obtained an even more impressive credit facility, totaling N1.51 trillion. Data from the CBN indicates that borrowing by real estate companies has surged from N712 billion to N755 billion, representing a remarkable 44.4 percent increase. Similarly, construction companies have seen their loans increase from N1.19 trillion to N1.51 trillion within the same timeframe.
When examining these figures on a monthly basis, 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, exacerbating the ongoing housing crisis. Consequently, this policy adjustment has prompted investors to adopt a more cautious approach, given the ongoing rise in property prices.