The numbers are not looking good for companies looking for bank credits: In H1 2018, total credit by banks to companies dropped by N855 billion or 5.7% from N14.9 trillion compared to H1 2017. Within the same period, bank’s investments in government securities – bonds and treasury bills- rose by 2.6% to N6.87 trillion.
Businessmen and intending entrepreneurs should note that the Nigerian economy at present requires every support to rebound fully and ensure improved economic and social welfare of the citizenry.
In the first half of this year, total credit by banks to businesses reduced by N855 billion or 5.7% from N14.9 trillion in the corresponding period of year 2017.
Also, while banks’ credits to businesses were reducing, their investments in government securities – bonds and treasury bills- rose by 2.6% to N6.87 trillion.
The implication: banks are expecting that many companies will struggle going forward. Simply, by moving the money from the private businesses into the public sector via bonds and treasury bills, they will avoid potential bad loans.
If you run a business in Nigeria, please watch your cashflow. It is going to be harder getting any decent credit from now till Q2 2019. Investment is already dropping as foreign investors are fleeing. Election is always a bad season for business in Nigeria. That is very unfortunate. It is adding another huge factor to an already challenging business climate.
ISP business is not easy in the age of MTN, Glo and Airtel. In the last five years, out of 103 ISPswho received licenses in Nigeria from NCC, only 11 renewed last year. Simply, many are dying out as data prices drop in the sector. With the WIFI entrepreneurs coupled with free Google services, ISPs will see only challenging future in Nigeria
More so, I expect bank profits to drop in 2019, primarily because they are over-hedging as they move money to government where gains are smaller compared to the private sector lending. But this could be a moment for startups like Lidya to step forward and meet clear market needs in the market: companies want credits and banks are not interested, so, if you can handle the heat, you can have your moments.
-- We offer Advisory Services (tech, strategy & Africa).