17August 2018 : The Central Bank of Nigeria (CBN) revealed that it would permit banks to use a portion of their Cash Reserve Ratio (CRR) funds to facilitate lending to the agriculture and manufacturing sectors. At present, commercial banks keep at least 22.5% of their funds with the apex bank, in line with the CRR requirement. However, the CBN has outlined its willingness to refund a portion of the CRR to any bank engaging in lending to these priority sectors at a single-digit interest rate. 

The move should encourage banks to look to lend more towards agriculture and manufacturing which still constitute far too small a portion of their loan books—agriculture credit accounted for c.3% of banking credit in 2017. Nevertheless, we assert that credit to these sectors has often been low due to structural factors such as asymmetric information and long-term economic weakness (particularly with manufacturing) and these must be addressed to really unlock credit growth. 

Reporting for EasyKobo on Friday ,17 August 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited