Banks boost core private sector businesses as credit rises 345.45% to N4.9trn

Likewise, the percentage of banks total credit/non-oil Gross Domestic Gross (GDP) increased from 20.7 percent in 2003 to 30.6 percent in 2007. Also, the Deposit Money Banks total credit rose from N1.2 trillion in 2003 to N4.8trillion in 2007.

Analysts recognise that banks play important roles in the economy, ranging from intermediation deposit taking/lending; resource allocation -from surplus units to deficit units; facilitate risk sharing - spreads/reduces risk faced by economic agents; generate wealth in the economy; and also facilitate the exchange of goods and services.

According to Chukwuma Soludo, governor Central Bank of Nigeria (CBN) in his speech Banks and the National Economy: Progress, Challenges and the Road Ahead, Nigerian banking sector s asset base grew by approximately 277 percent between 2003 and 2007. The apex bank boss noted that both the banking and telecommunications are the fastest growing sectors of the economy. They are driving the emergence of a new economy and growth is showing. Credit to private sector grew by 97 percent in 2007.

Credit to Small and Medium Enterprises (SMEs) grew by 51.2 percent in 2007. Economists say there is a correlation between finance and economic growth; an elasticity of real state income growth to bank loan supply growth; a strong correlation also exists between output and credit. Soludo also said about eleven banks are to record over $1 billion in Tier 1 capital, by end February, 2008.