CBN report shows ICT firms, telecoms companies owe banks N1.69 trillion as of September 2024

• A report shows ICT firms and telecommunications companies owe banks N1.69 trillion as of September 2024
• The amount is a 3.9 per cent decrease year-on-year compared to what was recorded in September 2023
• The decline in credit to the ICT sector is attributed to the Central Bank of Nigeria’s tight monetary policies

The quarterly statistical bulletin of the Central Bank of Nigeria (CBN) has shown that Information Communication Technology (ICT) firms, including telecommunications companies in Nigeria, owed Deposit Money Banks N1.69 trillion as of September 2024.

According to the data, the debt of telecom companies and other ICT firms to banks decreased year-on-year by 3.9 per cent (N68.04 billion) compared to the N1.77 trillion owed in September 2023.

The year-on-year decline shows low borrowing within the sector due to persistent interest rate hikes by the Central Bank of Nigeria (CBN).

On a month-on-month basis, however, the debt increased slightly by 1.9 per cent (N31.61 billion) from the N1.66 trillion recorded in August 2024.

The indebtedness of ICT firms and telecom companies comes amid calls by telecom operators for an increase in the tariff for data and voice calls.

Year-on-year analysis of indebtedness

A year-on-year analysis of the data shows that credit to the ICT sector stood at N2.47 trillion in January 2024, a 99.3 per cent (N1.23 trillion) increase compared to N1.24 trillion in January 2023.

Credit to the sector, however, decreased to N2.35 trillion in February 2024, an 88.4 per cent (N1.10 trillion) increase year-on-year compared to February 2023. It further fell to N1.67 trillion in March 2024, a 30 per cent (N385.24 billion) increase year-on-year compared to March 2023.

In April, bank credit to the sector stood at N1.66 trillion, a 17 per cent (N241.90 billion) year-on-year increase. It rose slightly to N1.68 trillion in May 2024, a 22.4 per cent (N308.38 billion) increase compared to May 2023.

Bank credit to the ICT sector started declining year-on-year from June 2024, dropping to N1.64 trillion in June, a 4.7 per cent (N81.59 billion) decline compared to June 2023.

It further declined by 2.8 per cent (N48.93 billion) in July 2024 to N1.69 trillion in July 2024 compared to July 2023.

The trend was maintained in August 2024 as credit fell N1.67 trillion, a six per cent decrease (N107.37 billion) compared to the N1.77 trillion recorded in August 2023.

In September 2024, bank credit to the ICT sector declined to N1.69 trillion, a N68.04 billion year-on-year decrease compared to the same period in 2023.

Declining bank credit to ICT sector result of CBN’s tight policies

The reduction in bank credit to the ICT sector in 2024 can be said to have resulted from the tight monetary policies of the CBN, which have raised the cost of borrowing.

In its efforts to combat inflation, the CBN consistently hiked the interest rate in 2024. The CBN increased the interest rate six times in 2024, from 18.75 per cent in January 2024 to 27.50 per cent in November, an 8.75 per cent increase, to curb inflation.

The rate hikes, in addition to other macroeconomic challenges, including exchange rate volatility and rising operational costs, have further constrained borrowing activity in the ICT sector.

Data reveals banks borrowed N131.42 trillion from CBN in 2024 to meet business obligations

Meanwhile, TheRadar earlier reported that data released by the Central Bank of Nigeria (CBN) showed that deposit money banks (DMBs) and merchant banks borrowed N131.42 trillion from the apex bank in 2024 to meet their daily business obligations.

According to the data, the amount borrowed in 2024 is 636.6 per cent higher than the N17.84 trillion borrowed by Nigerian banks in 2023.