Financial data released by the Central Bank of Nigeria (CBN) reveals that deposit money banks and merchant banks in the country borrowed a staggering N18.04 trillion in October 2024.
This figure represents a monumental 31,565% increase compared to the N57.14 billion borrowed during the same month in October 2023.
The surge in borrowing is indicative of severe liquidity challenges facing the Nigerian financial sector. Over the first ten months of 2024, banks and merchant banks have borrowed a total of N104.61 trillion from the CBN marking a dramatic 532.1% increase from the N16.55 trillion borrowed during the same period in 2023.
The reported N18.04 trillion borrowed in October is the second-highest amount accessed from the CBN this year, following the N21.74 trillion borrowed in March 2024.
The continuous borrowing underscores the ongoing liquidity issues impacting banks’ operations and the broader economy.
These liquidity challenges are rooted in a combination of structural economic problems, policy decisions, regulatory constraints, and global market influences.
The ramifications of these challenges are felt not only by financial institutions but also by businesses and consumers reliant on stable banking services for economic activity.
As the situation evolves, stakeholders in the financial sector are calling for strategic measures to address these liquidity concerns and restore stability to the banking system, which is crucial for fostering economic growth in Nigeria.
