Construction firms borrow N21tn in four years – Report

<p>Real estate and construction firms in the country were able to secure loans totaling N21.89tn in four years, findings by The PUNCH have shown.</p>, <p>The sector also contributed N93.14tn to Nigeria’s Gross Domestic Product during the period, according to an analysis of the GDP report released by the National Bureau of Statistics between 2019 and 2022.</p>, <p>According to the Sectoral Analysis of Deposit Money Banks’ Credit by the Central Bank of Nigeria, the real estate sector secured a loan of N8.22tn, while the construction industry obtained even more impressive credit facilities worth N13.77tn.</p>, <p>Recall that, the apex bank increased the benchmark interest rate from 11.5 per cent earlier last year to 18.5 per cent in May this year, across seven consecutive rate hikes as part of strategies to reduce inflation and mopped up liquidity from circulation.</p>, <p>Between May 2022 and May this year, Nigeria’s interest rate rose by about eight per cent.</p>, <p>However, data from the CBN revealed that borrowing by real estate firms rose from N15.16tn to N21.89tn, representing an increase of 44.4 per cent between January 2019 and December 2022.</p>, <p>Further analysis showed that the firms borrowed the sum of N18.26tn in 2020 and N20.861 in 2021</p>, <p>Reacting, the Executive Secretary of the Association of Housing Corporation of Nigeria, Toye Eniola, said higher interest rates on loans would hamper housing development.</p>, <p>He said, “This will obviously increase interest rates on loans, which will make it unattractive for housing development. Development loans require patient funds and if you are getting such loans at above 20 per cent, how would such a development be lucrative? It will be suicidal to go for such a thing, as houses developed are not going to be sold in one day.</p>, <p>“Before now, the interest rate on commercial bank loans was between 25 per cent and 30 per cent, and with the increase in Monetary Policy Rate, the interest rate will definitely go above 30 per cent. And this will obvious