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Wednesday, December 5, 2018

Banks' credits to ICT sector hit N737bn in Q3 - New Telegraph Newspaper

Nigerian banks extended credit facilities worth N736.8 billion to companies in the Information and Communications Technology (ICT) sector in the third quarter of the year, New Telegraph has learnt.

This however, represented 9.5 per cent decline compared with 814.5 billion the sector got in the second quarter, according to the latest statistics released by the National Bureau of Statistics (NBS).

The ICT sector is currently being tipped as the next frontier of Nigeria’s economy after oil and gas. However, funding has been a major challenge for players in that sector, especially the start-ups and young technology companies.

The third quarter figure showed a consistent drop in credit to the sector since the beginning of this year. In the second quarter, for instance, the sector also recorded 5.8 per cent decline in credit facilities, compared with N865.3 billion it received from the lenders in the first quarter of the year.

The sector came seventh in terms of segments that got the highest facilities in the third quarter. According to NBS, the total value of credit allocated by the banks for the period stood at N15.59 trillion. Oil & Gas and Manufacturing sectors got credit allocation of N3.59 trillion and N2.15 trillion to record the highest credit allocation as at the period under review. While the figures for Oil & Gas and Manufacturing represented 23.08 per cent and 13.79 per cent of the total credit to private sector respectively, the share of ICT stood at 4.73 per cent.

Aside from the commercial banks, stakeholders in the ICT sector have complained over the inability of SMEs in ICTs to access SME loans from the Bank of Industry. According to them, the technicalities of the business model in ICT have been discouraging the bank from releasing money to tech start-ups. This scenario has forced many ICT SMEs to rely on funding from angel investors and venture capitals from abroad.

However, the situation is not the same with established ICT businesses. Just recently, one of the leading ICT companies in the country, MTN Nigeria, secured a N200 billion loan from a consortium of 12 banks in a deal seen as the biggest in recent time.

Chief Executive Officer, MTN Nigeria, Ferdi Moolman, described the completion of the loan agreement with the banks as a mark of confidence in the sector, adding that it signposted MTN’s commitment to and confidence in Nigeria and the strength of the strategic collaboration between MTN Nigeria and local financial institutions, that will help deepen and broaden the provision of ICT services in Nigeria.

“The signing of this loan facility is a major landmark in our expansion programme in which we are making significant investments. The facility will enable us evolve the network to deliver convergent and superior quality, drive voice capacity expansion and data service penetration, maintain optimal capital structure and funding level that support growth and expansion. This partnership puts in place infrastructure that empowers commerce, industry and provision of public services,” Moolman said.

He lauded the participating financial institutions for staying committed to MTN, stressing that the loan syndication showcased the strength of the Nigerian financial institutions and their confidence in MTN’s visions, as well as both parties joint ability to stimulate significant economic growth.
The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Danbatta, recently declared that Nigeria’s future depends on how much is being invested in ICT capacity and infrastructure development today.

According to him, oil and gas have propelled Nigeria’s economy over the years and it cannot improve the economy any further because Information and Communication Technology drive the global economy of the 21st century. “The world has gone beyond crude oil, it is now driven by Information and Communication Technology – for this purpose, there is need for improvements in the ICT sector in Nigeria,” he said.

Meanwhile, the President of Lagos Chamber of Commerce and Industry (LCCI) Mr Babatunde Ruwase, has also challenged the Central Bank of Nigeria (CBN) on the need to have a broader view of the economy by supporting sectors outside the manufacturing and agriculture sectors, with emphasis on ICT. According to him, ICT and other service sectors are complementing productivity and performance in the real sector; hence, banks should give them special attention in funding.

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