(Ecofin Agency) - In Nigeria, loans worth 7.8 trillion naira ($20 billion) granted to 35,640 clients are being restructured by banks operating in the country, Bloomberg reports - quoting Godwin Emefiele (pictured), the governor of the country's central bank.

“If the CBN had not asked the banks to grant these forbearances to their customers, the loans will go bad immediately by our prudential ratios,” Mr. Emefiele said.

This restructuring accounts for 41% of the total outstanding loans to the Nigerian economy, which at the end of June 2020 was 18.9 trillion naira, according to the statement of the Monetary Policy Committee held on 20 July 2020. The Governor of the Central Bank hopes that a restructuring ratio of between 60% and 65% can be achieved.

The Nigerian banking sector is experiencing a moment unprecedented in its history. The health and economic crisis caused by covid-19 has brought with it a set of challenges, particularly concerning banks' exposure to the oil sector. The pandemic has extended the scale of the problem to all sectors.

In this uncertain environment, the Central Bank is urging banks to extend more and more credit. In June 2020 alone, 3,300 billion naira of new loans were granted. Although this is a significant figure, it only represented a 1.6% increase in the money supply. However, the authorities want to see this indicator increase by at least 13%.

Idriss Linge