Nigerian Deposit Money Banks’ borrowing from the Central Bank of Nigeria, CBN, hit an all-time high of N5.38 trillion in the first week of July 2024 amid liquidity concerns.

This is according to a recent CBN’s Standing Lending Facility (SLF) report.

The N5.38 trillion represents a 245 percent increase from N1.56 trillion borrowed by banks in the first week of June 2024.

On a year-on-year basis, it represents a 202 percent rise from N1.78 trillion borrowed by banks in the first week of July 2023, according to data from the CBN.

The Standing Lending Facility (SLF), is one way the central bank makes liquidity available to the banks.

Speaking with Business Day on the development, Alatise Yusuf, Chief Investment Officer, of Cowry Asset Management, said banks see CBN as their last resort in their demand for liquidity to carry out their funding obligations. This happens in the face of a high interest rate environment.

“On Thursday, we saw the overnight NIBOR at 32.4 percent, which indicates that system liquidity thinning is still on the rise while banks seek funds as lending rates trend upward,” he said.

Meanwhile, the CBN has assured that Nigeria’s financial sector remains strong and resilient amid its March recapitalization announcement.

The development that comes with CBN has continued monetary policy tightening despite a call by experts and industrial stakeholders to slow down.

In past months, CBN has increased interest rates by 750 basis points to 26.25 percent in May 2024.

Recently, the Chairman of Dangote Group, Aliko Dangote lamented high interest rates in Nigeria.

According to him, a high interest rate impedes growth creation and economic growth.