In the relentless face of escalating living expenses, Nigerians have turned to banks, borrowing a staggering N740 billion in the first nine months of this year.
Sharp Surge in Consumer Credit
Quarterly economic reports from the Central Bank of Nigeria (CBN) reveal a noteworthy surge in consumer credit, ballooning from N2.31 trillion in Q4 2022 to a substantial N3.05 trillion by Q3 2023. This marks a 32% surge within this nine-month period, painting a stark picture of the challenges Nigerians face amidst persistent inflation and diminishing purchasing power.
Consistent Upward Trajectory
Consumer credit hasn’t merely inched up; it’s been on a steady incline. Scaling from N2.31 trillion in Q4 2022 to N2.35 trillion in Q1 2023 (a 1.7% increase), it further leaped to N2.6 trillion in Q2 2023, showcasing a substantial 10.6% quarterly surge. By Q3 2023, the increase reached a staggering 17%, culminating in an unprecedented high of N3.05 trillion.
Dominance of Personal Loans
The CBN’s Q3 2023 economic report underlines that personal loans constitute a dominant 74.8% of consumer credit, with retail loans comprising the remaining 25.2%. The CBN attributes this surge to the necessity of coping with the relative spike in the cost of living. Specifically, personal loans saw an 18.6% spike to N2.28 trillion, contrasting with the N1.92 trillion in the preceding quarter. Meanwhile, retail loans, totaling N766.97 billion, experienced a growth of 7.3%.
“As a share of total sectoral credit from the Other Depository Corporations (ODCs), consumer credit rose to 7.8%, from 7.0% in the preceding quarter,” the CBN stated.
Insights into Economic Struggles
Surging inflation, projected to reach 30% by December 2023, has left Nigerians grappling with soaring costs across the board — from food and fuel to housing. Shockingly, the World Bank estimates that inflation has propelled an additional four million Nigerians into poverty within the first five months of this year. With approximately 133 million Nigerians already considered multidimensionally poor, the persistent inflation poses a significant risk of plunging more into poverty.
Notably, a report by SBM Intelligence sheds light on the coping mechanisms employed by Nigerians across income brackets, with 27% resorting to loan apps to sustain their daily needs amid the relentless rise in inflation. As the cost of living continues to surge, borrowing has become an unavoidable lifeline for many Nigerians striving to meet their basic living expenses.
