As of January 2024, Nigerians impacted by the country’s growing cost of living had access to N3.82 trillion in credit facilities from banks, according to the Central Bank of Nigeria.
According to an examination of the most recent monthly economic data available on its website, personal loans increased by 11.9 percent to N3.82 trillion in January 2024, primarily due to higher inflation.
Compared to January 2023, when N2.41tn was recorded, the data showed an increase of N1.41tn year over year.
The report further stated that retail loans increased by 3.6% to N794.79 billion, while personal loans jumped by 14.3% to N3.028 trillion from N2.648 trillion in December 2023.
The fact that personal loans made up 79.2% of consumer credit and retail loans made up 20.8% shows how hard it is for Nigerians to overcome persistent inflation and declining buying power.
The report read, “Total consumer credit outstanding increased by 11.9 per cent to N3.82tn in January 2024, driven, mainly, by the rise in personal loans on the back of heightened inflation. A disaggregation of consumer credit revealed that personal loans increased by 14.3 per cent to N3.028tn from N2.648tn in December 2023, while retail loans rose by 3.6 per cent to N794.79bn. Personal loans accounted for 79.2 per cent of consumer credit, while retail loans accounted for 20.8 per cent. Consumer credit, as a share of total credit from ODCs, however, declined to 6.6 per cent, from 7.7 per cent in the preceding month.”
The apex bank further stated that total credit extended to key sectors of the economy increased by N13.22bn or 29.7 per cent to N57.76bn, compared with N44.54bn in the preceding month.
“Total credit extended to key sectors of the economy by other depository corporations increased by 29.7 per cent to N57.76bn, compared with N44.536bn in the preceding month. The growth was driven by the sustained increase in credit to services (25.6 per cent), industry (37.5 per cent), and agricultural sector (7.1 per cent). A decomposition of sectoral credit indicated that the services sector remained dominant, accounting for 52.1 per cent. Industry constituted 44.7 per cent, while agriculture accounted for the balance of 3.2 per cent,” the report added.
In May, the headline inflation rate surged to 33.95 percent, a 28-year high, prompting the central bank to raise interest rates to 26.25 percent in quick succession.
Following the present administration’s adoption of extensive economic reforms, Nigerians have discovered that their living standards are declining and that their financial difficulties are growing.
With soaring inflation, a collapsing national currency, and millions of people trying to make ends meet, the nation is currently experiencing its worst economic crisis in decades.
In order to cover their fundamental demands, many residents are now compelled to turn to loans.
According to an SBM Intelligence report, 27% of Nigerians across all income brackets currently use loan applications to cover their living expenditures in the midst of historically high inflation.
The sharp effect of the persistent inflationary pressures on Nigerians’ daily lives—particularly for those who are already struggling with little financial resources—is demonstrated by the spike in demand for these lending apps.
While people in the unorganised sector use lending apps, employees of civil servants go to their bosses for assistance.
