The demand for bank loans by consumers in Nigeria has surged to its highest level in almost four years, reaching N2.99 trillion in August, a 16.9 percent increase from the previous month, according to data from the Central Bank of Nigeria (CBN). Rising inflationary pressures have led consumers to seek credit to cover shortfalls as incomes fail to match escalating prices. Personal loans accounted for 75.4 percent of the total, with retail loans making up the remaining 24.6 percent. Analysts attribute the trend to increased demand for credit facilities driven by economic challenges.
- Consumer credit in Nigeria rose by 16.9 percent to N2.99 trillion in August, marking the highest level in nearly four years.
- Personal loans constituted 75.4 percent of the total, while retail loans accounted for 24.6 percent.
- Rising inflationary pressures and economic challenges have squeezed incomes, leading to increased demand for credit facilities.
- Tough business conditions and a challenging job market have limited wage growth, prompting individuals to rely on credit to meet essential consumption needs.
- The removal of the petrol subsidy and naira devaluation in Q2 2023 contributed to higher inflation rates, impacting living conditions.
- Inflation more than doubled over the last eight years, exacerbating the financial strain on consumers in Africa’s largest economy.
- Average retail prices for petrol and diesel experienced significant increases, contributing to higher transportation costs and increased consumer credit usage.
- Nigerians are reported to spend 97 percent of their monthly income on food, according to a report by SBM Intelligence.
- Deposit money banks and microfinance banks, including loan apps, are major sources of credit for respondents, reflecting Nigerians’ reliance on these institutions during challenging times.
- The World Bank’s Nigeria Development Update report indicates a rise in the number of people living in poverty due to inflation, emphasizing the need for a holistic approach to reducing inflation through fiscal and monetary policies.