Inflation Pushes Consumer Credit to N4.42tn in November, CBN Report Shows

Nigeria’s consumer credit outstanding surged by 26.29% in November 2024, reaching a record N4.42 trillion, up from N3.5 trillion in October. The sharp increase, detailed in the Central Bank of Nigeria’s (CBN) monthly report, reflects the growing financial pressure many Nigerians are facing amid rising inflation.

The most significant growth was seen in personal loans, which jumped by 37.76%, reaching N3.32 trillion, accounting for nearly 75% of the total consumer credit. These loans, largely used for household expenses, highlight how many Nigerians are turning to credit as a way to cope with the increasing cost of living. Retail loans, which are used to purchase goods and services, saw a more modest rise of 1.83%, reaching N1.11 trillion. Despite this smaller increase, they still represent a sizable portion of consumer credit.

The increase in borrowing aligns with expectations of continued inflation, as many people rely on credit to manage everyday expenses. However, this surge in consumer debt comes at a time when the Central Bank is tightening monetary policy. Under Governor Olayemi Cardoso, the CBN raised the Monetary Policy Rate by a total of 875 basis points throughout 2024, pushing it from 18.75% to 27.50% in November. The bank has argued that these high interest rates are necessary to curb inflation, even though they place significant pressure on households and businesses.

While the CBN’s efforts to expand financial inclusion and improve credit accessibility are evident, there are growing concerns about the long-term sustainability of this rising debt. With high interest rates making it harder to service loans, experts are calling for a balance between encouraging credit growth and maintaining financial stability, to prevent a rise in defaults as more Nigerians take on debt to weather economic challenges.

SOURCE: PUNCH