Nigerians Borrow N470 Billion in Personal Loans Amid Economic Pressures – CBN Report
The Central Bank of Nigeria (CBN) has disclosed that Nigerians took out a total of N470 billion in personal loans from banks during the last quarter of 2024. According to the CBN’s Fourth Quarter Economic Report, consumer credit outstanding increased by 11.06% to N4.72 trillion by December 2024, up from N4.25 trillion in September. A significant portion of this growth was attributed to personal loans, which rose by 21.27% to N3.82 trillion, accounting for the majority of the increase in consumer credit.
Personal loans now represent 80.98% of the total consumer credit portfolio, dominating the sector compared to retail loans, which saw an 18.18% decline. This shift in borrowing patterns suggests that more Nigerians are opting for personal loans to meet financial needs, as opposed to retail loans, which have seen decreased demand. The growing reliance on personal loans reflects the challenging economic climate, with rising costs of living and inflationary pressures contributing to increased borrowing.
Despite the surge in personal loans, the CBN’s report also highlighted the impact of high interest rates on borrowing costs. The central bank’s tight monetary policy, aimed at addressing inflation, led to a series of interest rate hikes throughout 2024, with the Monetary Policy Rate (MPR) rising to 27.50%. These hikes made borrowing more expensive for individuals, yet the demand for personal loans continued to rise, suggesting that many Nigerians are still seeking credit to manage financial pressures.
The sustained demand for personal loans is likely driven by a combination of factors, including inflationary pressures, increased access to credit, and the financial strain experienced by individuals. As retail loans decline, personal loans are increasingly seen as the primary solution for many facing economic uncertainty. The CBN’s report indicates a trend that could have further implications for the country’s financial landscape in the coming months.
Source: Naira metrics