The amount Nigerians borrowed for personal needs in January 2024 rose by 14.3 percent when compared with December 2023, according to a recent report from the Central Bank of Nigeria (CBN).
Nigerians obtained a total value of personal loans that stood at N3.03trillion, a 14.3 percent increase from the N2.648trillion obtained in December 2023, according to the report.
“Total consumer credit outstanding increased by 11.9 percent to N3.823trillion in January 2024, driven, mainly, by the rise in personal loans on the back of heightened inflation,” the CBN report said.
The report also stated that personal loans outpaced retail loans, accounting for 79.2 percent of consumer credit, while retail loans accounted for 20.8 percent of total consumer credit.
Nigerians are borrowing more at a time when accelerating inflation has lowered their purchasing power, and reduced their standards of living.
Driven by the Naira devaluation, Nigeria’s annual inflation rate reached 29.90 percent in January 2024, according to the Nigerian Bureau of Statistics.
Inflation also quickened for the seventeenth consecutive month to 33.95 percent in May 2024 from 33.69 percent in April 2024, driven by food and non-alcoholic beverages.
A study by SBM Intelligence found that 27 percent of Nigerians across different income categories now resort to loan apps to keep up with their living expenses in the wake of record inflation.
The growing demand for personal loans coincides with the growth in the population of digital lenders.
The total number of approved digital lenders in Nigeria has surged by 64.16 percent since April 2023, reflecting the growing credit appetite of Nigerians facing weaker purchasing power and higher prices, BusinessDay earlier reported.
According to the Federal Competition and Consumer Protection Commission (FCCPC), the number of digital lenders rose to 284 in May 2024 from 173 in April 2023.
Bukola Sunday, an eggs retailer in Lagos, said that she had to resort to loans to keep her business running.
“With the prices of items rising so rapidly, I have been struggling to keep my business. I had no choice but to resort to LAPO to boost my business, and put food on the table,” she said.
“Rising cost directly impacts the need to access more funds,” Adeshina Adewumi, chief executive officer/ founder of Trade Lenda, earlier told BusinessDay.
