Nigerians are more likely to borrow from friends, family and loan apps rather than commercial banks, Piggyvest Savings Report shows.
“Over a third of Nigerians (36 percent) report being in debt. When asked Nigerians who they are indebted to? Friends or family members (43 percent ), a loan app (26 percent), a bank (24 percent), Others (7 percent),” Piggyvest, an online savings & investing platform said in its recent Savings Report.
The report said over 4 in 10 Nigerians point to their friends and family members and Loans from friends and family are usually recommended by experts because they have more flexible terms of repayment, come with little to no interest and involve little to no paperwork.
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The report said that beyond friends and family, other sources of debt for Nigerians include loan apps, workplace cooperative societies and banks. Of these debt sources, loan apps are the second most popular.
“It is also interesting to see that only 36% of the respondents admitted to having loan obligations; but worryingly only 25percent of those with loan obligations have them in commercial banks,” Akintunde Oyebode, Commissioner of Finance Ekiti State said in the foreword of the report.
Oyebode said this report reaffirms the long held belief that Nigeria’s financial services industry is yet to meet the credit needs of an underserved market. “While the main thrust of the report is not on access to finance, it is clear that credit remains an opportunity waiting to be maximised.”
The report further suggests that little over 1 in 5 Nigerians debt is below N50,000 as it made up the highest debt category according to their research, 21 percent.
The report showed the following percent of Nigerians for different debt category “N50,000 or less (21 percent), N50,000 – N99,000 (20 percent), N100,000 – N199,000 (17 percent), N200,000 – N499,000 (17 percent), N500,000 – N999,000 (9 percent) ,N1m-N2.9m (11 percent) N3M and above (5 percent).”
According to Piggyvest report the highest earning income bracket, representing almost 3 in 10 Nigerians, is below N100,000.
It said while 80 percent of its respondents said they earn an income, a close examination of their income levels affirms the low earning power of Nigerians.
“We asked Nigerians how much they earn, 20 percent earn no income, 26 percent earn below N100,000, 25 percent earn N100,000 -N249,000, 15 percent earn N250,000 – N499,000, 8 percent earn N500,000 – N999,000, and six percent earn N1M and above”
The report showed that food is the largest personal expense for Nigerians. Over 86 percent of its respondents named it among their top six expenses. By contrast, the second placed expense (Utility Bills) comes in at 58 percent, followed by transport at 48 percent, while rent and housing was 39 percent, clothings and personal upkeep 35 percent and childcare at 21 percent.
It also mentioned that Black tax is also a significant expense category for many Nigerians with over 4 in 5
Nigerian income earners pay black tax and 68 percent of those who pay black tax report paying monthly; only 32 percent pay occasionally.
Piggyvest said the culture of saving is alive and well in Nigeria.
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“As 79 percent of Nigerians tell us they have a habit of saving.Despite this, only 64 percent of Nigerians consistently save a portion of their monthly income, while 15 percent save occasionally,” the report said.
It said that many many of those who do not save say they do not have enough money to save. Others say they don’t know how to save or they do not consider saving a priority.
Odunayo Eweniyi, COO of PiggyVest emphasises the need to start small.
“Saving money is challenging, especially when income is low or there isn’t sufficient knowledge of how to start. But it is important to know that you can start small. It may not seem like it at the beginning but every naira counts,” she said.
