The Central Bank of Nigeria (CBN) has reported that Nigerians struggling with the rising cost of living borrowed a total of N3.82 trillion from banks as of January 2024. This represents an 11.9% increase in consumer credit, driven mainly by personal loans, which rose by 14.3% to N3.028 trillion. Retail loans also increased by 3.6% to N794.79 billion.
The surge in borrowing highlights the severity of Nigeria’s economic crisis, with inflation reaching a 28-year high of 33.95% in May. The CBN has responded by hiking interest rates to 26.25%, exacerbating the economic hardship faced by Nigerians.
As a result, many citizens are turning to loan apps and personal loans to meet their basic needs, with 27% of Nigerians across different income categories resorting to loan apps to cope with living expenses. The situation is particularly dire for those in the informal sector and civil servants, who are struggling to make ends meet.
The CBN report also showed that total credit extended to key sectors of the economy increased by 29.7% to N57.76 billion, driven by growth in credit to services, industry, and agriculture. However, consumer credit as a share of total credit declined to 6.6% from 7.7% in the preceding month.
The economic crisis in Nigeria has resulted in deteriorating living standards, skyrocketing inflation, and a national currency in free fall, with millions struggling to buy food. The situation has forced many citizens to seek loans as an alternative to meet their basic needs, highlighting the need for urgent economic reforms to address the crisis.
