Nigerians borrowed approximately N4.82 trillion from banks between January and March 2024 due to the escalating cost of living, according to the First Quarter 2024 Economic Report by the Central Bank of Nigeria (CBN).
This borrowing surge has pushed consumer credit outstanding in Nigeria to N8.24 trillion by the end of March 2024, up from N3.42 trillion in December 2023, marking a significant 268.9% increase.
The data reflects the severe financial strain on Nigerians amidst rising inflation.
The report highlights that the surge in consumer credit was mainly driven by a sharp rise in both personal and retail loans. Personal loans, which make up the largest share of consumer credit, increased by 270.4% to N7.52 trillion by the end of March 2024.
Retail loans also saw a substantial rise, increasing by 253.4% to reach N721.13 billion.
Personal loans continue to dominate the consumer credit landscape, accounting for a staggering 91.2% of total consumer credit. In contrast, retail loans make up the remaining 8.8%. This trend indicates a growing reliance on credit to manage personal finances in the face of economic challenges.
The CBN report states: “Consumer credit outstanding grew by 268.9% to N8,240.36 billion at the end of March 2024, relative to the level at the end of December 2023. The substantial growth in consumer credit was attributable to inflation expectations.
A breakdown of consumer credit showed that personal loans increased by 270.4% to N7,519.2 billion, while retail loans increased by 253.4% to N721.13 billion.
Personal loans remained the principal component of consumer credit, with a 91.2% share, while retail loans accounted for the balance. As a proportion of total sectoral credit, consumer credit increased to 15.5%, from 7.7% at the end of December 2023.”
Data from Nairametrics further reveals that personal loans have consistently represented the largest share of consumer credit. In March 2023, personal loans accounted for 74.54% of total consumer credit, while retail loans comprised 25.46%.
By December 2023, the share of personal loans had risen to 77.53% and had reached 91.25% by March 2024. Conversely, the share of retail loans has declined sharply, from 25.46% in March 2023 to just 8.75% by March 2024. This shift suggests an increased dependency on personal loans to meet urgent financial needs, reflecting the challenging economic environment.
The decline in retail loans indicates that consumers are prioritising securing funds for immediate personal needs over retail or commercial purposes.
The surging inflation in Nigeria has led to a significant increase in the cost of living, with prices rising for essentials such as food, fuel, and rent. In the first quarter of 2024, Nigeria’s headline inflation rate rose from 28.92% in December 2023 to 33.2% in March 2024, a 14.80% increase.
According to a World Bank report, rising inflation and weak earnings pushed 10 million Nigerians into poverty in 2023.
However, while inflation remains high, Nigeria’s headline inflation rate decreased slightly to 33.40% in July 2024, down from 34.19% in June 2024, according to the National Bureau of Statistics (NBS).
