Nigerians take on N3.82trn record debt as economic pressures mount

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In a sign of deepening economic hardship, Nigerians have borrowed heavily in recent months, with total consumer credit/debt reaching N3.82 trillion ($8.5 billion) by January 2024, according to the Central Bank of Nigeria (CBN). This represents a significant increase of 11.9% compared to the previous year.

The surge in borrowing is attributed primarily to rising personal loans, which climbed 14.3% to N3.03 trillion ($6.7 billion) in the same period. This suggests Nigerians are increasingly relying on credit to meet basic needs and cope with inflation, which has driven up the cost of living.

The CBN report highlights a concerning trend. While consumer credit makes up only 6.6% of total credit issued by banks, it has witnessed a substantial rise. This indicates that Nigerians, likely struggling with everyday expenses, are turning to loans as a short-term solution.

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The report read, “Total consumer credit outstanding increased by 11.9 per cent to N3.82tn in January 2024, driven, mainly, by the rise in personal loans on the back of heightened inflation. A disaggregation of consumer credit revealed that personal loans increased by 14.3 per cent to N3.028tn from N2.648tn in December 2023, while retail loans rose by 3.6 per cent to N794.79bn. Personal loans accounted for 79.2 per cent of consumer credit, while retail loans accounted for 20.8 per cent. Consumer credit, as a share of total credit from ODCs, however, declined to 6.6 per cent, from 7.7 per cent in the preceding month.”

The report also points to a potential silver lining. Credit extended to key sectors of the economy has shown positive growth, increasing by 29.7% to N57.76 billion ($128 million) compared to the previous month. This could signal increased investment and economic activity in certain areas.

However, the overall debt burden on Nigerians and the potential for rising interest rates pose significant challenges. It is crucial to monitor the situation closely to understand the long-term impact on household finances and the broader Nigerian economy.

Tags: Debt, CBN, Nigeria, Nigerians, Central Bank of Nigeria, Economy, Credit, Inflation, Banks, Consumer.