EVIDENCE has emerged that Nigerians affected by the rising cost of living are obtaining credit facilities from financial institutions to fund their daily expenditures.
This is evident in the 14.3 percent increase in personal loans, which rose from N2.648 trillion in December 2023 to N3.028 trillion, according to the Central Bank of Nigeria.
Personal loans accounted for 79.2 percent of consumer credit, while retail loans made up 20.8 percent, highlighting Nigerians’ struggle with persistent inflation and declining purchasing power.
Retail loans rose by 3.6 percent to N794.79 billion as of January 2024.
An analysis of the latest monthly economic report posted on CBN’s website revealed that total consumer credit rose by 11.9 percent to N3.82 trillion in January 2024, mainly driven by the increase in personal loans amid heightened inflation. Year-on-year, this figure represented an increase of N1.41 trillion from N2.41 trillion recorded in January 2023.
The report stated: “Total consumer credit outstanding increased by 11.9 percent to N3.82 trillion in January 2024, driven mainly by the rise in personal loans amid heightened inflation. A breakdown of consumer credit revealed that personal loans increased by 14.3 percent to N3.028 trillion from N2.648 trillion in December 2023, while retail loans rose by 3.6 percent to N794.79 billion. Personal loans accounted for 79.2 percent of consumer credit, while retail loans accounted for 20.8 percent.
However, consumer credit, as a share of total credit from ODCs, declined to 6.6 percent from 7.7 percent in the previous month.”The apex bank further stated that total credit extended to key sectors of the economy increased by N13.22 billion or 29.7 percent to N57.76 billion, compared with N44.54 billion in the preceding month.
“Total credit extended to key sectors of the economy by other depository corporations increased by 29.7 percent to N57.76 billion, compared with N44.536 billion in the preceding month.
The growth was driven by the sustained increase in credit to services (25.6 percent), industry (37.5 percent), and the agricultural sector (7.1 percent). A breakdown of sectoral credit indicated that the services sector remained dominant, accounting for 52.1 percent. Industry constituted 44.7 percent, while agriculture accounted for the balance of 3.2 percent,” the report added.
The headline inflation rate reached a 28-year high of 33.95 percent in May, forcing the apex bank to consecutively hike the interest rate to 26.25 percent.
Nigerians are grappling with deteriorating living standards and increased economic hardships following the implementation of sweeping economic reforms by the current administration.
As a result, the country is facing its worst economic crisis in decades, with skyrocketing inflation, a national currency in free fall, and millions of people struggling to buy food. This situation has forced many citizens to seek loans as an alternative to meet their basic needs.
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