Nigeria’s total consumer credit debt surged by 26.29% in November 2024, reaching N4.42 trillion, compared to N3.5 trillion in October. This means that Nigerians are borrowing more money, likely due to rising inflation and increased living costs......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
What is Consumer Credit?
Consumer credit refers to loans that people take to buy goods and services. It can include personal loans for household expenses and retail loans used to purchase specific products or services. The increase in consumer credit suggests that more Nigerians are relying on loans to cope with the country’s economic challenges.
Breakdown of the Loan Increase
The Central Bank of Nigeria’s (CBN) Monthly Economic Report showed that:
Personal loans grew by 37.76%, rising from N2.41 trillion in October to N3.32 trillion in November. This category includes loans for daily expenses such as rent, school fees, and medical bills. It accounted for 74.95% of total consumer credit.
Retail loans increased by 1.83%, growing from N1.09 trillion to N1.11 trillion. These loans are used to purchase goods like electronics, appliances, and cars. They made up 25.05% of total consumer credit.
Why Are Nigerians Borrowing More?
The sharp rise in borrowing is mainly due to the high cost of living. Inflation has made basic necessities more expensive, forcing many people to take loans to cover essential expenses. The CBN’s efforts to control inflation through high interest rates have made loans more expensive, but Nigerians continue to borrow despite these high costs.
CBN’s Interest Rate Policy
To combat inflation, the CBN has raised interest rates multiple times in 2024. The Monetary Policy Rate (MPR) increased from 18.75% in January to 27.50% in November, an aggressive move aimed at reducing excess cash in circulation.
CBN Governor Olayemi Cardoso acknowledged that high interest rates put financial pressure on households and businesses. However, he maintained that these measures are necessary to stabilize the economy.
Concerns About Rising Debt
Although increased credit access helps consumers manage short-term financial needs, economic experts warn that Nigeria must ensure responsible lending. The fear is that rising personal debt could lead to more defaults, where people are unable to repay their loans.
Experts have urged the CBN to find a balance between increasing credit availability and ensuring financial stability. If borrowing continues to rise unchecked, Nigeria could face a debt crisis that affects individuals, banks, and the overall economy.
Final Thoughts
The surge in consumer credit highlights the financial struggles of many Nigerians amid rising inflation. While loans provide temporary relief, the long-term solution lies in economic policies that improve purchasing power, stabilize prices, and create better financial opportunities for citizens.