Consumer credit in Nigeria rises to N4.42 trillion in November 2024, marking a 26.29% increase from the previous month, according to the Central Bank of Nigeria (CBN)’s latest economic report. The sharp rise results from inflation concerns, pushing more Nigerians to rely on credit to manage the rising cost of living......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
Personal loans experience the highest growth, surging by 37.76% to N3.32 trillion from N2.41 trillion in October 2024. These loans, mainly used for household expenses, account for nearly 75% of total consumer credit. Retail loans, which support the purchase of goods and services, increase by 1.83% to N1.11 trillion, making up the remaining 25%.
Analysts link the rise in credit demand to ongoing inflationary pressures, which continue to weaken household purchasing power. As inflation reaches record levels, more Nigerians turn to personal loans to cover essential needs such as rent, food, healthcare, and education. Retail loans grow at a slower pace, suggesting that while consumer spending remains steady, high prices limit non-essential purchases.
The increase in consumer credit aligns with the CBN’s efforts to expand financial inclusion and improve access to credit. However, concerns persist over rising debt levels and the ability of borrowers to meet repayment obligations, especially as interest rates remain high.
To combat inflation, the CBN raises the Monetary Policy Rate by a total of 875 basis points in 2024, moving from 18.75% in January to 27.50% by November. CBN Governor Olayemi Cardoso acknowledges the impact of higher interest rates on businesses and households but insists that tightening monetary policy is necessary to stabilize the economy. Economic experts continue to call for policies that balance credit expansion with financial stability, ensuring that increased borrowing does not lead to a surge in loan defaults.