The tough economic conditions in Nigeria have led to increased borrowing from banks, with Nigerians borrowing about N290 billion in the span of three months, according to the Central Bank of Nigeria (CBN) Economic Report for the Second Quarter of 2023.
The report reveals that consumer credit, which includes personal and retail loans, surged by 12.2%, rising from N2.35 trillion in Q1 2023 to N2.64 trillion in Q2 2023, reflecting a N290 billion increase between April and June of the same year.
Out of the total consumer credit of N2.64 trillion in June 2023, personal loans accounted for N1.92 trillion (72.9%), while retail loans comprised N715.10 billion (27.1%).
The CBN attributes the growth in consumer credit to heightened demand for personal loans and reinforced enforcement of the Loan-to-Deposit Ratio (LDR) policy.
The inflationary trend in Nigeria, which is projected to reach 30% by December 2023, has resulted in increased living costs, pushing more Nigerians to borrow to meet their daily needs. In July, the CBN resumed the enforcement of the LDR policy, aiming to encourage banks to increase lending to stimulate economic growth.
Rising inflation has already driven an estimated four million Nigerians into poverty in the first five months of the year, and approximately 133 million Nigerians are already classified as multidimensionally poor. The challenging economic environment, coupled with inflation, has led to a surge in borrowing, with a report indicating that 27% of Nigerians across different income categories turn to loan apps to sustain their living expenses.
