Nigerians borrow N4.82trn in Q1 2024 amid inflation surge

Nigerians borrowed N4.82 trillion from banks between January and March 2024 as the cost of living soared, according to the Central Bank of Nigeria (CBN).

Consumer credit outstanding surged by 268.9% to N8.24 trillion by March 2024, up from N3.42 trillion in December 2023.

This is according to the First Quarter 2024 Economic Report published by the Central Bank of Nigeria (CBN).

The report shows that the surge in consumer credit was primarily driven by a significant rise in both personal and retail loans.

 Personal loans, which rose by 270.4% to N7.52 trillion, made up 91.2% of total consumer credit, highlighting the severe financial strain on Nigerians due to escalating inflation. Retail loans also increased significantly, up by 253.4% to N721.13 billion.

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This surge reflects a growing reliance on credit to manage personal finances, driven by the skyrocketing cost of essentials such as food, fuel, and rent.

Nigeria’s headline inflation rate rose from 28.92% in December 2023 to 33.2% in March 2024, pushing millions into poverty. However, inflation slightly eased to 33.40% in July 2024, marking the first decline since December 2022.

The report read: “Consumer credit outstanding grew by 268.9 per cent to N8,240.36 billion at end-March 2024, relative to the level at end-December 2023. The substantial growth in consumer credit was attributable to inflation expectations.

“A disaggregation of consumer credit showed that personal loans increased by 270.4 per cent to N7,519.2 billion, while retail loans increased by 253.4 per cent to N721.13 billion. Personal loans remained the principal component of consumer credit, with a 91.2 per cent share, while retail loans accounted for the balance.

“As a proportion of total sectoral credit, consumer credit increased to 15.5 per cent, from 7.7 per cent in end-December 2023.”

It was further observed that personal loans have consistently dominated the consumer credit landscape, with their share steadily increasing.

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In March 2023, personal loans accounted for 74.54% of total consumer credit, while retail loans made up 25.46%.

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Over the following months, the share of personal loans continued to rise, reaching 77.53% by December 2023 and 91.25% by March 2024.

Conversely, the proportion of retail loans has seen a significant decline, dropping from 25.46% in March 2023 to just 8.75% by March 2024.

This shift shows the growing dependency on personal loans as the primary source of consumer credit, likely reflecting the urgent financial needs of individuals in an increasingly challenging economic environment.

The decline in the share of retail loans suggests that consumers may be focusing more on securing funds for immediate personal needs rather than retail or commercial purposes.

The surging inflation has left many Nigerians groaning under the weight of the skyrocketing cost of everything from food to fuel and rent.