Nigeria’s personal loan portfolio rose by 37.76 per cent to N3.32tn in November 2024, according to the latest monthly report by the Central Bank of Nigeria.
The sharp increase in consumer borrowing reflects the impact of rising inflation and high living costs, which have forced many Nigerians to rely more on credit to meet their financial obligations.
The CBN report showed that personal loans grew from N2.41tn in October to N3.32tn in November, marking one of the most significant monthly increases in recent years.
Personal loans now account for 74.95 per cent of total consumer credit, highlighting the growing dependence on unsecured loans to cover essential expenses such as rent, healthcare, education, and household needs.
Consumer credit outstanding also saw a substantial increase of 26.29 per cent, reaching N4.42tn in November from N3.50tn the previous month. Retail loans, which cover credit facilities for asset financing and consumer durables, rose by 1.83 per cent from N1.09tn in October to N1.11tn.
The steady rise in consumer credit reflects the financial strain on many households as inflation continues to erode purchasing power.
The report read, “Consumer credit outstanding increased significantly by 26.29 per cent to N4.42tn from the level in the preceding month, due, largely, to inflation expectations. Personal loans grew by 37.76 per cent to N3.32tn, from N2.41tn at end-October 2024.
“Similarly, retail loans increased by 1.83 per cent to N1.11tn from N1.09tn in the preceding month. Personal loans accounted for 74.95 per cent of total consumer credit, while retail loans constituted the balance.”
Despite the high cost of borrowing, demand for loans has remained strong. With inflation persistently high, many individuals are turning to banks and financial institutions for short-term financing to cover their daily expenses.
The report also noted that higher interest rates on savings and fixed deposits have encouraged banks to expand lending, even as borrowing costs remain elevated.
The sharp rise in personal loans comes at a time when the CBN, under Governor Olayemi Cardoso, has implemented multiple interest rate hikes in an effort to curb inflation.
The Monetary Policy Rate has been raised by a total of 875 basis points in 2024, moving from 18.75 per cent at the start of the year to 27.50 per cent by November.
This aggressive monetary tightening stabilises the economy by reducing excess liquidity. Cardoso has acknowledged the pressure that high interest rates place on households and businesses but insists that the measures are necessary to contain inflation.
He has also suggested that once inflation shows sustained improvement, a downward adjustment in interest rates could be considered.
Despite these efforts, inflation remains a pressing concern, with the National Bureau of Statistics reporting a rate of 34.80 per cent in October 2024.
The CBN’s Monetary Policy Committee has maintained a tough stance, with Cardoso reiterating the bank’s commitment to controlling inflation and ensuring economic stability.
