Nigeria’s consumer credit outstanding surged by 26.29% to N4.42 trillion in November 2024, up from N3.5 trillion in October, as inflation expectations drove more Nigerians to rely on credit to manage rising living costs. This is according to the latest Monthly Economic Report from the Central Bank of Nigeria (CBN).
Consumer credit represents the total loans and credit facilities extended to individuals by financial institutions for personal expenses. The report revealed that personal loans saw the highest increase, rising by 37.76% to N3.32 trillion from N2.41 trillion in October. These loans, used primarily for household expenses, accounted for 74.95% of total consumer credit. Meanwhile, retail loans—typically used for purchasing goods and services—recorded a modest 1.83% increase, reaching N1.11 trillion from N1.09 trillion, making up 25.05% of total consumer credit.
Analysts suggest that the surge in consumer borrowing reflects persistent inflationary pressures that continue to erode household purchasing power. With inflation at multi-year highs, many Nigerians are increasingly turning to personal loans to cover essential expenses such as rent, food, healthcare, and education. In contrast, the slower growth in retail loans suggests that high prices are discouraging discretionary spending on non-essential goods and services.
The increase in consumer credit aligns with the CBN’s ongoing push to expand financial inclusion and improve access to credit. However, concerns persist about rising debt levels and repayment sustainability, especially as interest rates remain high.
The sharp increase in personal loans comes amid the CBN’s aggressive monetary tightening under Governor Olayemi Cardoso, who has implemented multiple interest rate hikes in 2024 to combat inflation.
The Monetary Policy Rate (MPR) has risen by a cumulative 875 basis points this year, climbing from 18.75% in January to 27.50% by November. While these measures aim to stabilize the economy by curbing excess liquidity, they have also made borrowing more expensive.
Governor Cardoso has acknowledged the strain that high interest rates place on households and businesses but insists that stringent policies are necessary to control inflation. Economic experts have urged the CBN to strike a balance between credit expansion and financial stability, ensuring that increased borrowing does not lead to rising default rates, which could pose risks to the broader financial system.
As Nigeria navigates economic challenges, the growing dependence on consumer credit highlights the urgent need for policies that support financial stability while addressing inflationary pressures impacting household incomes.