Nigeria’s Consumer Credit Hits Record N4.42tn

According to the latest data from the Central Bank of Nigeria (CBN)’s Monthly Economic Report, Nigeria’s consumer credit outstanding surged by 26.29% to N4.42 trillion in November 2024, up from the previous month’s N3.5 trillion.

This significant rise in consumer credit is attributed to inflation expectations, as more Nigerians turn to credit to manage increasing living costs.

The report highlighted those personal loans experienced the most substantial growth, soaring by 37.76% to N3.32 trillion from N2.41 trillion recorded at the end of October 2024. These loans, primarily used for household expenditures, accounted for 74.95% of the total consumer credit. On the other hand, retail loans—credit issued for the purchase of goods and services—saw a modest increase of 1.83%, rising to N1.11 trillion from N1.09 trillion in the previous month. Retail loans made up the remaining 25.05% of total consumer credit.

“Consumer credit outstanding increased significantly by 26.29 per cent to N4.42 trillion from the level in the preceding month, due, largely, to inflation expectations. Personal loans grew by 37.76 per cent to N3.32 trillion, from N2.41 trillion at end-October 2024. Similarly, retail loans increased by 1.83 per cent to N1.11 trillion from N1.09 trillion in the preceding month. Personal loans accounted for 74.95 per cent of total consumer credit, while retail loans constituted the balance,” the report read.

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Analysts suggest that the surge in consumer credit reflects the persistent inflationary pressures that are eroding household purchasing power. With inflation reaching multi-year highs, many Nigerians are increasingly relying on personal loans to cover essential expenses such as rent, food, healthcare, and education. Retail loans, which showed slower growth compared to personal loans, indicate that while consumer spending remains strong, high prices may be discouraging discretionary spending on non-essential goods and services.

The rise in consumer credit aligns with the CBN’s ongoing efforts to enhance financial inclusion and credit accessibility. However, concerns about rising debt levels and repayment sustainability persist, especially as interest rates remain high. The sharp increase in personal loans comes at a time when the CBN, under Governor Olayemi Cardoso, has implemented multiple interest rate hikes 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 aims to stabilize the economy by reducing excess liquidity. Cardoso acknowledged the pressure that high interest rates place on households and businesses but insisted that these measures are necessary to contain inflation. Economic experts have urged the central bank to implement measures that balance credit expansion with financial stability, ensuring that increased borrowing does not lead to higher default rates.