Nigeria’s consumer credit surged to N4.42trn in November 2024 –CBN

Nigeria’s consumer credit outstanding surged by 26.29 per cent 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).

Nigeria’s consumer credit refers to the total amount of loans and credit facilities extended to individuals by financial institutions to finance personal expenses.

The report revealed that personal loans saw the most significant growth, skyrocketing by 37.76 per cent to N3.32 trillion from N2.41 trillion in October. These loans, primarily used for household expenses, accounted for 74.95 per cent of total consumer credit. Meanwhile, retail loans—typically used for purchasing goods and services—recorded a modest 1.83 per cent increase, rising to N1.11 trillion from N1.09 trillion in the previous month, making up 25.05 per cent of total consumer credit.

Analysts suggest this surge in consumer borrowing reflects persistent inflationary pressures that continue to erode household purchasing power. With inflation at multi-year highs, many Nigerians are 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 may be discouraging discretionary spending on non-essential goods and services.

The rise in consumer credit aligns with the CBN’s ongoing push to expand financial inclusion and improve access to credit. However, concerns remain about rising debt levels and repayment sustainability, particularly as interest rates remain elevated. 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 been raised by a cumulative 875 basis points this year, climbing from 18.75 per cent in January to 27.50 per cent by November. While these measures aim to stabilize the economy by curbing excess liquidity, they have also made borrowing more expensive. Cardoso has acknowledged the strain that high interest rates place on households and businesses but maintains that stringent policies are necessary to contain inflation.

Economic experts have urged the CBN to strike a balance between credit expansion and financial stability, ensuring that increased borrowing does not translate into rising default rates, which could pose risks to the broader financial system.