Personal Loans Hit N3.3tn in November – CBN

Nigeria’s personal loan portfolio saw a significant rise of 37.76%, reaching N3.32 trillion in November 2024, according to the latest report from the Central Bank of Nigeria.

This surge in consumer borrowing highlights the strain of rising inflation and high living costs, forcing more Nigerians to rely on credit to manage financial pressures. Personal loans now represent nearly 75% (74.95%) of all consumer credit, indicating that a growing number of people are turning to unsecured loans to cover essential expenses such as rent, healthcare, education, and daily household costs.

The CBN report revealed that personal loans surged from N2.41 trillion in October to N3.32 trillion in November, representing one of the largest monthly increases in recent years. This steady growth in consumer credit highlights the financial pressures faced by many households as inflation continues to weaken purchasing power.

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

Amid rising personal loans, the Central Bank of Nigeria, led by Governor Olayemi Cardoso, has implemented several interest rate hikes to tackle inflation. In 2024, the Monetary Policy Rate increased by 875 basis points, from 18.75% to 27.50% by November.

These measures aim to stabilize the economy by reducing excess liquidity. While Cardoso acknowledges the strain high interest rates place on households and businesses, he insists that they are crucial for controlling inflation. He also indicated that a rate reduction could be considered once inflation shows sustained improvement.

Despite high borrowing costs, demand for loans remains strong. With inflation consistently high, many individuals are turning to banks and financial institutions for short-term financing to manage daily expenses. The report also highlighted that higher interest rates on savings and fixed deposits have prompted banks to increase lending, even as borrowing costs remain elevated.