In response to the rising cost of living and borrowing patterns among Nigerians, the Federal Government has included a N100 billion Consumer Credit Fund in the 2024 budget. Nigerians borrowed roughly N740 billion from banks between January and September 2023, illustrating the economic hardships faced by sustained inflation and declining purchasing power.
Consumer credit increased by 32% or N740 billion in nine months, according to the Central Bank of Nigeria’s (CBN) quarterly economic reports, rising from N2.31 trillion at the end of Q4 2022 to N3.05 trillion at the end of Q3 2023. Personal loans accounted for 74.8% of total consumer credit, with retail loans accounting for the remaining 25.2%.
In Nigeria, inflation has been on the rise, affecting the cost of necessities such as food, fuel, and rent. According to the World Bank, inflation forced almost four million Nigerians into poverty in the first five months of 2023. By establishing the N100 billion consumer credit fund, the Federal Government hopes to address the difficulties caused by inflation and increased borrowing.
The Presidential Council on Industrial Revitalization recently formed a Technical Working Group comprised of members from the Central Bank of Nigeria (CBN), the National Identity Management Commission (NIMC), and the Federal Competition and Consumer Commission (FCCPC) to develop a framework to improve consumer credit in Nigeria.
Dr. Doris Nkiruka Uzoka-Anite, Minister of Industry, Trade, and Investment, underlined the necessity of an effective consumer credit system in boosting market efficiencies. The Technical Working Group’s goal is to develop and execute a workable institutional and regulatory framework to improve the consumer credit picture.
“An efficient consumer credit system is a highly essential component of successful economies, as it works to improve market efficiencies and fill in gaps in consumption and productivity by providing consumers with immediate access to credit, allowing them to purchase ahead of ability,” Nkiruka Uzoka-Anite said during the inaugural meeting of the Technical Working Group for Consumer Finance.
She went on to say: “Nigeria has numerous financial institutions and credit schemes, but many Nigerians still face substantial hurdles in accessing credit due to stringent eligibility criteria, high-interest rates, identity-related challenges, fragmented data sources for proof of livelihood and financial worth, lack of awareness or understanding of credit processes, and inadequate credit available for lending.”
The establishment of the consumer credit fund is consistent with the government’s efforts to boost economic growth and ease financial difficulties experienced by citizens in the country.
